DoD awards $70.8M for aircraft components, with limited competition and no small business set-aside

Contract Overview

Contract Amount: $70,763,197 ($70.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2018-09-25

End Date: 2019-02-28

Contract Duration: 156 days

Daily Burn Rate: $453.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: XILINX (#9415) AND INTEL-ALTERA (#15780) DMS PARTS BUY

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $70.8 million to LOCKHEED MARTIN CORPORATION for work described as: XILINX (#9415) AND INTEL-ALTERA (#15780) DMS PARTS BUY Key points: 1. Contract awarded for critical aircraft components, highlighting the need for specialized manufacturing capabilities. 2. The fixed-price contract structure aims to control costs, but the lack of competition raises concerns about optimal pricing. 3. A short performance period suggests a focus on immediate supply chain needs rather than long-term strategic sourcing. 4. The award to a large, established defense contractor indicates a reliance on existing relationships and capabilities. 5. Geographic concentration in Texas for delivery points to a specific regional industrial base supporting this contract. 6. The absence of small business participation limits opportunities for smaller firms in this high-value defense sector.

Value Assessment

Rating: fair

The contract value of $70.8 million for 156 days of performance appears high on a daily basis. Benchmarking against similar sole-source or limited-competition awards for specialized aircraft components is difficult without more detailed specifications. The firm-fixed-price structure is generally favorable for cost control, but the lack of competitive bidding prevents a robust assessment of value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that only one vendor was deemed capable of meeting the specific requirements. This approach is often used for highly specialized or proprietary components where alternatives are not readily available. The limited competition means that the government did not benefit from a bidding process that could drive down prices through market forces.

Taxpayer Impact: Sole-source awards can lead to higher prices for taxpayers as the contractor faces less pressure to offer competitive rates. This limits the government's ability to secure the best possible value.

Public Impact

The primary beneficiaries are the Department of Defense and its aircraft maintenance and operational units, ensuring the availability of critical components. Services delivered include the supply of specialized DMS (Data Management System) parts essential for aircraft functionality. The geographic impact is concentrated in Texas, where the components are manufactured or delivered. Workforce implications are likely within the specialized manufacturing sector, supporting skilled labor in aircraft component production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in inflated pricing.
Sole-source award limits transparency and potential cost savings.
Short performance period could indicate urgent need, potentially leading to rushed processes or higher costs.
No small business participation means missed opportunities for economic inclusion and diverse supplier bases.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to a known entity like Lockheed Martin suggests established quality and reliability.
Specific part numbers (XILINX, INTEL-ALTERA) indicate a focus on precise, critical components.

Sector Analysis

This contract falls within the broader aerospace and defense manufacturing sector, specifically focusing on aircraft components. The market for specialized electronic components like DMS parts is often characterized by high barriers to entry due to technical expertise and stringent quality requirements. Spending in this area is critical for maintaining military readiness. Comparable spending benchmarks are difficult to establish without knowing the exact specifications and quantities of the DMS parts, but significant investments are typical for advanced military aircraft sustainment.

Small Business Impact

This contract did not include a small business set-aside, nor is there any indication of subcontracting opportunities for small businesses. The award to a large prime contractor suggests that the work is likely being performed in-house or with other large-subcontractors. This represents a missed opportunity to engage the small business industrial base in defense contracting.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and procurement regulations. Accountability measures are inherent in the firm-fixed-price structure, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency is limited due to the sole-source nature of the award. The Inspector General's office within the DoD would have jurisdiction for audits and investigations if any irregularities were suspected.

Related Government Programs

Aircraft Component Procurement
Defense Electronics Manufacturing
Specialized Parts Supply Chain
Lockheed Martin Contracts
Department of the Navy Acquisitions

Risk Flags

Sole-source award
Lack of competition
No small business participation
High value for short duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $70.8 million to LOCKHEED MARTIN CORPORATION. XILINX (#9415) AND INTEL-ALTERA (#15780) DMS PARTS BUY

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 $70.8 million.

What is the period of performance?

Start: 2018-09-25. End: 2019-02-28.

What is the specific nature of the DMS parts and why are they critical for aircraft?

DMS, or Data Management System, parts are crucial electronic components that handle the storage, retrieval, and processing of data within an aircraft's complex systems. These systems are vital for navigation, communication, flight control, and mission execution. The criticality stems from the fact that any failure in these components can lead to mission failure, safety hazards, or significant operational disruptions. The specific parts from XILINX and Intel-Altera are likely high-performance integrated circuits or modules designed for the demanding environmental and operational conditions of military aviation, requiring specialized manufacturing processes and rigorous quality control.

What are the risks associated with a sole-source award for critical aircraft components?

Sole-source awards for critical aircraft components carry several risks. Primarily, the lack of competition can lead to higher costs for the government, as the contractor faces no market pressure to offer the lowest possible price. This can result in taxpayers paying a premium. Secondly, it can reduce transparency in the procurement process, making it harder to verify the fairness of the price. There's also a risk of vendor lock-in, where the government becomes overly reliant on a single supplier, potentially limiting future flexibility and innovation. Finally, it can stifle competition within the industry, discouraging other potential suppliers from developing capabilities if they see no path to market.

How does the firm-fixed-price contract type mitigate risks for the government in this scenario?

The firm-fixed-price (FFP) contract type is generally advantageous for the government when dealing with well-defined requirements, as is the case with specific aircraft components. Under an FFP contract, the contractor assumes most of the risk for cost overruns. This means the government knows the total price upfront and is protected from unexpected increases in the contractor's expenses. This provides budget certainty and simplifies financial management. However, the benefit of FFP is maximized when there is robust competition, as the initial price offered is more likely to be competitive. In a sole-source situation, while the price is fixed, it may not necessarily be the best possible price achievable through competition.

What is the significance of the short performance period (156 days)?

A short performance period of 156 days (approximately five months) for a contract valued at $70.8 million suggests an urgent need for these specific DMS parts. This could be due to several factors: an unexpected surge in demand, a depletion of existing inventory, a critical maintenance requirement for a specific fleet of aircraft, or a gap in the supply chain that needs immediate filling. Such short timelines can sometimes lead to premium pricing as contractors may need to expedite production or sourcing. It also implies that this is likely a short-term solution or a delivery order against a potentially larger, longer-term framework that was not fully detailed in this award notice.

What does the absence of small business participation imply for the defense industrial base?

The absence of small business participation in this $70.8 million contract signifies a missed opportunity to leverage the agility and innovation often found in smaller enterprises within the defense industrial base. Large, sole-source awards to prime contractors can sometimes create barriers for small businesses seeking to enter or expand their role in the defense supply chain. It suggests that the specific technical requirements or the scale of this particular procurement were likely beyond the capabilities or capacity of most small businesses, or that the prime contractor has established relationships that preclude subcontracting to smaller firms. This can contribute to market concentration and limit the diversity of the supplier ecosystem.

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: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

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: $70,763,197

Exercised Options: $70,763,197

Current Obligation: $70,763,197

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001914G0020

IDV Type: BOA

Timeline