DoD Awards $7B LRIP 9 Aircraft Contract to Lockheed Martin, Facing No Competition

Contract Overview

Contract Amount: $6,998,362,071 ($7.0B)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2014-03-19

End Date: 2025-07-31

Contract Duration: 4,152 days

Daily Burn Rate: $1.7M/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: LRIP 9 AIRCRAFT AAC

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $7.00 billion to LOCKHEED MARTIN CORPORATION for work described as: LRIP 9 AIRCRAFT AAC Key points: 1. Significant contract value of $6.99 billion for Low Rate Initial Production (LRIP) of aircraft. 2. Sole-source award to Lockheed Martin Corporation indicates a lack of competitive bidding. 3. Long contract duration (over 11 years) raises concerns about long-term cost control and adaptability. 4. Aircraft Manufacturing sector is critical for defense, but this award lacks transparency.

Value Assessment

Rating: questionable

The contract's fixed-price incentive structure aims to control costs, but without competition, it's difficult to benchmark against market rates. The large value and long duration suggest potential for cost overruns if not rigorously managed.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, meaning Lockheed Martin was the only bidder. This significantly limits price discovery and potentially leads to higher costs for taxpayers compared to a competitive process.

Taxpayer Impact: The absence of competition likely results in a higher price for the government and taxpayers than if multiple vendors had vied for the contract.

Public Impact

Taxpayers are funding a major defense acquisition without the benefit of competitive pricing. The long-term nature of the contract may lock the government into a specific technology or supplier. Lack of transparency in the sole-source award process can erode public trust. Potential for cost overruns due to the lack of competitive pressure.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Long contract duration
Lack of transparency
High dollar value

Positive Signals

Fixed-price incentive contract type
Awarded to established defense contractor

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, a critical component of national defense spending. Benchmarks for similar sole-source, long-duration production contracts are difficult to establish due to the inherent lack of competition.

Small Business Impact

The data provided does not indicate any specific provisions or subcontracting goals for small businesses on this contract. As a sole-source award to a large corporation, opportunities for small businesses may be limited unless actively pursued by the prime contractor.

Oversight & Accountability

The sole-source nature of this contract warrants close oversight from the Department of Defense to ensure fair pricing and effective execution. Robust accountability mechanisms are crucial to mitigate risks associated with non-competitive awards.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Lack of competition
Potential for inflated pricing
Long contract duration
Risk of technological obsolescence
Limited transparency
No small business set-aside indicated

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $7.00 billion to LOCKHEED MARTIN CORPORATION. LRIP 9 AIRCRAFT 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 $7.00 billion.

What is the period of performance?

Start: 2014-03-19. End: 2025-07-31.

What is the justification for not competing this significant aircraft production contract, and what mechanisms are in place to ensure fair pricing?

The justification for sole-sourcing typically involves unique capabilities, national security imperatives, or the absence of viable alternatives. To ensure fair pricing, the government likely relies on cost analysis, historical data, and negotiation strategies, though the absence of competition inherently limits the government's leverage.

Given the 11-year duration, what are the risks associated with technological obsolescence or the need for future modifications?

A long contract duration increases the risk of technological obsolescence if the aircraft's design or components become outdated before the contract ends. Future modifications could also become costly and complex, potentially requiring separate, potentially competitive, procurements or costly change orders under the existing sole-source agreement.

How does the fixed-price incentive structure effectively manage costs without competitive pressure, and what are the potential taxpayer implications?

The fixed-price incentive structure aims to share cost risks and rewards between the government and contractor. However, without competition, the 'target cost' and 'incentive' elements are negotiated rather than market-driven. This means taxpayers bear the risk that the target cost might be inflated, and the incentive structure may not yield the same savings as in a competitive environment.

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: $7,899,281,948

Exercised Options: $7,899,281,948

Current Obligation: $6,998,362,071

Actual Outlays: $11,205,232

Subaward Activity

Number of Subawards: 882

Total Subaward Amount: $1,629,655,822

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline