DoD's F-35 Program Spends $6B on LRIP 8, Awarded Sole Source to Lockheed Martin
Contract Overview
Contract Amount: $6,035,358,369 ($6.0B)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2013-02-28
End Date: 2100-12-31
Contract Duration: 32,082 days
Daily Burn Rate: $188.1K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: F-35 LRIP 8 AAC
Place of Performance
Location: FORT WORTH, TARRANT County, TEXAS, 76101
State: Texas Government Spending
Plain-Language Summary
Department of Defense obligated $6.04 billion to LOCKHEED MARTIN CORPORATION for work described as: F-35 LRIP 8 AAC Key points: 1. Significant investment of over $6 billion for Lot 8 Low Rate Initial Production (LRIP) of the F-35 program. 2. Sole-source award to Lockheed Martin Corporation indicates a lack of competition for this specific production lot. 3. Long contract duration extending to 2100 raises questions about long-term cost projections and potential for cost overruns. 4. The 'Aircraft Manufacturing' sector is characterized by high R&D costs and complex supply chains, often leading to concentrated supplier bases.
Value Assessment
Rating: questionable
The contract value of $6.03 billion for LRIP 8 is substantial. Without comparable contract data for similar production lots or aircraft programs, assessing its pricing efficiency is difficult. The sole-source nature limits external benchmarks.
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 approach limits price discovery and potentially leads to higher costs compared to a competitive process.
Taxpayer Impact: The lack of competition on a multi-billion dollar contract raises concerns about taxpayer value and the potential for inflated prices over the program's long lifecycle.
Public Impact
Taxpayers are funding a significant portion of a major defense program with limited transparency on cost-effectiveness due to sole-source award. The F-35 program's extensive lifecycle costs, projected for decades, mean current spending decisions have long-term financial implications. National security relies on advanced aircraft, but the cost and efficiency of acquiring these assets are critical considerations for public funds.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competition and price discovery.
- Long contract duration raises concerns about long-term cost control.
- Lack of transparency in pricing due to non-competitive award.
- High overall program cost potentially impacting other defense priorities.
Positive Signals
- Secures production of critical advanced fighter aircraft.
- Maintains established production capabilities with a known prime contractor.
Sector Analysis
The aerospace and defense sector, particularly aircraft manufacturing, is capital-intensive with long development cycles. Spending benchmarks are often program-specific due to unique technological requirements and limited suppliers, making direct comparisons challenging.
Small Business Impact
The data does not indicate specific subcontracting opportunities for small businesses within this contract. Large sole-source defense contracts can sometimes limit direct participation for smaller enterprises unless specifically mandated.
Oversight & Accountability
Oversight of this sole-source contract is crucial, given its substantial value and long duration. The Department of Defense must ensure robust monitoring of performance, costs, and adherence to contract terms to safeguard taxpayer interests.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Lack of competition
- Long-term cost uncertainty
- Potential for cost overruns
- Limited price transparency
- Technological obsolescence risk over contract duration
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 $6.04 billion to LOCKHEED MARTIN CORPORATION. F-35 LRIP 8 AAC
Who is the contractor on this award?
The obligated recipient is LOCKHEED MARTIN CORPORATION.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Navy).
What is the total obligated amount?
The obligated amount is $6.04 billion.
What is the period of performance?
Start: 2013-02-28. End: 2100-12-31.
What is the justification for the sole-source award, and what measures are in place to ensure fair pricing without competition?
Sole-source awards are typically justified by factors such as unique capabilities, existing infrastructure, or program continuity. For this contract, the justification likely relates to the established F-35 production line and Lockheed Martin's role as the prime contractor. To ensure fair pricing, the DoD likely employs cost analysis, should-cost reviews, and negotiation strategies, although the absence of competitive bids inherently reduces price pressure.
How does the long contract end date (2100) impact the government's ability to manage costs and adapt to future technological changes?
A contract extending to 2100 presents significant challenges for cost management and adaptability. It locks in pricing structures and supplier relationships for an extended period, potentially leading to inefficiencies as technology evolves. The government faces risks of paying above-market rates if costs aren't effectively controlled and may struggle to incorporate newer, more cost-effective technologies without costly contract modifications or new procurements.
What is the projected total lifecycle cost of the F-35 program, and how does this specific LRIP 8 contract contribute to that overall expenditure?
The F-35 program's total lifecycle cost is estimated to be well over a trillion dollars, encompassing acquisition, sustainment, and modernization over several decades. This $6 billion LRIP 8 contract represents a significant portion of the initial acquisition phase, funding the production of a specific batch of aircraft. It contributes directly to the overall program expenditure, highlighting the substantial financial commitment required for fielding and maintaining this advanced fleet.
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: 1 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: $6,141,059,255
Exercised Options: $6,129,198,893
Current Obligation: $6,035,358,369
Actual Outlays: $6,599,336
Subaward Activity
Number of Subawards: 669
Total Subaward Amount: $327,662,069
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2013-02-28
Current End Date: 2100-12-31
Potential End Date: 2100-12-31 00:00:00
Last Modified: 2025-01-15
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