DoD's $153.9M contract for AF ATGL refurbishment awarded to Lockheed Martin

Contract Overview

Contract Amount: $15,393,480 ($15.4M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2022-08-01

End Date: 2026-06-30

Contract Duration: 1,429 days

Daily Burn Rate: $10.8K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: AF ATGL REFURBISHMENT

Place of Performance

Location: LEXINGTON, FAYETTE County, KENTUCKY, 40516

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $15.4 million to LOCKHEED MARTIN CORPORATION for work described as: AF ATGL REFURBISHMENT Key points: 1. Value for money assessed through comparison with similar refurbishment contracts. 2. Competition dynamics indicate a full and open process, potentially driving competitive pricing. 3. Risk indicators include the cost-plus fixed fee pricing structure, which may shift cost overruns to the government. 4. Performance context is tied to the U.S. Special Operations Command's needs for specialized equipment. 5. Sector positioning within defense services, specifically focusing on aircraft component support. 6. The contract duration of 1429 days suggests a significant, long-term project.

Value Assessment

Rating: fair

The contract's cost-plus fixed fee (CPFF) structure warrants careful monitoring, as it can incentivize contractor spending without direct cost savings. Benchmarking this specific refurbishment against similar, complex aircraft component overhauls is challenging due to the specialized nature of ATGL systems. However, the total value of $153.9 million for a four-year period suggests a substantial investment, and the government will need to ensure rigorous oversight to control costs and achieve value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple bidders had the opportunity to submit proposals. This competitive environment is generally favorable for price discovery and can lead to more cost-effective solutions for the government. The number of bidders is not specified, but the open nature of the competition implies a robust selection process.

Taxpayer Impact: A full and open competition provides taxpayers with assurance that the government sought the best possible price and technical solution, minimizing the risk of inflated costs due to limited options.

Public Impact

The U.S. Special Operations Command benefits from the refurbishment of critical Air Force (AF) assets. Services delivered include the maintenance and upgrade of Air Force Ground Target Launchers (ATGL). Geographic impact is primarily within Kentucky (ST, SN), where the work is being performed. Workforce implications may include specialized technical roles for engineers and technicians involved in the refurbishment process.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus fixed fee contract type can lead to cost overruns if not managed tightly.
The specialized nature of ATGL systems may limit the pool of experienced contractors.
Long contract duration (1429 days) requires sustained oversight and performance management.

Positive Signals

Awarded through full and open competition, indicating a competitive bidding process.
Contractor, Lockheed Martin Corporation, is a major defense contractor with extensive experience.
The contract addresses critical operational needs for the U.S. Special Operations Command.

Sector Analysis

This contract falls within the defense services sector, specifically focusing on the maintenance, repair, and overhaul (MRO) of specialized military equipment. The defense MRO market is substantial, driven by the need to maintain aging fleets and advanced weapon systems. Comparable spending benchmarks would involve other large-scale refurbishment or upgrade contracts for critical defense assets, often in the hundreds of millions of dollars.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, nor does it explicitly mention subcontracting goals for small businesses. As a large prime contract awarded to a major defense corporation, the direct impact on small businesses may be limited unless Lockheed Martin actively engages them for specialized components or services. Further analysis of subcontracting plans would be needed to assess the full impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract will likely be managed by the U.S. Special Operations Command contracting and program management offices. Accountability measures would include performance metrics, milestone tracking, and financial reviews inherent in a CPFF contract. Transparency is generally maintained through contract award databases, though specific performance details may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Component Maintenance
Special Operations Equipment Support
Defense Logistics and Sustainment
Military Ground Support Equipment

Risk Flags

Cost-plus contract type requires diligent cost monitoring.
Long-term contract duration necessitates sustained oversight.
Specialized nature of equipment may pose supply chain risks.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.4 million to LOCKHEED MARTIN CORPORATION. AF ATGL REFURBISHMENT

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (U.S. Special Operations Command).

What is the total obligated amount?

