DoD's $17M contract for aircraft parts awarded to Lockheed Martin, with no competition

Contract Overview

Contract Amount: $17,018,869 ($17.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2019-01-18

End Date: 2025-07-15

Contract Duration: 2,370 days

Daily Burn Rate: $7.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: NRE (CY19)

Place of Performance

Location: STRATFORD, FAIRFIELD County, CONNECTICUT, 06614

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $17.0 million to LOCKHEED MARTIN CORPORATION for work described as: NRE (CY19) Key points: 1. The contract value of $17 million for aircraft parts represents a significant investment in specialized manufacturing. 2. Awarded to a single, large defense contractor, this suggests a focus on established capabilities rather than broad market engagement. 3. The 'NOT COMPETED' status is a key risk indicator, potentially leading to higher costs and reduced innovation. 4. The contract duration of approximately 6.5 years points to a long-term need for these specific aircraft parts. 5. The North American Industry Classification System (NAICS) code 336413 indicates a focus on the manufacturing of aircraft parts and auxiliary equipment. 6. The contract type 'COST PLUS FIXED FEE' can incentivize cost overruns if not closely monitored.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without specific details on the aircraft parts and their criticality. However, the absence of competition inherently raises concerns about whether the government secured the best possible price. Cost-plus contracts, while sometimes necessary for R&D or uncertain scopes, carry a higher risk of cost escalation compared to fixed-price contracts. Without comparative bids, it's difficult to definitively assess value for money, but the lack of competition suggests potential for overpayment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple potential suppliers. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or when urgent needs preclude a competitive process. The lack of competition limits the government's ability to leverage market forces to drive down prices and encourage innovation from a wider range of suppliers.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings and improved terms that competitive bidding can generate. This can lead to higher overall spending for the same goods or services.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Department of the Navy, which will receive critical aircraft parts. The services delivered include the manufacturing and supply of specialized aircraft components, essential for maintaining military aviation readiness. The geographic impact is primarily linked to the contractor's facilities in Connecticut, where the manufacturing is likely to occur. Workforce implications include the potential for skilled manufacturing jobs at Lockheed Martin and its supply chain partners.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing and reduced incentive for cost efficiency.
Cost-plus contract type introduces risk of cost overruns if not rigorously managed.
Sole-source awards can stifle innovation by limiting opportunities for new market entrants.
Long contract duration increases exposure to potential performance issues or changing requirements over time.

Positive Signals

Award to a major defense contractor like Lockheed Martin suggests access to established expertise and production capacity.
The contract supports critical defense needs, ensuring operational readiness for naval aviation.
The fixed fee component, despite the cost-plus structure, provides some level of cost predictability.

Sector Analysis

The aerospace and defense manufacturing sector is characterized by high barriers to entry, significant R&D investment, and long product development cycles. Contracts like this, for specialized aircraft parts, fall within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sub-sector. The market is often dominated by a few large, established players due to the technical expertise and security clearances required. Spending in this area is driven by military modernization, sustainment, and operational requirements, with government contracts forming a substantial portion of the industry's revenue.

Small Business Impact

This contract does not appear to involve a small business set-aside, as indicated by 'sb': false. The award to Lockheed Martin, a large prime contractor, suggests that small businesses are unlikely to be direct recipients of this prime contract. However, they may participate as subcontractors if Lockheed Martin chooses to engage them for specific components or services, though this is not guaranteed by the contract terms.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Given the sole-source nature and cost-plus structure, rigorous oversight of incurred costs, performance milestones, and adherence to contract terms would be crucial. Transparency may be limited due to the non-competitive award, but contract modifications, performance reports, and financial audits would be key accountability mechanisms. The Inspector General's office for the Department of Defense would have jurisdiction for audits and investigations.

Related Government Programs

Department of Defense Aircraft Procurement
Naval Aviation Sustainment Programs
Aerospace Manufacturing Contracts
Defense Industrial Base Support

Risk Flags

Sole-source award lacks competitive pricing pressure.
Cost-plus contract type carries inherent risk of cost overruns.
Long contract duration increases exposure to changing market conditions and requirements.
Lack of specific performance metrics in summary data hinders detailed assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.0 million to LOCKHEED MARTIN CORPORATION. NRE (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 $17.0 million.

What is the period of performance?

Start: 2019-01-18. End: 2025-07-15.

What specific aircraft parts are being procured under this contract, and what is their criticality to naval operations?

The provided data does not specify the exact aircraft parts being procured. However, the NAICS code 336413 indicates they fall under 'Other Aircraft Parts and Auxiliary Equipment Manufacturing.' These parts are likely critical components for the operational readiness and maintenance of naval aircraft. Without further details, their specific criticality cannot be determined, but given the sole-source award and substantial value, they are presumed to be essential for specific platforms or systems where Lockheed Martin holds unique manufacturing capabilities or intellectual property.

How does the 'COST PLUS FIXED FEE' contract type compare to other common contract types for similar defense procurements, and what are the associated risks?

Cost Plus Fixed Fee (CPFF) contracts are used when the scope of work is not precisely defined, or when there's significant uncertainty in costs, often in R&D or complex manufacturing. The contractor is reimbursed for allowable costs plus a fixed fee representing profit. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers more flexibility but carries higher risk for the government regarding cost overruns, as the contractor has less incentive to control costs once the fee is fixed. Fixed-Price Incentive (FPI) contracts offer a middle ground, sharing cost savings or overruns. The primary risk with CPFF is that the final cost can significantly exceed initial estimates if cost controls are weak.

What is the historical spending pattern for similar aircraft parts procured by the Department of the Navy, and how does this contract's value compare?

Historical spending data for specific 'Other Aircraft Parts' is not detailed in the provided information. However, the Department of the Navy consistently invests billions annually in aircraft procurement, sustainment, and parts. A $17 million contract for specialized parts, especially if it spans multiple years, is a significant but not extraordinary amount within the broader context of naval aviation budgets. Without comparative data on similar sole-source awards or the specific nature of these parts, a precise comparison is difficult. However, the absence of competition suggests this value might be higher than if it were competed.

What are the potential performance risks associated with awarding this contract to Lockheed Martin on a sole-source basis?

The primary performance risk stems from the lack of competitive pressure. Without competing bids, there's a reduced incentive for Lockheed Martin to optimize production efficiency, innovate processes, or offer the absolute lowest price. While Lockheed Martin is a reputable contractor, sole-source awards can sometimes lead to complacency. Furthermore, the long duration of the contract (over 2 years) increases the risk of potential supply chain disruptions, obsolescence of technology, or shifts in naval requirements that may not be immediately addressed due to the fixed nature of the sole-source relationship.

Are there any specific metrics or Key Performance Indicators (KPIs) mentioned in the contract that will be used to measure Lockheed Martin's performance?

The provided data does not include details on specific Key Performance Indicators (KPIs) or metrics for this contract. Typically, for defense contracts, performance is measured against delivery schedules, quality standards (e.g., defect rates), technical specifications, and compliance with contract terms. For a CPFF contract, adherence to the estimated cost baseline and timely delivery are crucial. However, the specifics would be outlined in the contract's Statement of Work (SOW) and associated performance clauses, which are not available in this dataset.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment 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 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: $17,571,911

Exercised Options: $17,326,644

Current Obligation: $17,018,869

Actual Outlays: $970,460

Subaward Activity

Number of Subawards: 14

Total Subaward Amount: $1,062,425

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