DoD's $54M aircraft parts contract to Lockheed Martin raises value and competition concerns

Contract Overview

Contract Amount: $54,023,255 ($54.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2020-12-01

End Date: 2025-12-31

Contract Duration: 1,856 days

Daily Burn Rate: $29.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FY2021 TRAVEL

Place of Performance

Location: STRATFORD, FAIRFIELD County, CONNECTICUT, 06614

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $54.0 million to LOCKHEED MARTIN CORPORATION for work described as: FY2021 TRAVEL Key points: 1. The contract's value appears high relative to the limited competition and duration. 2. Lack of competition suggests potential for inflated pricing and reduced taxpayer value. 3. The firm-fixed-price structure offers some cost certainty but doesn't mitigate pricing concerns. 4. Performance duration of nearly 4 years warrants scrutiny of cost-effectiveness over time. 5. This contract falls within the 'Other Aircraft Parts' manufacturing sector, a critical defense area. 6. The sole-source nature limits opportunities for small businesses to participate.

Value Assessment

Rating: questionable

Benchmarking this contract is challenging due to its sole-source nature and specific product category. However, the duration of nearly four years for a $54 million award suggests a significant per-year expenditure. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value or if taxpayers are overpaying. The firm-fixed-price contract type provides cost certainty for the government, but the absence of competition means the contractor has less incentive to offer the most competitive price.

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. This indicates that only one contractor, Lockheed Martin Corporation, was considered capable of fulfilling the requirement. The lack of competition limits price discovery and may lead to higher costs for the government compared to a fully competed procurement. It also suggests potential barriers to entry for other qualified suppliers in this market segment.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings typically achieved through competitive bidding. This can result in a less efficient use of public funds.

Public Impact

The Department of Defense is the primary beneficiary, receiving critical aircraft parts. This contract supports the operational readiness of naval aircraft. The geographic impact is primarily concentrated where Lockheed Martin operates, likely in Connecticut. The contract supports jobs within Lockheed Martin's manufacturing and supply chain operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Lack of transparency in the procurement process due to no-competition.
Potential for over-reliance on a single supplier for critical aircraft parts.
Limited opportunities for small businesses to participate in this significant contract.
The long duration of the contract may not reflect the most current market pricing.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to a large, established defense contractor suggests a focus on reliability.
Contract supports critical defense needs for aircraft parts.

Sector Analysis

This contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, a vital component of the aerospace and defense industry. This sector is characterized by high technological demands, stringent quality control, and significant R&D investment. The market size for defense aerospace parts is substantial, driven by military readiness requirements and ongoing modernization efforts. This specific contract likely supports a niche but critical set of components for naval aviation.

Small Business Impact

The sole-source nature of this contract significantly limits opportunities for small businesses. As it was not competed, there was no mechanism for small business set-asides or subcontracting goals to be established. This means that the prime contractor, Lockheed Martin, is not mandated to engage small businesses for this specific award, potentially impacting the small business ecosystem within the defense supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management oversight bodies. Accountability measures are inherent in the firm-fixed-price structure, which caps the government's liability. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Aircraft Procurement
Naval Aviation Support Contracts
Aerospace Manufacturing Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source justification requires scrutiny.
Potential for inflated pricing due to lack of competition.
Limited transparency in the procurement process.
Lack of small business participation opportunities.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $54.0 million to LOCKHEED MARTIN CORPORATION. FY2021 TRAVEL

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 $54.0 million.

What is the period of performance?

Start: 2020-12-01. End: 2025-12-31.

What is Lockheed Martin Corporation's track record with the Department of Defense for similar aircraft parts contracts?

Lockheed Martin Corporation is a major defense contractor with a long history of supplying aircraft and related components to the Department of Defense. They have a substantial portfolio of contracts across various military branches, including the Navy. Their track record generally indicates experience in complex manufacturing and program management. However, specific performance data for similar 'Other Aircraft Parts' contracts would require a deeper dive into contract databases to assess on-time delivery, quality compliance, and cost performance. Given their size and scope, they are a frequent recipient of large DoD awards, but the nature of sole-source awards means direct comparison of value is often difficult.

How does the $54 million value compare to similar sole-source aircraft parts contracts awarded by the DoD?

Direct comparison of sole-source contracts is inherently difficult as they are awarded without competitive bidding, often due to unique capabilities or urgent needs. However, $54 million over approximately 3.5 years (December 2020 to December 2025) represents an average annual value of roughly $15.4 million. This figure needs to be contextualized by the specific type of aircraft parts, their complexity, and the volume required. Without knowing the exact nature of these parts, it's hard to benchmark against other sole-source awards. Generally, sole-source awards tend to be higher than competitively bid contracts for similar items due to the lack of price pressure.

What are the primary risks associated with a sole-source award for critical aircraft parts?

The primary risks associated with a sole-source award for critical aircraft parts include potential overpricing due to the absence of competition, reduced incentive for the contractor to innovate or improve efficiency, and a lack of transparency in the procurement process. There's also a risk of vendor lock-in, where the government becomes overly dependent on a single supplier, making it difficult to switch even if performance or pricing becomes unfavorable. Furthermore, if the sole-source justification is weak or if other capable suppliers exist, it represents a missed opportunity for better value and potentially for fostering a more robust industrial base.

How effective is the firm-fixed-price contract type in mitigating risks for this specific sole-source award?

The firm-fixed-price (FFP) contract type is generally effective in mitigating cost overrun risks for the government, as the contractor assumes responsibility for all costs incurred to deliver the specified goods or services at the agreed-upon price. For this sole-source award, FFP provides a degree of budget certainty. However, it does not inherently address the risk of the initial price being too high due to the lack of competition. While the government knows its maximum liability, it doesn't guarantee that the price paid represents the best possible value. The effectiveness is thus limited to cost certainty rather than value optimization in a non-competitive scenario.

What is the historical spending pattern for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' by the Department of the Navy?

Historical spending patterns for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' by the Department of the Navy are substantial, reflecting the continuous need to maintain and upgrade its diverse fleet of aircraft. While specific figures fluctuate annually based on operational tempo, modernization programs, and new platform introductions, this category consistently represents a significant portion of the Navy's procurement and maintenance budgets. Analyzing historical data would reveal trends in spending, identify major suppliers, and potentially highlight periods of increased or decreased demand for specific types of parts. This contract, valued at $54 million, fits within this ongoing expenditure.

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: 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: $54,260,143

Exercised Options: $54,023,255

Current Obligation: $54,023,255

Subaward Activity

Number of Subawards: 21

Total Subaward Amount: $1,632,189

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