DoD's $120M Lockheed Martin contract for Outer Wing Assembly Kits awarded via full and open competition

Contract Overview

Contract Amount: $120,305,709 ($120.3M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2011-03-14

End Date: 2017-09-29

Contract Duration: 2,391 days

Daily Burn Rate: $50.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROCUREMENT OF 14 OUTER WING ASSEMBLY (OWA) KITS.

Place of Performance

Location: MARIETTA, COBB County, GEORGIA, 30063

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $120.3 million to LOCKHEED MARTIN CORP for work described as: PROCUREMENT OF 14 OUTER WING ASSEMBLY (OWA) KITS. Key points: 1. Contract awarded for specialized aircraft parts, indicating a need for advanced manufacturing capabilities. 2. The firm-fixed-price structure suggests a defined scope and cost control expectations. 3. A single award for 14 kits implies a significant unit cost and potential for specialized production. 4. The contract duration of nearly 7 years points to a long-term requirement for these components. 5. The procurement falls under the 'Other Aircraft Parts' manufacturing NAICS code, highlighting a specific niche within the aerospace sector.

Value Assessment

Rating: fair

The total contract value of $120.3 million for 14 Outer Wing Assembly (OWA) Kits results in a per-unit cost of approximately $8.6 million. Benchmarking this against similar complex aerospace components is challenging without more specific technical details. However, given the specialized nature and likely advanced materials and manufacturing processes involved in OWA kits, the price appears within a plausible range for such high-value, low-volume defense articles. Further analysis would require comparison to other OWA procurements or similar structural aircraft components.

Cost Per Unit: Approximately $8.6 million per kit.

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that the Department of the Navy sought proposals from all responsible sources. While the number of bidders is not specified, this approach generally fosters a competitive environment, allowing for a wider range of potential suppliers to participate. The use of full and open competition is the government's preferred method for ensuring fair pricing and access to the best available technology and services.

Taxpayer Impact: Full and open competition aims to secure the best value for taxpayers by encouraging multiple companies to bid, driving down prices through market forces and ensuring the government isn't locked into a single supplier.

Public Impact

The primary beneficiaries are the Department of the Navy, receiving critical components for its aircraft sustainment or modernization programs. The contract delivers 14 Outer Wing Assembly (OWA) Kits, essential for maintaining the airworthiness and operational readiness of specific naval aircraft. The geographic impact is primarily associated with Lockheed Martin's manufacturing facilities, likely located in Georgia (indicated by 'ST: GA'), contributing to regional employment and economic activity. Workforce implications include skilled labor in aerospace manufacturing, engineering, and quality assurance at the contractor's sites.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (nearly 7 years) could introduce risks related to technology obsolescence or changing operational requirements.
High unit cost per OWA kit warrants close monitoring of performance and potential for cost overruns if not managed effectively.
Reliance on a single contractor for a critical component could pose supply chain risks if not mitigated by robust oversight.

Positive Signals

Awarded under full and open competition, suggesting a competitive process that should yield fair pricing.
Firm Fixed Price contract type provides cost certainty for the government, limiting financial exposure.
The contract is for a specific, defined quantity (14 kits), indicating clear requirements and scope.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for specialized aircraft components like Outer Wing Assemblies is characterized by high barriers to entry due to complex engineering, stringent quality control, and significant capital investment. Spending in this area is driven by military readiness requirements, aircraft modernization programs, and sustainment efforts. Comparable spending benchmarks would typically involve other major airframe component procurements or large-scale aircraft modification contracts within the defense industry.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'SB: false'. Furthermore, the prime contractor, Lockheed Martin Corp, is a large aerospace and defense company. While there are no direct set-aside provisions mentioned, large prime contractors are often required to meet small business subcontracting goals. The impact on the small business ecosystem would depend on whether Lockheed Martin actively seeks out and utilizes small businesses for subcontracting opportunities related to the production of these OWA kits.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy's contracting and program management offices. Accountability measures are embedded within the firm-fixed-price contract terms, requiring delivery of specified OWA kits. Transparency is facilitated through contract databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract's execution.

