DoD's $365M initial spares contract for aircraft parts awarded to Lockheed Martin without competition

Contract Overview

Contract Amount: $364,745,841 ($364.7M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2019-08-29

End Date: 2026-12-13

Contract Duration: 2,663 days

Daily Burn Rate: $137.0K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FY19 AV INITIAL SPARES (ASP/DSP)

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $364.7 million to LOCKHEED MARTIN CORPORATION for work described as: FY19 AV INITIAL SPARES (ASP/DSP) Key points: 1. Contract awarded on a sole-source basis, raising questions about potential overpricing and lack of market pressure. 2. Significant duration of the contract (over 7 years) suggests a long-term need for these critical aircraft components. 3. The award to a single, large defense contractor highlights potential consolidation within the aerospace supply chain. 4. Lack of competition may limit opportunities for innovative solutions or cost-saving alternatives from other vendors. 5. Performance context is crucial given the critical nature of aircraft spares for military readiness. 6. The contract's value, while substantial, needs to be benchmarked against similar sole-source awards for aircraft parts.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging due to the absence of competitive bids. The initial award amount of over $364 million for aircraft spares suggests a significant investment. Without comparable contracts or market data, it's difficult to definitively assess if this represents fair value for money. The firm-fixed-price structure provides some cost certainty, but the lack of competition means potential savings may have been forgone.

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 vendors. This typically occurs when only one vendor possesses the necessary capabilities, technology, or is the sole provider of the required goods or services. The absence of competition means there was no opportunity for price discovery through a bidding process, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium for these aircraft spares due to the lack of competitive pressure. Without multiple bids, the government cannot be assured it is receiving the best possible price.

Public Impact

The Department of the Navy benefits from the assured supply of critical aircraft spare parts, ensuring operational readiness. This contract supports the maintenance and sustainment of specific aircraft platforms operated by the U.S. Navy. The geographic impact is primarily within the United States, where Lockheed Martin facilities will produce and deliver these parts. Workforce implications include job security and potential expansion at Lockheed Martin's manufacturing and logistics sites.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and may result in higher costs.
Long contract duration could lead to price increases over time if not managed effectively.
Dependence on a single contractor for critical spares poses a supply chain risk.
Lack of transparency in the sole-source justification process.
Potential for scope creep or unexercised options to increase the total contract value.

Positive Signals

Award to a prime defense contractor with established expertise in aircraft manufacturing.
Firm-fixed-price contract provides cost certainty for the initial award.
Contract ensures availability of critical spares for ongoing military operations.
Long-term nature of the contract suggests a stable, predictable supply chain for essential components.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government investment. This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sub-sector. The market for specialized aircraft spares is often dominated by original equipment manufacturers (OEMs) like Lockheed Martin, leading to sole-source or limited-competition awards. Comparable spending benchmarks are difficult to establish without more specific part details and competitive data, but the overall defense aerospace market is valued in the hundreds of billions annually.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, Lockheed Martin, is a large defense corporation. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan for this contract is not detailed here. The absence of a direct set-aside means small businesses are unlikely to be the primary recipients of this contract funding, though they may participate as subcontractors.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The Defense Contract Management Agency (DCMA) likely plays a role in contract administration and performance monitoring. Inspector General (IG) oversight is standard for Department of Defense contracts, providing an independent review of waste, fraud, and abuse. Transparency is limited by the sole-source nature of the award, but contract modifications and performance reports would be subject to review.

Related Government Programs

Aircraft Maintenance and Repair
Defense Logistics Agency (DLA) Spare Parts Procurement
Naval Air Systems Command (NAVAIR) Contracts
Lockheed Martin Defense Contracts
Aerospace Manufacturing and Supply Chain

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $364.7 million to LOCKHEED MARTIN CORPORATION. FY19 AV INITIAL SPARES (ASP/DSP)

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 $364.7 million.

What is the period of performance?

Start: 2019-08-29. End: 2026-12-13.

What specific aircraft platforms are these initial spares intended for, and what is the criticality of these parts to their operation?

The provided data does not specify the exact aircraft platforms for which these initial spares are intended. However, given the award to Lockheed Martin and the nature of 'Aircraft Parts and Auxiliary Equipment Manufacturing,' it is highly probable that these spares are for platforms manufactured or supported by Lockheed Martin, such as F-35, F-16, C-130 variants, or naval aviation platforms. The criticality of 'initial spares' suggests they are essential for the initial fielding, operational testing, or immediate sustainment of these aircraft. Without this information, assessing the true value and risk associated with the contract is incomplete. The Department of the Navy would have this detailed breakdown, likely classified by the specific part numbers and their role in aircraft mission capability and safety.

What was the justification for awarding this contract on a sole-source basis, and were any alternative sources considered?

The justification for a sole-source award typically stems from situations where only one responsible source can provide the required supplies or services. For specialized aircraft spares, this often means the original equipment manufacturer (OEM) is the only viable source due to proprietary designs, unique manufacturing processes, or existing support infrastructure. The data indicates 'CT: NOT COMPETED,' confirming a sole-source award. The Department of Defense is required to publish justifications for sole-source awards (e.g., through the Federal Business Opportunities website, now SAM.gov) above certain thresholds, outlining the rationale and any market research conducted. Without access to that specific justification document, we can only infer that Lockheed Martin was deemed the sole capable provider for these particular spares.

How does the initial award value of $364.7 million compare to historical spending on similar aircraft spares by the Department of the Navy or other branches?

Comparing the initial award value of $364.7 million for 'FY19 AV INITIAL SPARES (ASP/DSP)' requires context regarding the specific types of spares and the aircraft platforms they support. General comparisons are difficult without knowing the exact part numbers and their complexity. However, the Department of Defense spends billions annually on aircraft spare parts. For instance, major aircraft programs often have sustainment contracts in the hundreds of millions or even billions over their lifecycle. This $365 million figure, for initial spares over a period extending to late 2026, represents a significant investment. Benchmarking would ideally involve looking at similar 'initial spares' procurements for comparable aircraft types or analyzing the unit cost of specific high-value components if that data were available.

What are the potential risks associated with a sole-source contract for critical aircraft spares, and what mitigation strategies are in place?

The primary risks of a sole-source contract for critical aircraft spares include inflated pricing due to lack of competition, potential for vendor lock-in, and reduced incentive for the contractor to innovate or improve efficiency. There's also a risk if the sole-source provider experiences production issues or financial instability. Mitigation strategies employed by the government often include rigorous negotiation of contract terms, establishing performance metrics, conducting independent cost analyses where possible, and potentially developing alternative sources or second-sourcing strategies over the long term. For this contract, the firm-fixed-price structure offers some cost control, and the government's oversight and contract administration functions are crucial for monitoring performance and addressing any emerging issues.

What is Lockheed Martin's track record in fulfilling similar sole-source contracts for the Department of Defense, particularly concerning delivery timeliness and quality?

Lockheed Martin is a major defense contractor with extensive experience fulfilling large, complex contracts, including many sole-source awards for aircraft and associated systems. Their track record is generally characterized by delivering advanced technological solutions, though like any large contractor, they have faced scrutiny regarding cost overruns and delivery schedules on specific programs. For sole-source contracts involving critical spares, the DoD typically relies on the contractor's established performance history and robust quality assurance processes. Performance data for this specific contract (336413) would be available through contract performance reports (e.g., CPARS), which assess aspects like schedule adherence, cost control, technical performance, and management. Without access to those specific reports, a detailed assessment of their track record on this particular type of award is limited.

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

Pricing Type: FIRM FIXED PRICE (J)

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: $364,745,841

Exercised Options: $364,745,841

Current Obligation: $364,745,841

Actual Outlays: $20,181,435

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001919D0015

IDV Type: IDC

Timeline