DoD's $13.7M aircraft parts contract awarded to Lockheed Martin raises questions on competition and value

Contract Overview

Contract Amount: $13,753,844 ($13.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2019-08-20

End Date: 2026-01-31

Contract Duration: 2,356 days

Daily Burn Rate: $5.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: PRODUCIBILITY

Place of Performance

Location: STRATFORD, GREATER BRIDGEPORT County, CONNECTICUT, 06615

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $13.8 million to LOCKHEED MARTIN CORPORATION for work described as: PRODUCIBILITY Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant duration of over 2300 days suggests a long-term need for these aircraft parts. 3. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns. 4. Lack of competition raises concerns about whether the government is receiving the best possible value. 5. The specific part number (336413) is crucial for understanding its role in aircraft maintenance. 6. The award to a single, large defense contractor may limit opportunities for smaller suppliers.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the sole-source award and lack of publicly available pricing details for specific aircraft parts. The Cost Plus Fixed Fee structure, while common for complex procurements, carries inherent risks of cost escalation. Without competitive bids, it's difficult to ascertain if the fixed fee and overall cost represent a fair market price or if there's potential for savings through a more competitive process. The $13.7 million total value over its extended period needs to be assessed against the criticality and volume of the parts procured.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a 'NOT COMPETED' method, indicating a sole-source procurement. This means that only one offer was solicited and considered. While sole-source awards are sometimes necessary due to unique capabilities or urgent needs, they bypass the competitive process that typically drives down prices and encourages innovation. The absence of multiple bidders means there was no direct comparison of offerings or pricing, potentially leading to a higher cost for the government.

Taxpayer Impact: Taxpayers may be paying a premium for these aircraft parts due to the lack of competition. Without the pressure of competing bids, the contractor has less incentive to offer the lowest possible price, and the government has fewer options to negotiate favorable terms.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially the broader Department of Defense, ensuring the continued operational readiness of specific aircraft. The contract delivers essential aircraft parts, crucial for maintenance, repair, and operational sustainment of military aviation assets. The geographic impact is primarily linked to the operational bases and maintenance facilities where these aircraft are deployed and serviced. Workforce implications include the specialized manufacturing and logistics jobs supported at Lockheed Martin and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Cost Plus Fixed Fee contract type can incentivize cost overruns if not closely managed.
Lack of transparency in pricing for specific parts makes independent value assessment difficult.
Long contract duration may indicate potential for scope creep or evolving requirements without competitive re-evaluation.

Positive Signals

Award to a major defense contractor like Lockheed Martin suggests access to specialized manufacturing capabilities.
The contract ensures the availability of critical aircraft parts, supporting national defense readiness.
The fixed fee component provides some cost certainty, provided the base cost is well-managed.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for defense aerospace components is characterized by high barriers to entry, significant R&D investment, and long-standing relationships between prime contractors and the government. Spending in this area is substantial, driven by the need to maintain aging fleets and develop next-generation aircraft. Comparable spending benchmarks would typically involve analyzing other sole-source or competitively awarded contracts for similar aircraft components or systems.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The award to Lockheed Martin, a large prime contractor, suggests that the work is likely performed by the prime or its large subcontractors. There is no explicit indication of subcontracting opportunities for small businesses within the provided data, which could be a missed opportunity to foster small business participation in the defense supply chain.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy's contracting officers and program managers. The Cost Plus Fixed Fee structure necessitates rigorous financial oversight to ensure costs are reasonable and allocable. Transparency is limited due to the sole-source nature and the proprietary nature of specific part costs. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Aircraft Maintenance and Repair Services
Aerospace Component Manufacturing
Defense Logistics Support
Military Aircraft Procurement
Cost-Plus Contracting Vehicles

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competitive bidding
Limited public pricing data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $13.8 million to LOCKHEED MARTIN CORPORATION. PRODUCIBILITY

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 $13.8 million.

What is the period of performance?

Start: 2019-08-20. End: 2026-01-31.

What is the specific type of aircraft or system these parts are intended for, and what is their criticality?

The provided data indicates the contract is for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' under NAICS code 336413, with the part number 336413. However, the specific aircraft or system is not detailed. The criticality of these parts is inferred from the substantial value ($13.7M) and long duration (2356 days) of the contract, suggesting they are essential for the operational readiness and sustainment of military aircraft. Without knowing the specific aircraft, it's difficult to assess the precise impact of potential supply chain disruptions or the true value proposition of the procured components.

Can the $13.7 million total value be broken down into annual spending or cost per part?

The provided data aggregates the total contract value to $13,753,843.57 over a period of 2356 days (approximately 6.45 years). This equates to an average annual spending of roughly $2.13 million. However, a precise breakdown into annual spending or cost per part is not available. The contract type is Cost Plus Fixed Fee (CPFF), meaning the government reimburses the contractor's allowable costs plus a fixed fee. This structure makes it challenging to determine the exact cost per part without detailed cost accounting data, which is typically not publicly disclosed for sole-source awards.

What are the risks associated with a Cost Plus Fixed Fee (CPFF) contract for aircraft parts?

The primary risk with a CPFF contract is the potential for cost overruns. While the contractor's profit (the fixed fee) is predetermined, the government bears the risk of reimbursing all allowable costs incurred. If the contractor's costs exceed initial estimates, the total contract value can increase significantly beyond the originally anticipated level. This necessitates robust government oversight to ensure costs are reasonable, allocable, and allowable. For aircraft parts, unforeseen manufacturing challenges, material price fluctuations, or design modifications could lead to increased costs, impacting the overall value for the taxpayer.

What is Lockheed Martin's track record with similar sole-source contracts for aircraft parts?

Lockheed Martin is a major defense contractor with extensive experience in sole-source and competitively awarded contracts for aircraft parts and systems across various platforms. Their track record typically involves delivering complex components under demanding specifications. However, specific details on their performance for similar sole-source contracts, including any past issues with cost control or delivery timelines for aircraft parts, are not readily available in the public domain without deeper contract-specific analysis or historical performance reviews. Generally, large contractors are expected to meet stringent quality and delivery standards.

How does this contract's value compare to other procurements for similar aircraft components?

Direct comparison of this $13.7 million contract value for 'Other Aircraft Parts' to similar procurements is difficult without knowing the specific part number's function and the aircraft platform. The sole-source nature of this award further complicates benchmarking, as competitive bids typically establish a clearer market price. However, given the long duration and the nature of defense contracting, $13.7 million over nearly seven years for critical aircraft components is not unusual, though it underscores the importance of ensuring competitive pricing whenever possible to maximize value for taxpayer dollars.

What are the implications of this contract being awarded in Connecticut?

The contract indicates the awardee is located in Connecticut ('sn': 'CONNECTICUT'). This suggests that the manufacturing, assembly, or distribution of these aircraft parts will likely occur within or be managed from Connecticut. This has economic implications for the state, potentially supporting jobs in the aerospace manufacturing sector, contributing to the local economy through wages and supplier contracts. For the Department of the Navy, it signifies a reliance on a specific geographic base for a critical component of their aviation sustainment.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment 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: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 1801 STATE RT 17 C, OWEGO, NY, 13827

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: $14,399,008

Exercised Options: $14,399,008

Current Obligation: $13,753,844

Actual Outlays: $483,399

Subaward Activity

Number of Subawards: 10

Total Subaward Amount: $390,253

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001919G0029

IDV Type: BOA

Timeline