DoD Awards $35.1 Billion LRIP Lot 12 Contract to Lockheed Martin for Aircraft Manufacturing

Contract Overview

Contract Amount: $35,135,514,910 ($35.1B)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2017-11-17

End Date: 2031-03-31

Contract Duration: 4,882 days

Daily Burn Rate: $7.2M/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: LRIP LOT 12 ADVANCE ACQUISITION CONTRACT

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $35.14 billion to LOCKHEED MARTIN CORPORATION for work described as: LRIP LOT 12 ADVANCE ACQUISITION CONTRACT Key points: 1. Significant investment in aircraft manufacturing, with a substantial portion allocated to Lockheed Martin. 2. The contract's value suggests a critical role in national defense capabilities. 3. Lack of competition raises concerns about potential price inflation and limited innovation. 4. The long duration indicates a sustained commitment to this specific aircraft program.

Value Assessment

Rating: questionable

The contract value of $35.1 billion over 13 years is substantial. Without competitive bidding, it's difficult to assess if this price is optimal compared to potential alternatives or market rates for similar advanced aircraft programs.

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 limits price discovery and may result in higher costs for taxpayers compared to a competitive process.

Taxpayer Impact: The absence of competition for such a large contract means taxpayers may be paying a premium, as there was no pressure from rival bids to drive down costs.

Public Impact

Impacts national defense readiness and strategic capabilities. Supports a major defense contractor and its supply chain. Long-term commitment to a specific aircraft platform, potentially influencing future military modernization. Raises questions about the efficiency of defense spending and the justification for sole-source awards.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and price discovery.
High contract value over an extended period.
Lack of transparency in the justification for not competing.
Potential for cost overruns in long-term fixed-price incentive contracts.

Positive Signals

Ensures continued production of critical aircraft.
Provides long-term stability for a key defense supplier.
Supports advanced manufacturing capabilities within the US.

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, a critical component of the defense industrial base. Spending in this sector is often characterized by high R&D costs, long production cycles, and significant government oversight due to national security implications.

Small Business Impact

The data indicates this is a large prime contract awarded to Lockheed Martin Corporation. There is no direct information on subcontracting opportunities for small businesses within this specific award, but large defense contracts often include provisions for small business participation.

Oversight & Accountability

The Department of Defense is responsible for oversight of this contract. Given the sole-source nature and significant value, robust oversight mechanisms are crucial to ensure performance, manage costs, and verify the necessity of the award.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Lack of competition may lead to inflated costs.
Long contract duration increases exposure to cost escalation and technological obsolescence.
Sole-source award raises concerns about accountability and value for taxpayer money.
Potential for contractor lock-in, limiting future flexibility.
Insufficient information provided on small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.14 billion to LOCKHEED MARTIN CORPORATION. LRIP LOT 12 ADVANCE 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 (Department of the Navy).

What is the total obligated amount?

The obligated amount is $35.14 billion.

What is the period of performance?

Start: 2017-11-17. End: 2031-03-31.

What was the specific justification provided by the Department of the Navy for awarding this contract on a sole-source basis, and were alternative acquisition strategies considered?

The justification for a sole-source award typically centers on unique capabilities, proprietary technology, or the lack of viable alternatives that meet specific military requirements. The Department of the Navy would need to provide documentation detailing why Lockheed Martin was the only source capable of fulfilling the LRIP Lot 12 requirements for this aircraft program, and evidence that competitive options were thoroughly explored and deemed unsuitable.

How does the fixed-price incentive (FPI) structure of this contract incentivize Lockheed Martin to control costs and meet performance targets, especially given the lack of upfront competition?

A Fixed Price Incentive (FPI) contract establishes a target cost, target profit, and a price ceiling. If the final cost is below the target, both the contractor and the government share in the savings. Conversely, if costs exceed the target, the contractor bears a portion of the overrun up to the ceiling. This structure aims to motivate the contractor to manage costs efficiently while meeting agreed-upon performance objectives, even in a sole-source scenario.

What are the long-term implications of this substantial, non-competed award on the overall defense budget and the potential for future innovation in aircraft manufacturing?

A large, sole-source award like this can strain the defense budget by potentially incurring higher costs than a competitive process. It may also reduce the incentive for Lockheed Martin to innovate aggressively if they are the sole provider for an extended period. Furthermore, it could discourage new entrants or smaller firms from developing competing technologies, potentially limiting long-term innovation and market dynamism in the aircraft manufacturing sector.

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

Solicitation ID: N0001917R0001

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: $36,707,159,003

Exercised Options: $36,688,544,467

Current Obligation: $35,135,514,910

Actual Outlays: $933,036,846

Subaward Activity

Number of Subawards: 12482

Total Subaward Amount: $18,885,674,259

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline