Lockheed Martin awarded $50.8M contract for aircraft manufacturing, with a significant portion for non-recurring engineering

Contract Overview

Contract Amount: $50,790,545 ($50.8M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2009-05-08

End Date: 2013-11-29

Contract Duration: 1,666 days

Daily Burn Rate: $30.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DESIGN, DEVELOPEMENT (NRE)

Place of Performance

Location: MARIETTA, COBB County, GEORGIA, 30063

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $50.8 million to LOCKHEED MARTIN CORP for work described as: DESIGN, DEVELOPEMENT (NRE) Key points: 1. The contract's substantial Non-Recurring Engineering (NRE) component suggests significant upfront investment in design and development. 2. A single award indicates a lack of competition, potentially impacting price negotiation and value for money. 3. The contract duration of 1666 days points to a long-term commitment for the specified aircraft manufacturing services. 4. The firm fixed-price contract type shifts cost risk to the contractor, providing budget certainty for the government. 5. The absence of small business set-asides or subcontracting plans warrants further investigation into broader economic impact.

Value Assessment

Rating: fair

The total award of $50.8 million for aircraft manufacturing, with a significant portion allocated to Design, Development (NRE), requires careful benchmarking. Without specific details on the deliverables or the nature of the NRE, it's challenging to compare its value directly to similar contracts. However, the substantial NRE suggests a complex undertaking. The firm fixed-price nature provides cost certainty, but the lack of competition raises concerns about whether the government secured the best possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one source is capable of meeting the requirement, or in specific circumstances where full and open competition is not feasible. The lack of competition means there was no opportunity for price discovery through a bidding process, which could lead to higher costs for the government compared to a competitive award.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without competing offers, the government had limited leverage to negotiate the lowest possible price.

Public Impact

The primary beneficiary is the Department of Defense, which will receive the manufactured aircraft. The contract supports the production and development of aircraft, crucial for national defense capabilities. The geographic impact is centered in Georgia, where the contractor, Lockheed Martin Corp., is located. This contract likely supports a skilled workforce in the aerospace manufacturing sector, contributing to specialized employment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in suboptimal pricing.
The substantial NRE costs require thorough justification and oversight.
Long contract duration could lead to scope creep or evolving requirements not fully accounted for in the initial price.

Positive Signals

Firm fixed-price contract provides cost certainty.
Award to a major defense contractor suggests established capabilities.
Contract supports critical defense assets.

Sector Analysis

The aerospace manufacturing sector is characterized by high barriers to entry, significant R&D investment, and long production cycles. This contract falls squarely within this domain, involving the production of aircraft. Comparable spending in this sector can range from millions to billions of dollars, depending on the complexity and quantity of aircraft. Lockheed Martin is a dominant player in this market, often securing large-scale defense contracts.

Small Business Impact

This contract does not appear to have a small business set-aside, nor is there an indication of subcontracting plans for small businesses. This suggests that the primary awardee is expected to perform the majority of the work, and opportunities for small businesses within the supply chain may be limited or not explicitly mandated by this specific contract. Further review of subcontracting reports would be necessary to fully assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the awarding agency (Department of Defense) and potentially the Defense Contract Management Agency (DCMA), given its role in contract administration. The firm fixed-price nature provides a degree of accountability for cost control on the contractor's side. Transparency regarding the specific deliverables and performance metrics would be crucial for effective oversight, though details are not provided in this summary.

Related Government Programs

Aircraft Procurement
Defense Manufacturing
Aerospace Research and Development
Military Aircraft Production

Risk Flags

Sole-source award lacks competitive pricing.
Significant NRE component requires justification.
Lack of small business subcontracting opportunities.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $50.8 million to LOCKHEED MARTIN CORP. DESIGN, DEVELOPEMENT (NRE)

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $50.8 million.

What is the period of performance?

Start: 2009-05-08. End: 2013-11-29.

What specific aircraft or aircraft systems are being manufactured under this contract?

The provided data indicates the contract is for 'Aircraft Manufacturing' (NAICS 336411) and was awarded to Lockheed Martin Corp. However, the specific type of aircraft or aircraft systems is not detailed in the summary data. This information is crucial for understanding the strategic importance and technical complexity of the contract. Without this detail, it's difficult to assess the contract's alignment with specific defense needs or to compare it accurately with other aircraft production contracts.

What is the breakdown of the $50.8 million award between Design, Development (NRE) and other costs?

The data indicates that a significant portion of the $50.8 million award is allocated to 'DESIGN, DEVELOPEMENT (NRE)'. While the exact dollar amount for NRE is not explicitly stated as a separate figure, its inclusion suggests substantial upfront investment in research, design, and development activities before full-scale production. Understanding the precise allocation would allow for a more granular assessment of value for money, particularly in evaluating the cost-effectiveness of the initial development phase against the expected performance and longevity of the final product.

What factors led to this contract being awarded on a sole-source basis?

The contract was awarded under the 'NOT COMPETED' (CT) designation, signifying a sole-source procurement. Common justifications for sole-source awards include unique capabilities of a single contractor, urgent and compelling needs where competition is impractical, or follow-on work to a previous contract where only the original contractor can provide the necessary integration or compatibility. Without further documentation, the specific rationale for this sole-source award remains unclear, but it implies that the Department of Defense determined that only Lockheed Martin Corp. could fulfill this particular requirement.

What is the expected performance period and delivery schedule for the aircraft?

The contract has a duration (dur) of 1666 days, which translates to approximately 4.56 years. This indicates a long-term commitment for the manufacturing and potentially development of the aircraft. The start date (sd) was May 8, 2009, and the end date (ed) was November 29, 2013. This timeframe suggests a phased approach to delivery and production, likely encompassing initial development, testing, and subsequent manufacturing runs over several years.

Are there any performance metrics or key performance indicators (KPIs) associated with this contract?

The provided summary data does not explicitly list performance metrics or Key Performance Indicators (KPIs) for this contract. However, as a firm fixed-price contract, the primary performance expectation is the delivery of the specified aircraft according to the agreed-upon schedule and quality standards. The success of the contract would be measured by the contractor's ability to meet these delivery obligations within the fixed price. Further details on quality assurance and acceptance criteria would typically be found in the full contract documentation.

What is the historical spending trend for similar aircraft manufacturing contracts awarded to Lockheed Martin or the Department of Defense?

Historical spending on aircraft manufacturing contracts, particularly with major defense contractors like Lockheed Martin, is substantial and often spans many years and billions of dollars. The Department of Defense is the largest single purchaser of military aircraft globally. Contracts for specific aircraft types, especially advanced platforms, can involve significant Non-Recurring Engineering (NRE) costs upfront, followed by large production runs. Analyzing past awards for similar platforms (e.g., fighter jets, transport planes) would provide context for the $50.8 million award, though this specific contract appears to be for a relatively modest sum in the context of major aircraft programs.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001909R0249

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 86 SOUTH COBB DR, MARIETTA, GA, 30063

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

Financial Breakdown

Contract Ceiling: $50,790,545

Exercised Options: $50,790,545

Current Obligation: $50,790,545

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline