DoD's $30M Lockheed Martin contract for aircraft parts faces scrutiny over sole-source award and lack of competition

Contract Overview

Contract Amount: $29,861,967 ($29.9M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2020-09-25

End Date: 2025-01-31

Contract Duration: 1,589 days

Daily Burn Rate: $18.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LRIP LOT 1 DEPLOYABLE CONFIGURATION UPDATE

Place of Performance

Location: JUPITER, PALM BEACH County, FLORIDA, 33478

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $29.9 million to LOCKHEED MARTIN CORPORATION for work described as: LRIP LOT 1 DEPLOYABLE CONFIGURATION UPDATE Key points: 1. The contract's value, while significant, requires careful benchmarking against similar sole-source awards to ensure fair pricing. 2. The absence of a competitive bidding process raises concerns about potential overpayment and reduced value for taxpayer dollars. 3. Risk indicators are elevated due to the sole-source nature, limiting transparency and potentially masking inefficiencies. 4. Performance context is limited by the lack of comparative data from a competitive environment. 5. This contract falls within the Defense sector, specifically related to aircraft parts manufacturing. 6. The firm-fixed-price structure aims to control costs, but its effectiveness is hampered by the non-competitive award.

Value Assessment

Rating: questionable

Benchmarking the $29.86 million awarded to Lockheed Martin for LRIP LOT 1 DEPLOYABLE CONFIGURATION UPDATE is challenging due to the sole-source nature of the contract. Without competitive bids, it's difficult to definitively assess if the pricing represents fair market value. However, given the lack of competition, there's an inherent risk that the price may be higher than what could have been achieved through an open bidding process. Further analysis would require access to proprietary cost data or comparisons with similar sole-source awards for comparable aircraft components.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Lockheed Martin Corporation, was solicited. This approach bypasses the standard competitive procurement process, which typically involves soliciting bids from multiple qualified vendors. The lack of competition means there was no opportunity for price discovery through market forces, potentially leading to less favorable pricing for the government.

Taxpayer Impact: Taxpayers may be paying a premium for these aircraft parts due to the absence of competitive pressure. The government missed an opportunity to leverage competition to drive down costs and ensure the best possible value.

Public Impact

The primary beneficiary is the Department of the Navy, receiving updated deployable configurations for aircraft. The contract supports the sustainment and modernization of military aviation assets. The geographic impact is concentrated in Florida, where the contract is being performed. This contract likely sustains jobs within Lockheed Martin's aerospace manufacturing workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and transparency.
Potential for higher costs due to lack of competitive bidding.
Limited public data to assess value for money.
Contract duration of nearly 5 years warrants close monitoring.

Positive Signals

Firm-fixed-price contract type helps to cap costs.
Award to an established defense contractor with existing expertise.
Contract supports critical defense modernization efforts.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts and components. The market for such specialized parts is often dominated by a few large, established players like Lockheed Martin due to high barriers to entry, including intellectual property, specialized manufacturing capabilities, and existing government relationships. Comparable spending benchmarks would typically involve analyzing other sole-source awards for similar complex aircraft systems or upgrades within the Department of Defense.

Small Business Impact

There is no indication that this contract included a small business set-aside. As a sole-source award to a large prime contractor, the opportunities for small businesses would primarily be through subcontracting. The extent to which Lockheed Martin will engage small businesses as subcontractors is not detailed in the provided data, but it is a crucial area for ensuring broader economic impact and fostering the small business ecosystem within the defense supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price structure, which places cost risk on the contractor. Transparency is limited due to the sole-source nature. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Modernization Programs
Defense Logistics Agency (DLA) Procurement
Naval Air Systems Command (NAVAIR) Contracts
Lockheed Martin Defense Contracts

Risk Flags

Sole-source award without clear justification
Lack of competitive bidding limits price discovery
Potential for inflated costs due to non-competitive nature
Limited transparency in contract award process

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.9 million to LOCKHEED MARTIN CORPORATION. LRIP LOT 1 DEPLOYABLE CONFIGURATION UPDATE

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 $29.9 million.

What is the period of performance?

Start: 2020-09-25. End: 2025-01-31.

What is Lockheed Martin Corporation's track record with sole-source contracts for similar aircraft components?

Lockheed Martin Corporation, as a major defense contractor, has a history of receiving sole-source contracts, particularly for specialized systems and upgrades where they possess unique capabilities or are the sole manufacturer. Analyzing their past sole-source awards for similar LRIP (Low Rate Initial Production) lots or configuration updates within the naval aviation sector would provide context. This analysis should focus on contract values, durations, and any documented performance issues or cost overruns. Without specific data on past sole-source awards for comparable items, it's difficult to definitively assess if this $29.86 million award is consistent with historical pricing and terms, but the pattern of sole-source awards to prime contractors for unique defense articles is not uncommon, though it warrants scrutiny regarding justification and price reasonableness.

How does the $29.86 million contract value compare to similar sole-source awards for aircraft configuration updates?

Direct comparison of this $29.86 million contract value to similar sole-source awards for aircraft configuration updates is challenging without access to a comprehensive database of government contracts, particularly those awarded non-competitively. Sole-source awards are often justified by unique capabilities, proprietary technology, or the absence of viable alternatives, which can lead to price variations. To assess value, one would ideally benchmark against contracts for similar aircraft types, complexity of upgrades, and the specific components involved. If comparable competitive contracts exist for similar services or products, their pricing could serve as a benchmark. However, the inherent nature of sole-source procurement means that direct, apples-to-apples comparisons are often difficult, and the government relies on negotiation and cost analysis to ensure reasonableness, which is less transparent than competitive bidding.

What are the primary risk indicators associated with this sole-source contract award?

The primary risk indicator for this contract is its sole-source nature. This significantly reduces transparency and limits the government's ability to achieve the best possible price through competition. Without multiple bids, there's an increased risk of paying a premium for the goods or services. Other risks include potential contractor complacency, as there is less pressure to innovate or improve efficiency when competition is absent. Furthermore, the lack of a competitive process makes it harder to identify potential performance issues or cost overruns early on. The long contract duration (ending in 2025) also presents a risk of scope creep or changing requirements that may not be adequately controlled without a competitive framework.

What is the expected program effectiveness or outcome of this contract?

The expected outcome of this contract is the successful delivery of LRIP LOT 1 DEPLOYABLE CONFIGURATION UPDATE for unspecified aircraft, as manufactured by Lockheed Martin Corporation. This implies an enhancement or modification to existing aircraft systems to improve their deployability or operational readiness. The effectiveness of the program will be measured by the timely delivery of these updated configurations, their successful integration into the existing fleet, and their contribution to the Department of the Navy's mission capabilities. Given the firm-fixed-price contract type, the government anticipates cost certainty, assuming the contractor meets performance specifications. The ultimate effectiveness hinges on the technical performance of the updated configurations and their impact on naval aviation readiness and operational success.

How does historical spending on similar aircraft parts contracts compare to this award?

Analyzing historical spending on similar aircraft parts contracts requires access to detailed procurement data, specifically filtering for contracts related to aircraft configuration updates and parts manufacturing, ideally within the naval aviation domain. Without this specific data, a direct comparison is not feasible. However, the Department of Defense is a significant spender on aircraft sustainment and upgrades, with contracts often running into millions or billions of dollars. The $29.86 million for this specific update is substantial but may be within the expected range for specialized components or low-rate initial production runs for advanced systems. A thorough analysis would involve examining trends in spending for similar systems over time, identifying any significant price escalations, and understanding the factors driving those costs, such as technological advancements or sole-source justifications.

What is the justification for awarding this contract solely to Lockheed Martin Corporation?

The provided data indicates the contract was 'NOT COMPETED,' which is synonymous with a sole-source award. The specific justification for this sole-source determination is not included in the abbreviated data. Typically, sole-source awards require a formal justification from the procuring agency, citing reasons such as unique capabilities, proprietary technology, urgent and compelling needs where only one source can fulfill the requirement, or the absence of adequate competition. For Lockheed Martin Corporation, it's plausible they are the sole designer, manufacturer, or possess the necessary intellectual property for this specific 'LRIP LOT 1 DEPLOYABLE CONFIGURATION UPDATE.' A full justification document would be required to understand the precise rationale and ensure it aligns with federal procurement regulations.

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

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: $29,861,967

Exercised Options: $29,861,967

Current Obligation: $29,861,967

Subaward Activity

Number of Subawards: 35

Total Subaward Amount: $1,707,449

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