F-35 Joint Strike Fighter program awarded to Lockheed Martin, exceeding $972 million in contract value

Contract Overview

Contract Amount: $97,286,356 ($97.3M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2014-03-18

End Date: 2023-06-30

Contract Duration: 3,391 days

Daily Burn Rate: $28.7K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: JOINT STRIKE FIGHTER (JSF) F-35

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $97.3 million to LOCKHEED MARTIN CORPORATION for work described as: JOINT STRIKE FIGHTER (JSF) F-35 Key points: 1. The contract represents a significant investment in advanced military aircraft capabilities. 2. Competition dynamics are limited due to the specialized nature of the F-35 program. 3. Performance is tied to cost-plus incentive fee structure, suggesting shared risk and reward. 4. The program's long duration and substantial funding indicate a critical, ongoing defense initiative. 5. Sector positioning is within the high-tech aerospace manufacturing industry, a key area for national security.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without detailed cost breakdowns and comparisons to similar advanced aircraft development programs. The 'cost plus incentive fee' structure implies that costs can escalate, with the government paying a base cost plus incentives for meeting certain performance targets. This can lead to higher overall expenditures than fixed-price contracts, especially if cost overruns occur. The provided data lacks sufficient detail to definitively assess value for money against industry benchmarks or alternative solutions.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a sole-source or limited competition framework, typical for highly specialized and technologically advanced defense systems like the F-35. The development and production of such platforms require unique expertise, extensive intellectual property, and established supply chains, making it difficult for new competitors to enter. The lack of broad competition likely results in less price pressure and potentially higher costs for the government.

Taxpayer Impact: The limited competition means taxpayers may not benefit from the cost savings typically achieved through a robust bidding process. This can translate to higher overall program costs, requiring greater allocation of public funds for defense procurement.

Public Impact

The primary beneficiaries are the U.S. Department of Defense and allied nations requiring advanced air superiority capabilities. Services delivered include the manufacturing, integration, and sustainment of F-35 fighter jets. Geographic impact is global, with F-35s deployed by the U.S. Air Force, Navy, and Marine Corps, as well as international partners. Workforce implications include high-skilled jobs in aerospace engineering, manufacturing, and maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in cost-plus contracts.
Long-term sustainment costs for advanced aircraft can be substantial and may exceed initial procurement budgets.
Dependence on a single prime contractor (Lockheed Martin) can create supply chain risks and limit negotiation leverage.

Positive Signals

Represents a significant advancement in military aviation technology.
The program involves extensive testing and validation, aiming for high performance and reliability.
International partnerships foster interoperability and burden-sharing among allied forces.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product development cycles. The F-35 program is a flagship initiative within this sector, representing a substantial portion of defense spending. Comparable spending benchmarks would include other major military aircraft development and procurement programs, which often run into billions of dollars over their lifecycle. The market is dominated by a few large, established prime contractors.

Small Business Impact

While the data indicates this contract was not specifically set aside for small businesses (sb: false), large defense contracts typically involve extensive subcontracting. Prime contractors like Lockheed Martin are often required to meet small business subcontracting goals. This can create opportunities for small businesses to participate in the supply chain, providing specialized components, services, or materials. However, the primary awardee is a large corporation, and the direct contract value does not reflect direct small business set-aside.

Oversight & Accountability

Oversight for the Joint Strike Fighter program is typically managed by the Department of Defense's acquisition and program management offices, along with the Government Accountability Office (GAO) and the Inspector General (IG). Transparency is often managed through program reports, congressional testimonies, and public releases of certain program milestones. Accountability measures are built into the contract terms, particularly with the incentive fee structure, and through regular program reviews.

Related Government Programs

Fighter Aircraft Procurement
Advanced Weapons Systems
Aerospace Manufacturing
Defense Logistics and Sustainment
Military Technology Development

Risk Flags

Cost Overruns
Schedule Delays
Technical Complexity
Sustainment Costs
Sole-Source Award

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $97.3 million to LOCKHEED MARTIN CORPORATION. JOINT STRIKE FIGHTER (JSF) F-35

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 $97.3 million.

What is the period of performance?

Start: 2014-03-18. End: 2023-06-30.

What is the historical spending trend for the F-35 Joint Strike Fighter program?

The F-35 Joint Strike Fighter program has a long and complex spending history, with total program costs projected to exceed $1.7 trillion over its lifecycle, encompassing development, procurement, and sustainment. Annual spending fluctuates based on production rates, modification requirements, and sustainment activities. For instance, in fiscal year 2023, the Department of Defense requested billions for F-35 procurement and sustainment. Historical data shows a consistent, substantial allocation of defense budgets towards this program, reflecting its strategic importance and the ongoing need for modernization of air fleets across multiple services and allied nations. Analyzing year-over-year spending reveals trends in unit costs, production ramp-up, and the increasing burden of operational and sustainment costs.

How does the cost per unit of the F-35 compare to other modern fighter jets?

The cost per unit of the F-35 has been a subject of significant debate and analysis. While initial procurement costs were very high, they have decreased over time due to economies of scale and production efficiencies. However, the F-35's 'flyaway cost' (the cost to build the aircraft itself) is still substantial, often ranging from $80 million to over $100 million depending on the variant (A, B, or C) and the specific contract lot. When compared to other modern fighter jets, such as the F-15EX or F/A-18 Super Hornet, the F-35's procurement cost can be competitive or even lower in some instances, especially when considering its advanced stealth capabilities and sensor fusion. However, the total ownership cost, including sustainment, maintenance, and operational expenses, is often cited as being higher than many legacy aircraft, making direct cost comparisons complex and dependent on the metrics used.

What are the primary risks associated with the F-35 program's long-term sustainment?

The primary risks associated with the F-35 program's long-term sustainment are multifaceted. Firstly, the complexity of the aircraft's systems, including its stealth coatings and advanced avionics, requires specialized maintenance procedures and highly trained personnel, leading to high maintenance costs. Secondly, the reliance on a global, interconnected logistics and supply chain system, managed by the Autonomic Logistics Information System (ALIS) and its successor, the Operational Data Integrated Network (ODIN), presents risks related to software reliability, data security, and system availability. Failures or inefficiencies in these systems can ground aircraft and disrupt operations. Thirdly, the sheer number of F-35s planned for production and deployment worldwide means that sustainment costs will represent a significant portion of the program's total lifecycle expenditure, potentially straining defense budgets if not managed effectively. Finally, the potential for unforeseen technological obsolescence or the emergence of more capable adversary threats could necessitate costly upgrades or modifications throughout the aircraft's extended service life.

How has the F-35 program's performance evolved since its inception?

The F-35 program has undergone significant evolution in performance since its inception, marked by initial developmental challenges and subsequent improvements. Early phases were plagued by delays, cost overruns, and technical issues, leading to a critical review and restructuring of the program. Over time, the program has achieved key milestones, including the declaration of initial operational capability (IOC) by the U.S. Air Force, Navy, and Marine Corps. Performance improvements have focused on enhancing reliability, reducing maintenance requirements, and integrating new software capabilities through continuous upgrades (e.g., Block 4). The aircraft's advanced sensor fusion, stealth characteristics, and network-centric warfare capabilities have been progressively realized, enabling it to perform complex missions. However, challenges remain, particularly concerning the full realization of its intended performance envelope in all variants and the management of its complex sustainment system.

What is the track record of Lockheed Martin in managing large-scale defense programs like the F-35?

Lockheed Martin has a long and extensive track record in managing large-scale, complex defense programs, including the F-35 Joint Strike Fighter, the C-130 Hercules transport aircraft, and various missile systems. The company is a major prime contractor for the U.S. Department of Defense and numerous international allies. While the F-35 program itself has faced significant challenges related to cost, schedule, and technical development, Lockheed Martin has demonstrated the capability to scale production and deliver advanced platforms. Their experience encompasses systems integration, advanced manufacturing, and global supply chain management. However, like many mega-projects in the defense sector, the F-35's history includes periods of intense scrutiny regarding cost control and schedule adherence, suggesting that while they possess the technical and managerial capacity, the inherent complexities of such programs often lead to challenges that require continuous oversight and management adjustments.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

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: $108,911,538

Exercised Options: $108,911,538

Current Obligation: $97,286,356

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline