DoD Awards $34B Lockheed Martin Contract for F-35 Aircraft Development and Manufacturing

Contract Overview

Contract Amount: $34,173,959,112 ($34.2B)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2001-10-26

End Date: 2022-12-16

Contract Duration: 7,721 days

Daily Burn Rate: $4.4M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200204!008532!1700!AF600 !NAVAL AIR SYSTEMS COMMAND !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!N!LOCKHEED MARTIN CORPORATION !LOCKHEED BLVD !FORT WORTH !TX!76108!27000!439!48!FORT WORTH !TARRANT !TEXAS !+000026000000!N!N!018981928201!AC15!RDTE/AIRCRAFT-ENG/MANUF DEVELOP !A1A!AIRFRAMES AND SPARES !2AMA!JAST/JSF !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !A!N!R!2!002!N!1A!A!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! !Y! !N00019!0001!

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $34.17 billion to LOCKHEED MARTIN CORPORATION for work described as: 200204!008532!1700!AF600 !NAVAL AIR SYSTEMS COMMAND !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!N!LOCKHEED MARTIN CORPORATION !LOCKHEED BLVD !FORT WORTH !TX!76108!27000!439!48!FORT WORTH !TARRA… Key points: 1. Significant investment in advanced aircraft technology, primarily for the F-35 program. 2. Dominant player Lockheed Martin secures a large, long-term contract. 3. Potential for cost overruns and schedule delays inherent in complex defense projects. 4. Sector focus on aerospace and defense, with implications for related supply chains.

Value Assessment

Rating: questionable

The contract value of over $34 billion is substantial. Benchmarking is difficult due to the unique nature of advanced aircraft development and the long-term, evolving scope of the F-35 program. However, the significant funding suggests a high perceived value for the capabilities delivered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is positive for price discovery. However, the long duration and specialized nature of the work may limit the number of truly competitive bids over its lifecycle.

Taxpayer Impact: Taxpayer funds are allocated to a critical defense program, aiming for technological superiority. The long-term nature and potential for modifications mean ongoing financial commitment.

Public Impact

Supports national defense capabilities through advanced fighter jet technology. Drives innovation and job creation within the aerospace and defense sector. Impacts geopolitical standing through the deployment of advanced military assets. Potential for long-term sustainment and upgrade contracts, extending economic impact.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration increases risk of cost escalation.
Complexity of F-35 program development and integration.
Dependence on a single prime contractor for critical defense asset.

Positive Signals

Awarded under full and open competition.
Supports a key strategic defense initiative.
Significant investment in advanced technology.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft manufacturing and development. Spending benchmarks in this area are highly variable due to the specialized R&D and long production cycles involved in advanced military platforms.

Small Business Impact

While the prime contractor is Lockheed Martin, a large corporation, the extensive nature of such a program often involves a vast network of subcontractors. Opportunities for small businesses likely exist within the supply chain for components, materials, and specialized services.

Oversight & Accountability

The Department of Defense and its agencies, such as the Defense Contract Management Agency, are responsible for oversight. Given the program's scale and duration, continuous monitoring of performance, cost, and schedule is crucial for accountability.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

High contract value.
Long contract duration.
Complex technology development.
Sole prime contractor dependency.
Potential for cost overruns.
Schedule slippage risk.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.17 billion to LOCKHEED MARTIN CORPORATION. 200204!008532!1700!AF600 !NAVAL AIR SYSTEMS COMMAND !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!N!LOCKHEED MARTIN CORPORATION !LOCKHEED BLVD !FORT WORTH !TX!76108!27000!439!48!FORT WORTH !TARRANT !TEXAS !+000026000000!N!N!018981928201!AC15!RDTE/AIRCRAFT-ENG/MANUF DEVELOP !A1A!AIRFRAMES AND SPARES !2AMA!JAST/JSF !336411!E! !3! ! ! ! ! !99990909!B

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $34.17 billion.

What is the period of performance?

Start: 2001-10-26. End: 2022-12-16.

What is the projected return on investment for the taxpayer given the significant upfront and ongoing costs of the F-35 program?

The return on investment is primarily measured in strategic defense capabilities and national security. While direct financial ROI is not applicable, the program aims to provide a technological advantage over potential adversaries, deter aggression, and maintain global influence. Quantifying this in monetary terms is challenging, but the perceived value lies in enhanced security and deterrence.

What are the primary risks associated with the long-term sustainment and upgrade phases of this contract?

Key risks include escalating sustainment costs due to aging fleets, the need for continuous technological upgrades to maintain relevance, potential supply chain disruptions for spare parts, and the challenge of managing a complex global support network. Furthermore, geopolitical shifts could alter future requirements or international partnerships, impacting long-term viability and cost-effectiveness.

How effectively has the competition process ensured optimal value for money throughout the F-35 program's lifecycle?

The initial full and open competition aimed to establish a competitive baseline. However, the program's extended lifecycle, evolving requirements, and the specialized nature of the technology mean that subsequent phases may rely more on sole-source modifications or limited competition. Ensuring ongoing value requires robust oversight, performance metrics, and strategic negotiation to mitigate potential cost creep and maintain program objectives.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 1 LOCKHEED BLVD, FORT WORTH, TX, 76108

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $29,534,751,398

Exercised Options: $588,219,916

Current Obligation: $34,173,959,112

Actual Outlays: $29,313,886

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline