DoD's $312M aircraft manufacturing contract awarded to Lockheed Martin shows limited competition and fair value

Contract Overview

Contract Amount: $312,762,665 ($312.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2017-03-10

End Date: 2019-12-31

Contract Duration: 1,026 days

Daily Burn Rate: $304.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::OT::IGF

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $312.8 million to LOCKHEED MARTIN CORPORATION for work described as: IGF::OT::IGF Key points: 1. The contract's value of over $312 million represents a significant investment in aircraft manufacturing capabilities. 2. Awarded to a single, large defense contractor, this suggests a concentrated market for these specific aircraft. 3. The firm-fixed-price contract type indicates a defined cost structure, potentially mitigating cost overrun risks. 4. The duration of the contract (over 1000 days) points to a long-term need for these aircraft. 5. The absence of a small business set-aside raises questions about opportunities for smaller players in this segment. 6. Performance context is limited without specific delivery schedules or mission objectives.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific details on the aircraft type and its capabilities. However, given the sole-source nature and the contractor's established position, the price is likely within an expected range for specialized defense manufacturing. Further analysis would require comparing unit costs to similar platforms or previous procurements by the Department of Defense.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Lockheed Martin Corporation, was considered. This approach is typically used when a unique capability or proprietary technology is required, or in situations where only one source can fulfill the requirement. The lack of competition means there was no opportunity for price discovery through a bidding process.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This necessitates robust oversight to ensure fair pricing.

Public Impact

The primary beneficiaries are the Department of Defense, which receives critical aircraft manufacturing services. The contract supports the production and delivery of specialized aircraft essential for national security operations. The geographic impact is primarily centered around Lockheed Martin's manufacturing facilities, likely in Texas given the 'TX' code. Workforce implications include job creation and retention within the aerospace and defense sector at the contractor's sites.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential innovation from other firms.
Lack of small business participation may exclude specialized smaller companies from contributing.
Long contract duration without clear performance metrics could obscure potential inefficiencies.

Positive Signals

Award to a prime contractor with a proven track record in defense manufacturing.
Firm-fixed-price contract provides cost certainty for the government.
Contract supports critical national defense capabilities.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product development cycles. This contract falls within the aircraft manufacturing sub-sector, which is dominated by a few large, established players like Lockheed Martin. Spending in this area is driven by defense modernization needs and geopolitical factors. Comparable spending benchmarks would involve analyzing other large-scale aircraft procurement contracts within the DoD.

Small Business Impact

This contract does not appear to have a small business set-aside, as indicated by 'sb: false'. This means that opportunities for small businesses to directly participate as prime contractors were likely limited. While Lockheed Martin may engage small businesses as subcontractors, the primary award mechanism did not prioritize small business inclusion, potentially limiting their direct access to this significant federal spending.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. The firm-fixed-price structure provides some level of financial oversight by fixing the cost. Transparency is generally maintained through contract award databases, but detailed performance and cost breakdowns may be less accessible due to the sole-source nature and defense sensitivities. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Procurement, Air Force
Combat Aircraft Manufacturing
Defense Production Act Investments
Naval Aviation Programs

Risk Flags

Sole Source Award
Lack of Competition
Potential for Overpricing
Limited Small Business Participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $312.8 million to LOCKHEED MARTIN CORPORATION. IGF::OT::IGF

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 $312.8 million.

What is the period of performance?

Start: 2017-03-10. End: 2019-12-31.

What is Lockheed Martin's track record with similar sole-source aircraft manufacturing contracts awarded by the Department of Defense?

Lockheed Martin Corporation has a long and extensive history of securing sole-source contracts with the Department of Defense for aircraft manufacturing, particularly for advanced platforms like fighter jets and specialized reconnaissance aircraft. Their track record often involves complex, high-value procurements where they possess unique technological capabilities or are the incumbent provider. While these awards are critical for national security, they frequently draw scrutiny regarding pricing and competition. Analyzing past sole-source awards to Lockheed Martin for similar aircraft types would reveal patterns in contract value, duration, and justification for the lack of competition, providing context for the current $312 million award.

How does the $312 million contract value compare to other aircraft manufacturing contracts for similar platforms?

Direct comparison of the $312 million contract value requires knowing the specific aircraft type and its capabilities. However, in the realm of defense aircraft manufacturing, this figure is substantial but not unprecedented for major platforms or significant production runs. For instance, contracts for advanced fighter jets or large transport aircraft can easily reach hundreds of millions or even billions of dollars. If this contract is for a niche or specialized aircraft, the value might be considered high relative to its scale. Conversely, if it's for a widely used platform or a large quantity, it could represent fair market value. Benchmarking against publicly available data for similar platforms procured by the DoD or allied nations would be necessary for a precise assessment.

What are the primary risks associated with a sole-source award of this magnitude in aircraft manufacturing?

The primary risks associated with a sole-source award of this magnitude in aircraft manufacturing include potential overpricing due to the lack of competitive bidding, reduced incentive for the contractor to innovate or improve efficiency, and a lack of market validation for the chosen solution. Taxpayers may end up paying more than they would in a competitive environment. Furthermore, reliance on a single source can create supply chain vulnerabilities and limit the government's flexibility if performance issues arise. There's also a risk that the government may not be getting the best available technology or value if alternative solutions were not explored.

What does the 'Aircraft Manufacturing' (NAICS 336411) sector typically involve in terms of government contracts?

The 'Aircraft Manufacturing' sector (NAICS 336411) encompasses establishments primarily engaged in manufacturing aircraft, aircraft parts, and auxiliary equipment. Government contracts in this sector are predominantly awarded by the Department of Defense for military aircraft, including fighters, bombers, transport planes, helicopters, and drones, as well as their associated components and maintenance. These contracts are often characterized by high dollar values, long lead times, complex technological requirements, and significant research and development components. Due to the specialized nature and national security implications, many contracts in this sub-sector are awarded on a sole-source or limited-competition basis to established prime contractors with proven capabilities.

What are the historical spending patterns for aircraft manufacturing contracts awarded by the Department of the Navy?

Historical spending patterns for aircraft manufacturing contracts by the Department of the Navy show a consistent and substantial investment in maintaining and modernizing its air fleet. This includes procurements for carrier-based aircraft, maritime patrol aircraft, helicopters, and unmanned aerial systems. Spending is often concentrated among a few major defense contractors, with Lockheed Martin, Boeing, and Northrop Grumman being significant recipients. Contracts can range from research and development to full-rate production and sustainment. The Navy's spending is influenced by strategic priorities, technological advancements, and budget allocations, often resulting in large, multi-year procurements and sole-source awards for specialized platforms.

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 COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001914R0110

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $322,504,375

Exercised Options: $322,504,375

Current Obligation: $312,762,665

Actual Outlays: $-20,880,196

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $2,320,239

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001914G0020

IDV Type: BOA

Timeline