Navy awards $49.3M for aircraft spares and support, a sole-source contract to Lockheed Martin

Contract Overview

Contract Amount: $49,285,968 ($49.3M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2019-08-07

End Date: 2026-09-30

Contract Duration: 2,611 days

Daily Burn Rate: $18.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LRIP 3 AIRCRAFT SPARES AND SUPPORT LABOR

Place of Performance

Location: STRATFORD, FAIRFIELD County, CONNECTICUT, 06614

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $49.3 million to LOCKHEED MARTIN CORPORATION for work described as: LRIP 3 AIRCRAFT SPARES AND SUPPORT LABOR Key points: 1. The contract value of $49.3 million for LRIP 3 aircraft spares and support labor represents a significant investment in maintaining naval aviation readiness. 2. As a sole-source award to Lockheed Martin, the absence of competition raises questions about potential price efficiencies and the exploration of alternative suppliers. 3. The contract duration of 2611 days (approximately 7 years) suggests a long-term need for these critical spares and support services. 4. The fixed-price nature of the contract provides some cost certainty for the government, but the lack of competition limits the ability to benchmark pricing against market alternatives. 5. The award falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code, indicating a focus on specialized components rather than complete aircraft. 6. The contract's primary purpose is to procure spares and support labor for LRIP 3 (Low Rate Initial Production Lot 3) aircraft, implying these are for newer or specific variants.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific nature of LRIP spares. Without competitive bids, it's difficult to assess if the $49.3 million represents a fair market price. The long duration suggests a sustained need, but the lack of transparency in pricing mechanisms typical of sole-source awards warrants scrutiny. Comparing this to other sole-source contracts for similar specialized aircraft components would be necessary for a more robust value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Lockheed Martin Corporation, was solicited. The justification for sole-source procurement typically involves unique capabilities, proprietary technology, or the absence of other responsible sources. The lack of competition means that the Navy did not benefit from a bidding process that could have driven down prices through market forces or encouraged innovation from multiple suppliers.

Taxpayer Impact: Taxpayers may be paying a premium for this contract due to the absence of competitive pressure. Without multiple bids, there is less assurance that the government is receiving the best possible price for these critical aircraft spares and support labor.

Public Impact

Naval aviation units operating the specific LRIP 3 aircraft will benefit from the availability of necessary spare parts and support labor, ensuring operational readiness. The contract supports the maintenance and sustainment of advanced military aircraft, contributing to national defense capabilities. The primary geographic impact is likely within the operational theaters and maintenance facilities of the U.S. Navy. The contract supports specialized manufacturing and technical labor within the aerospace and defense sector, potentially sustaining high-skilled jobs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings for taxpayers.
Lack of transparency in the sole-source justification and pricing structure.
Long contract duration could mask inefficiencies if not closely monitored.
Reliance on a single contractor for critical spares may pose supply chain risks.

Positive Signals

Ensures availability of critical spares and support for specific naval aircraft.
Fixed-price contract provides some level of cost predictability.
Award to a known, established contractor like Lockheed Martin may reduce performance risk.
Supports long-term sustainment of key defense assets.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts and support. The market for specialized aircraft components is often characterized by high barriers to entry, proprietary technology, and a limited number of qualified suppliers, which can lead to sole-source or limited competition awards. Spending in this category is critical for maintaining the operational readiness of military fleets. Comparable spending benchmarks would typically involve analyzing other sole-source or competitively awarded contracts for similar specialized aircraft components across different military branches.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'co' (contracting office) is Lockheed Martin Corporation, a large prime contractor. While Lockheed Martin may engage small businesses as subcontractors, the primary award is not directed towards small businesses. The implications for the small business ecosystem are indirect; any subcontracting opportunities would depend on Lockheed Martin's procurement practices and the availability of small businesses capable of providing the required specialized parts or labor.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the contract terms, including delivery schedules and performance specifications. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract's execution.