The obligated amount is $15.4 million.

What is the period of performance?

Start: 2022-08-01. End: 2026-06-30.

What is the historical spending pattern for AF ATGL refurbishment or similar systems by the Department of Defense?

Historical spending on AF ATGL refurbishment or comparable specialized military equipment maintenance is not readily available in public databases without specific contract identifiers or program names. However, the Department of Defense consistently allocates significant portions of its budget to sustainment and modernization efforts for its vast array of assets. Large-scale refurbishment projects for critical systems can range from tens to hundreds of millions of dollars, depending on the complexity, quantity, and technological upgrades involved. Analyzing past contracts for similar specialized platforms, such as targeting systems or unique launch mechanisms, would provide a better benchmark. The current $153.9 million award suggests a substantial, multi-year investment, aligning with the typical scale of major defense sustainment programs.

How does the pricing structure (Cost Plus Fixed Fee) compare to other methods for this type of service, and what are the associated risks?

The Cost Plus Fixed Fee (CPFF) pricing structure is common for complex projects where the scope of work may evolve or is difficult to define precisely upfront, such as research and development or specialized refurbishments. In a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This structure incentivizes the contractor to control costs to maximize their fee relative to the fixed profit amount. However, it shifts a significant portion of the cost risk to the government, as any cost overruns beyond the estimated amount are borne by the government. Compared to fixed-price contracts, CPFF offers more flexibility but potentially less cost certainty for the government. The primary risk is that the contractor may not have a strong incentive to minimize costs if the fixed fee is substantial, leading to higher overall expenditures than anticipated.

What is Lockheed Martin Corporation's track record with similar large-scale defense refurbishment contracts?

Lockheed Martin Corporation is one of the largest defense contractors globally, with extensive experience in managing and executing complex, large-scale defense programs, including refurbishment, upgrade, and sustainment contracts. They have a long history of working with the Department of Defense and various military branches on a wide range of platforms, from aircraft and missiles to ground systems and naval vessels. Their track record typically involves managing intricate supply chains, advanced engineering, and significant project scopes. While specific details on ATGL refurbishment contracts are not publicly detailed, Lockheed Martin's overall portfolio demonstrates a capacity to handle contracts of this magnitude and complexity. Performance reviews and past contract awards would provide more granular insights into their specific success rates and efficiency in similar projects.

What are the potential performance risks associated with refurbishing AF ATGL systems, and how are they mitigated?

Potential performance risks in refurbishing AF ATGL systems could include technical obsolescence of components, integration challenges with updated systems, supply chain disruptions for specialized parts, and the inherent complexity of the refurbishment process itself. Ensuring the availability of skilled labor and maintaining stringent quality control throughout the 1429-day period are also critical. Mitigation strategies typically involve robust project management, detailed technical specifications, proactive risk assessment and contingency planning, strong government oversight, and performance-based incentives or penalties. The CPFF structure, while shifting cost risk, requires close government monitoring of progress and adherence to technical requirements to ensure successful performance.

How does the geographic location of performance (Kentucky) impact the contract's execution and oversight?

The performance location in Kentucky (ST, SN) means that oversight activities, such as site visits, inspections, and progress meetings, will need to be conducted by personnel or representatives stationed in or able to travel to that region. This can influence the cost and efficiency of government oversight. It may also imply the presence of specific logistical or maintenance infrastructure in Kentucky relevant to Air Force operations or contractor facilities. For the contractor, operating in Kentucky might offer advantages related to existing workforce skills, local supply chains, or state-level incentives. The specific impact depends on the nature of the facilities and the workforce available in that area for specialized defense work.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Other Support Services › All Other Support Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: H9225416R0001

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 5749 BRIAR HILL RD, LEXINGTON, KY, 40516

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $15,612,229

Exercised Options: $15,393,480

Current Obligation: $15,393,480

Subaward Activity

Number of Subawards: 25

Total Subaward Amount: $3,483,518

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: H9225417D0001

IDV Type: IDC

Timeline