Related Government Programs

Aircraft Component Manufacturing
Aerospace Defense Contracts
Naval Aviation Sustainment
Major Defense Equipment Procurement
Lockheed Martin Contracts

Risk Flags

Long-term contract duration
High unit cost for specialized components
Potential for technology obsolescence
Single award for critical part

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $120.3 million to LOCKHEED MARTIN CORP. PROCUREMENT OF 14 OUTER WING ASSEMBLY (OWA) KITS.

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $120.3 million.

What is the period of performance?

Start: 2011-03-14. End: 2017-09-29.

What is the historical spending trend for Outer Wing Assembly Kits by the Department of the Navy?

Analyzing historical spending on Outer Wing Assembly Kits (OWA) by the Department of the Navy requires access to detailed procurement data beyond this single contract. This specific contract, awarded in 2011 and ending in 2017 for $120.3 million, represents a significant investment over its duration. To understand trends, one would need to examine procurements of similar OWA kits or related wing components across multiple fiscal years. Factors influencing spending include aircraft fleet size, age, modernization programs, and sustainment strategies. A broader analysis might reveal cyclical spending patterns, increases or decreases in demand, and the impact of specific naval aviation programs on the procurement of such critical parts. Without additional data points, it's difficult to establish a definitive trend beyond this single contract's lifecycle.

How does the unit cost of these OWA kits compare to similar complex aerospace structural components?

The unit cost of approximately $8.6 million per Outer Wing Assembly (OWA) Kit is substantial, reflecting the complexity and specialized nature of aerospace manufacturing. Direct comparisons are challenging without knowing the exact specifications, materials, and technology involved in these specific kits. However, major structural components for large aircraft, such as wing sections, fuselage segments, or tail assemblies, can range from several hundred thousand to tens of millions of dollars depending on size, materials (e.g., composites vs. traditional alloys), and integration requirements. For context, a complete set of commercial airliner wings can cost tens of millions. Given this is a defense-specific component likely incorporating advanced features and meeting stringent military specifications, the $8.6 million per unit cost appears plausible within the high-end spectrum of specialized aircraft parts, especially when considering the relatively small quantity procured.

What are the potential risks associated with a long-duration contract for specialized aircraft parts?

Long-duration contracts, like this nearly seven-year award for OWA kits, carry several potential risks for specialized defense procurements. Firstly, technological obsolescence is a significant concern; advancements in materials science, manufacturing techniques, or aircraft design could render the procured kits outdated or less effective before the contract concludes. Secondly, changes in operational requirements or strategic priorities within the Department of the Navy could alter the demand or specifications for these kits, potentially leading to contract modifications or disputes. Thirdly, economic fluctuations or supply chain disruptions over an extended period can impact the cost of raw materials and labor, potentially straining the fixed-price agreement if not adequately managed. Finally, maintaining contractor performance and quality assurance over many years requires sustained oversight to prevent degradation.

What is Lockheed Martin's track record with similar large-scale aerospace component contracts?

Lockheed Martin Corporation has an extensive and well-established track record in delivering large-scale, complex aerospace and defense systems, including critical components for various aircraft platforms. As a major prime contractor for the U.S. military, they have consistently managed and executed high-value contracts involving advanced manufacturing, engineering, and integration. Their experience spans fighter jets (like the F-35, F-16, F-22), transport aircraft, and various specialized systems. While specific details on their performance for this particular OWA kit contract require deeper analysis of past performance metrics, Lockheed Martin's overall history suggests a capability to handle the technical and logistical demands of such procurements. Their extensive supply chain and manufacturing infrastructure are designed for these types of programs.

How does the 'Other Aircraft Parts' NAICS code (336413) reflect the nature of this procurement?

The North American Industry Classification System (NAICS) code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' accurately categorizes this procurement. This code is used for establishments primarily engaged in manufacturing aircraft parts and auxiliary equipment, except engines, engine parts, propellers, and landing gear. This includes components like airframes, fuselage sections, wings (as in this case), empennages, nacelles, and other structural or functional parts not elsewhere classified. By assigning this code, the government identifies the specific industrial sector and the type of manufacturing expertise required. It helps in categorizing spending, understanding the market landscape for aircraft component suppliers, and potentially benchmarking against other procurements within this specialized sub-sector of the aerospace industry.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0001910R0043

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, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $120,305,709

Exercised Options: $120,305,709

Current Obligation: $120,305,709

Subaward Activity

Number of Subawards: 11

Total Subaward Amount: $2,192,944

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline