DoD awards $342M Lockheed Martin contract for flight and lab support, raising questions on competition

Contract Overview

Contract Amount: $342,249,730 ($342.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2018-11-15

End Date: 2020-07-13

Contract Duration: 606 days

Daily Burn Rate: $564.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: FLIGHT TEST SUPPORT AND LAB SUPPORT

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $342.2 million to LOCKHEED MARTIN CORPORATION for work described as: FLIGHT TEST SUPPORT AND LAB SUPPORT Key points: 1. Contract awarded on a non-competitive basis, limiting price discovery and potentially increasing costs. 2. Significant contract value suggests a critical need for specialized flight and lab support services. 3. The use of a Cost Plus Incentive Fee (CPIF) contract type may incentivize cost control but requires careful oversight. 4. The contractor, Lockheed Martin, is a major defense industrial base participant, indicating established capabilities. 5. The contract duration of 606 days (approx. 20 months) suggests a medium-term requirement. 6. The absence of small business set-asides indicates the scope may not be conducive to smaller contractors.

Value Assessment

Rating: questionable

The contract value of $342.2 million for flight and lab support is substantial. Without competitive bidding, it is difficult to benchmark the value for money. The CPIF contract type, while offering incentives for cost savings, can also lead to cost overruns if not managed stringently. Comparing this to similar sole-source contracts for specialized aerospace support would be necessary to assess pricing fairness. The lack of competition is a primary driver for the 'questionable' rating.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using the 'not competed' method, indicating a sole-source procurement. This typically occurs when only one responsible source is available or when the agency determines that full and open competition is not feasible or not in the public interest. The lack of competition means there were no other bidders to drive down prices through a bidding process, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without multiple bids, the government lacks assurance that the price reflects the lowest possible cost for the required services.

Public Impact

The primary beneficiaries are the Department of Defense and its personnel who rely on advanced flight testing and laboratory analysis capabilities. Services delivered include critical flight test support and laboratory support, essential for aircraft development, modification, and maintenance. The contract is geographically focused in Texas (ST: TX, SN: TEXAS), suggesting a concentration of defense testing and development activities in that region. The contract supports a highly skilled workforce, likely including engineers, technicians, and test pilots, within the aerospace and defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Cost Plus Incentive Fee (CPIF) contract type requires robust oversight to prevent cost overruns.
Lack of small business participation may limit opportunities for smaller, innovative firms in this specialized sector.

Positive Signals

Contract awarded to a major defense contractor with established expertise in flight and lab support.
CPIF contract structure includes incentives for cost efficiency, potentially benefiting the government if managed well.
The contract addresses critical defense needs for advanced testing and analysis capabilities.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex technological requirements, and significant government spending. This contract falls within the aircraft manufacturing and support sub-sector, which is dominated by large, established prime contractors like Lockheed Martin. The market size for such specialized support services is substantial, driven by ongoing defense modernization and sustainment programs. Benchmarking this contract would involve comparing its pricing and terms to other sole-source or competitively awarded contracts for similar flight test and laboratory support within the DoD.

Small Business Impact

This contract was not competed and did not include small business set-asides. The nature of specialized flight test and lab support, often requiring extensive infrastructure, security clearances, and proprietary knowledge, typically favors large, established defense contractors. The absence of subcontracting opportunities for small businesses is implied by the sole-source nature and the contractor's size. This limits the direct impact on the small business ecosystem for this specific award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA), responsible for contract administration and ensuring contractor performance. The CPIF contract type necessitates close monitoring of costs and performance against established targets to ensure incentive clauses are effective and that the government receives value. Transparency is limited due to the sole-source nature, but contract performance reports and financial audits would be key accountability measures. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Aircraft Manufacturing
Aerospace Research and Development
Defense Logistics Support
Flight Simulation and Training
Advanced Materials Testing

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns (CPIF)
Limited small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $342.2 million to LOCKHEED MARTIN CORPORATION. FLIGHT TEST SUPPORT AND LAB SUPPORT

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $342.2 million.

What is the period of performance?

Start: 2018-11-15. End: 2020-07-13.

What is Lockheed Martin's track record with similar sole-source DoD contracts for flight and lab support?

Lockheed Martin Corporation has a long history of securing large sole-source contracts with the Department of Defense, particularly in areas requiring specialized technical expertise and integrated systems. Their track record typically involves complex programs related to aircraft development, sustainment, and advanced technology integration. For flight test and lab support, they often leverage their extensive internal capabilities and existing infrastructure. While specific data on past sole-source contracts for identical services is proprietary, their overall performance history with the DoD is extensive, marked by both successes in delivering complex capabilities and scrutiny regarding cost and schedule adherence on large programs. Analyzing past performance metrics, such as on-time delivery, budget adherence, and quality ratings on comparable contracts, would provide a clearer picture of their reliability in this domain.

How does the Cost Plus Incentive Fee (CPIF) structure compare to other contract types for this kind of service?

The Cost Plus Incentive Fee (CPIF) contract type is designed to share the risks and rewards of cost control between the government and the contractor. In a CPIF contract, the final profit is adjusted based on the contractor's performance against target cost and performance objectives. If the contractor achieves lower costs or better performance than targeted, both parties share in the savings or benefits. Conversely, if costs exceed targets, the contractor's profit is reduced. This contrasts with Fixed-Price contracts, where the contractor bears most of the cost risk, or Cost Plus Fixed Fee (CPFF) contracts, where the fee is fixed regardless of cost efficiency. For specialized, complex services like flight testing where cost estimation can be challenging, CPIF can incentivize efficiency. However, it requires robust government oversight to ensure targets are realistic and that the contractor is genuinely motivated to control costs rather than manipulate performance metrics.

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

The primary risks associated with a sole-source award of this magnitude ($342.2 million) are significant. Firstly, the lack of competition means the government likely pays a higher price than it would in a competitive environment, as there is no market pressure to drive down costs. Secondly, without competing proposals, the government may not have access to the full range of innovative solutions or the best possible technical approaches available in the market. Thirdly, a sole-source award can create a dependency on a single contractor, potentially reducing leverage for future negotiations and increasing long-term costs. Finally, it raises concerns about the justification for sole-sourcing; if competition was feasible, the government missed an opportunity to foster a more dynamic defense industrial base and potentially identify emerging capabilities from smaller firms.

What is the historical spending pattern for flight test and lab support within the Department of Defense?

Historical spending patterns for flight test and lab support within the Department of Defense are substantial and generally trend upwards, reflecting the continuous need for advanced aerospace capabilities, modernization programs, and platform sustainment. The DoD consistently allocates significant portions of its budget to research, development, testing, and evaluation (RDT&E), which directly encompasses these services. Spending is often concentrated with major defense contractors who possess the necessary infrastructure, expertise, and security clearances. While specific figures fluctuate year-to-year based on program priorities and budget cycles, the overall demand for these specialized support functions remains a constant. Analyzing historical data reveals a pattern of long-term contracts, often awarded non-competitively or with limited competition, due to the specialized nature of the work and the consolidation within the defense industry.

How does the geographic concentration in Texas impact the broader defense industrial base?

The geographic concentration of this contract's performance in Texas highlights the state's significant role as a hub for aerospace and defense activities. Texas hosts numerous military installations, testing ranges, and private sector aerospace companies, creating a robust ecosystem for specialized support services. This concentration can foster collaboration and innovation among local firms and educational institutions, potentially leading to workforce development and technological advancements. However, it also presents risks. Over-reliance on a single geographic region can make the defense industrial base vulnerable to localized disruptions, such as natural disasters or economic downturns. Furthermore, it might limit opportunities for contractors and talent in other regions, potentially hindering broader national industrial capacity and resilience.

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

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 1 LOCKHEED BLVD BLDG 10, 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: $394,480,840

Exercised Options: $381,711,548

Current Obligation: $342,249,730

Actual Outlays: $8,820,983

Subaward Activity

Number of Subawards: 243

Total Subaward Amount: $63,458,426

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline