DoD awards $325.8M F-35 MOD/Retrofit to Lockheed Martin, raising questions on competition and value
Contract Overview
Contract Amount: $325,861,729 ($325.9M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2019-02-25
End Date: 2027-12-31
Contract Duration: 3,231 days
Daily Burn Rate: $100.9K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: PROVIDE MOD AND RETROFIT SUPPORT FOR F-35 PROGRAM FOR CY19
Place of Performance
Location: FORT WORTH, TARRANT County, TEXAS, 76108
State: Texas Government Spending
Plain-Language Summary
Department of Defense obligated $325.9 million to LOCKHEED MARTIN CORPORATION for work described as: PROVIDE MOD AND RETROFIT SUPPORT FOR F-35 PROGRAM FOR CY19 Key points: 1. Significant contract value for sustainment activities. 2. Sole incumbent contractor, Lockheed Martin, dominates F-35 sustainment. 3. Potential for cost overruns with Cost Plus Fixed Fee contract type. 4. Aircraft Manufacturing sector sees substantial government investment.
Value Assessment
Rating: questionable
The Cost Plus Fixed Fee structure, while common for complex projects, can lead to higher costs if not tightly managed. Benchmarking against similar sustainment contracts for major defense platforms is difficult due to the unique nature of the F-35 program.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, relying on a sole-source award to Lockheed Martin. This lack of competition limits price discovery and potentially increases costs for taxpayers.
Taxpayer Impact: The absence of competition for a contract of this magnitude suggests taxpayers may be paying a premium for sustainment services.
Public Impact
Ensures continued operational readiness of the F-35 fleet. Supports high-tech jobs within the aerospace and defense industry. Potential for long-term reliance on a single provider for critical aircraft maintenance.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Cost-plus contract type
- Long-term sustainment needs
Positive Signals
- Supports critical defense asset
- Incumbent expertise
Sector Analysis
This contract falls within the Aircraft Manufacturing sector, a key area for national defense spending. Benchmarks for sustainment contracts of this scale are often proprietary or difficult to compare due to the specialized nature of advanced fighter jets.
Small Business Impact
This contract does not appear to have specific provisions for small business participation. Large sole-source awards often bypass opportunities for small businesses to compete for prime contract roles.
Oversight & Accountability
Oversight will be critical to ensure Lockheed Martin adheres to the fixed fee and manages costs effectively under the Cost Plus Fixed Fee structure. The Department of the Navy is responsible for administering this contract.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Sole-source award
- Cost-plus contract type
- Lack of transparency in pricing
- Potential for contractor lock-in
- Long contract duration
Tags
aircraft-manufacturing, department-of-defense, tx, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $325.9 million to LOCKHEED MARTIN CORPORATION. PROVIDE MOD AND RETROFIT SUPPORT FOR F-35 PROGRAM FOR CY19
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 $325.9 million.
What is the period of performance?
Start: 2019-02-25. End: 2027-12-31.
What is the projected cost growth trajectory for this contract given its Cost Plus Fixed Fee structure and sole-source nature?
The Cost Plus Fixed Fee structure, combined with a sole-source award, presents a risk of cost growth if not rigorously managed. Without competitive pressure, there's less incentive for the contractor to aggressively control expenses. The long duration and complexity of F-35 sustainment further amplify this risk, necessitating robust government oversight and detailed cost tracking to mitigate potential overruns and ensure taxpayer value.
How does the government plan to ensure fair pricing and value for money without a competitive bidding process?
Ensuring fair pricing without competition relies heavily on robust government cost analysis, benchmarking against similar (though often imperfectly comparable) contracts, and stringent negotiation of the fixed fee. The Department of the Navy must employ skilled contract specialists to scrutinize cost proposals, validate assumptions, and potentially incorporate performance incentives or penalties. Regular audits and reviews are essential to monitor expenditures and prevent unwarranted price increases.
What are the long-term implications of awarding sustainment contracts for major defense platforms on a sole-source basis?
Sole-source awards for long-term sustainment can create a dependency on a single provider, potentially stifling innovation and leading to higher costs over time due to a lack of competitive pressure. This can also limit the government's flexibility in adopting new technologies or maintenance approaches. While it ensures continuity and leverages incumbent expertise, it necessitates proactive government strategies to manage the relationship, encourage efficiency, and explore future competitive opportunities where feasible.
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: COST PLUS FIXED FEE (U)
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: $330,836,301
Exercised Options: $325,903,449
Current Obligation: $325,861,729
Actual Outlays: $6,655,383
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
Start Date: 2019-02-25
Current End Date: 2027-12-31
Potential End Date: 2027-12-31 00:00:00
Last Modified: 2025-08-12
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