DoD Awards $4.99 Billion LRIP Lot 5 Contract to Lockheed Martin for Aircraft Manufacturing
Contract Overview
Contract Amount: $4,993,929,468 ($5.0B)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2010-07-06
End Date: 2022-05-04
Contract Duration: 4,320 days
Daily Burn Rate: $1.2M/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: LOW RATE INTITIAL PRODUCTION (LRIP) LOT 5 ADVANCED ACQUISITION CONTRACT.
Place of Performance
Location: FORT WORTH, TARRANT County, TEXAS, 76101
State: Texas Government Spending
Plain-Language Summary
Department of Defense obligated $4.99 billion to LOCKHEED MARTIN CORPORATION for work described as: LOW RATE INTITIAL PRODUCTION (LRIP) LOT 5 ADVANCED ACQUISITION CONTRACT. Key points: 1. Significant investment in advanced aircraft production. 2. Sole-source award to Lockheed Martin raises competition concerns. 3. Long contract duration (4320 days) warrants close monitoring. 4. Fixed Price Incentive contract type aims to balance cost and performance. 5. High value suggests substantial taxpayer exposure.
Value Assessment
Rating: questionable
The contract value of $4.99 billion is substantial. Without competitive bidding, it's difficult to benchmark against similar contracts to assess if the pricing is optimal. The fixed-price incentive structure suggests an attempt to control costs, but the lack of competition limits price discovery.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to Lockheed Martin. This significantly limits price discovery and potentially leads to higher costs for taxpayers compared to a competitive process.
Taxpayer Impact: The absence of competition for a nearly $5 billion contract means taxpayers may not be receiving the best possible price for these advanced aircraft.
Public Impact
Taxpayers are funding the production of advanced aircraft, potentially at a premium due to the lack of competition. The long duration of the contract implies a sustained commitment of resources over many years. The specific aircraft type and its capabilities are not detailed, limiting public understanding of the investment's purpose.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- High contract value
- Long contract duration
- Fixed Price Incentive contract type can lead to cost overruns if not managed carefully
Positive Signals
- Production of advanced aircraft
- Long-term commitment to defense capabilities
Sector Analysis
This contract falls within the Aircraft Manufacturing sector, a critical component of the defense industry. Spending in this sector is often characterized by high R&D costs, long production cycles, and significant government investment, frequently involving sole-source or limited competition due to specialized capabilities.
Small Business Impact
The data indicates this is a large prime contract awarded to Lockheed Martin Corporation. There is no information provided regarding subcontracting opportunities for small businesses, which is a common concern with large sole-source defense contracts.
Oversight & Accountability
The Department of Defense, through the Defense Contract Management Agency, is responsible for overseeing this contract. The long duration and high value necessitate robust oversight to ensure performance, cost control, and adherence to contract terms.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Sole-source award limits price competition.
- High contract value represents significant taxpayer financial exposure.
- Long contract duration increases risk of cost escalation and changing requirements.
- Lack of specific aircraft details hinders public understanding of value.
- Potential for cost overruns inherent in FPI contracts.
Tags
aircraft-manufacturing, department-of-defense, tx, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $4.99 billion to LOCKHEED MARTIN CORPORATION. LOW RATE INTITIAL PRODUCTION (LRIP) LOT 5 ADVANCED ACQUISITION CONTRACT.
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 $4.99 billion.
What is the period of performance?
Start: 2010-07-06. End: 2022-05-04.
What specific advanced aircraft capabilities does this LRIP Lot 5 contract procure, and how do they align with current defense needs?
The contract details do not specify the exact aircraft model or its advanced capabilities. Understanding the specific technological advancements and their strategic importance is crucial for justifying the significant investment. This information would help assess the value proposition beyond just the production quantity and cost.
What steps were taken to ensure fair and reasonable pricing in the absence of a competitive bidding process for this $4.99 billion contract?
Given the sole-source nature of this award, it is imperative to understand the government's negotiation strategy and cost analysis techniques used to determine fair and reasonable pricing. This includes examining Lockheed Martin's cost proposals, independent government cost estimates, and any price negotiation objectives established prior to the award.
How will the performance and cost risks associated with the Fixed Price Incentive contract type be effectively managed over the 4320-day duration to protect taxpayer interests?
The Fixed Price Incentive (FPI) contract type shares risk between the government and contractor. Effective management requires clear target costs, incentive formulas, and ceiling prices. Robust oversight by the Defense Contract Management Agency is essential to monitor progress, control costs, and ensure the contractor meets performance objectives without excessive cost overruns.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing
Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE (L)
Evaluated Preference: NONE
Contractor Details
Parent Company: Lockheed Martin Corp
Address: LOCKHEED BLVD, FORT WORTH, TX, 76108
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: $26,983,524,162
Exercised Options: $5,056,274,162
Current Obligation: $4,993,929,468
Contract Characteristics
Multi-Year Contract: Yes
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2010-07-06
Current End Date: 2022-05-04
Potential End Date: 2022-05-04 00:00:00
Last Modified: 2024-06-10
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