Related Government Programs

F-35 Lightning II Program
Naval Air Systems Command (NAVAIR) Sustainment Contracts
Aircraft Component Manufacturing
Defense Logistics Agency (DLA) Aviation Support Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for price escalation without competitive pressure
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $49.3 million to LOCKHEED MARTIN CORPORATION. LRIP 3 AIRCRAFT SPARES AND SUPPORT LABOR

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 $49.3 million.

What is the period of performance?

Start: 2019-08-07. End: 2026-09-30.

What is the specific type of aircraft or system these LRIP 3 spares and support labor are intended for?

The provided data does not specify the exact aircraft or system for which these LRIP 3 spares and support labor are intended. 'LRIP 3' typically refers to the third lot of Low Rate Initial Production for a particular defense platform. Given the contractor is Lockheed Martin and the awarding agency is the Department of the Navy, it is highly probable that these spares and support are related to a naval aviation platform manufactured by Lockheed Martin, such as variants of the F-35 Lightning II (which the Navy operates), or potentially other naval aircraft programs where Lockheed Martin is the prime contractor or a major component supplier. Further investigation into NAVAIR's procurement history or specific program documentation would be required to identify the precise platform.

What was the justification for awarding this contract on a sole-source basis?

The data indicates this contract was awarded as 'NOT COMPETED' (CT), signifying a sole-source or limited competition scenario. The specific justification for this sole-source award is not detailed in the provided snippet. Typically, sole-source justifications for defense contracts revolve around factors such as the unique capabilities or proprietary nature of the contractor's product or service, the need for compatibility with existing systems, the lack of other responsible sources capable of meeting the requirement, or urgent and compelling circumstances. For specialized aircraft spares and support, it often relates to the original equipment manufacturer (OEM) possessing unique technical data, tooling, or intellectual property necessary for production and support, making it difficult or impossible for other firms to compete without extensive and costly technology transfer or development.

How does the $49.3 million contract value compare to historical spending on similar spares and support for this platform or comparable platforms?

Direct comparison of the $49.3 million contract value to historical spending is difficult without knowing the specific aircraft platform and the scope of 'LRIP 3 spares and support labor.' However, as a sole-source award, this figure represents a negotiated price without the benefit of competitive bidding. To assess its value, one would need to analyze historical contract data for the same or similar aircraft platforms, looking at both sole-source and competitively awarded contracts for spares and support over time. Factors such as inflation, quantity of items procured, and the specific mix of spares versus labor would need to be considered. A significant deviation from historical trends, especially if prices have increased without a clear justification, could indicate potential value concerns.

What are the potential risks associated with relying on a single contractor (Lockheed Martin) for these critical aircraft spares and support?

Relying on a single contractor like Lockheed Martin for critical aircraft spares and support introduces several potential risks. Firstly, there's a risk of supply chain disruption if Lockheed Martin faces production issues, labor strikes, or financial difficulties. Secondly, the lack of competition can lead to higher prices over the contract's lifespan, as the government has limited leverage to negotiate better terms. Thirdly, there's a risk of vendor lock-in, where the government becomes heavily dependent on the incumbent contractor, making it difficult and costly to switch suppliers in the future. Finally, without competitive pressure, there might be less incentive for the contractor to innovate or improve efficiency in delivering spares and support services.

What performance metrics or oversight mechanisms are in place to ensure the quality and timeliness of the delivered spares and support labor?

The provided data indicates the contract type is 'FIRM FIXED PRICE' (FFP), which inherently places the cost risk on the contractor. While the specific performance metrics and oversight mechanisms are not detailed, standard government contracting practices for FFP contracts typically include requirements for timely delivery, adherence to specifications, and quality control. The Department of the Navy would likely have program managers and contracting officers responsible for monitoring contractor performance, conducting inspections, and ensuring compliance with contract terms. Delivery schedules ('sd' and 'ed') and the number of orders ('no') provide some quantitative indicators, but detailed quality assurance surveillance plans (QASPs) and acceptance criteria would be outlined in the contract's statement of work.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

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

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: $49,285,968

Exercised Options: $49,285,968

Current Obligation: $49,285,968

Actual Outlays: $479,244

Subaward Activity

Number of Subawards: 432

Total Subaward Amount: $19,830,214

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