DoD's $16.1M non-recurring engineering contract for aircraft parts awarded to Lockheed Martin

Contract Overview

Contract Amount: $16,112,766 ($16.1M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2021-09-14

End Date: 2026-01-31

Contract Duration: 1,600 days

Daily Burn Rate: $10.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: OTPS NON-RECURRING ENGINEERING (NRE)

Place of Performance

Location: OWEGO, TIOGA County, NEW YORK, 13827

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $16.1 million to LOCKHEED MARTIN CORPORATION for work described as: OTPS NON-RECURRING ENGINEERING (NRE) Key points: 1. The contract value of $16.1 million for non-recurring engineering (NRE) appears substantial for specialized aircraft parts. 2. Awarded on a sole-source basis, the lack of competition may limit price discovery and potentially increase costs. 3. The contract duration of approximately 4 years (September 2021 - January 2026) suggests a significant development or integration effort. 4. The primary contractor, Lockheed Martin, is a major defense industrial base participant, indicating a known entity for complex aerospace projects. 5. The contract is for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' a broad category that warrants further detail on specific deliverables. 6. The absence of small business set-aside flags suggests this contract is not directly aimed at fostering small business participation.

Value Assessment

Rating: fair

Benchmarking the value of this $16.1 million non-recurring engineering (NRE) contract is challenging without specific details on the 'Other Aircraft Parts and Auxiliary Equipment' being developed. NRE costs can vary widely based on complexity, research, and development intensity. Given the sole-source nature, a direct comparison to competitively bid contracts is not feasible. However, for specialized aerospace components, this amount could be within a reasonable range if it involves significant design, testing, and validation phases. Further analysis would require understanding the specific technical requirements and the expected outcomes of the NRE.

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 a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. The lack of competition means that the Department of the Navy did not benefit from a bidding process that could drive down prices through market forces. While justified in certain circumstances, sole-source awards generally present a higher risk of inflated costs compared to fully competed contracts.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure. Without multiple bids, there is less assurance that the price reflects the most economical option available in the market.

Public Impact

The primary beneficiary is the Department of the Navy, which will receive specialized aircraft parts and auxiliary equipment. The contract supports the development and manufacturing of critical components for naval aviation platforms. The geographic impact is centered in New York (ST: NY), where Lockheed Martin's operations are located. This contract likely supports a specialized workforce within Lockheed Martin, including engineers, technicians, and manufacturing personnel.

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 regarding specific deliverables for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' makes value assessment difficult.
The substantial NRE cost without competitive benchmarking raises questions about cost-effectiveness.
Contract duration of over four years requires ongoing monitoring to ensure timely and efficient execution.

Positive Signals

Awarded to a major defense contractor (Lockheed Martin) with established expertise in aerospace manufacturing.
The contract is for non-recurring engineering, which is often necessary for developing new or highly specialized components.
The fixed-firm price contract type provides cost certainty for the government once the scope is defined.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product development cycles. Contracts for aircraft parts and auxiliary equipment fall under the broader manufacturing segment of this sector. The North American Industry Classification System (NAICS) code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' covers establishments primarily engaged in manufacturing aircraft parts and auxiliary equipment, not elsewhere classified. Spending in this area is driven by military modernization programs, aircraft sustainment, and technological advancements. Comparable spending benchmarks are difficult to establish without knowing the specific nature of the NRE, but large-scale aerospace NRE projects can range from millions to billions of dollars.

Small Business Impact

This contract does not appear to include any small business set-aside provisions, as indicated by the 'sb' field being false. Furthermore, the 'ss' field is also false, meaning it was not a small business prime award. Consequently, the direct impact on small businesses as prime contractors is negligible. However, Lockheed Martin, as the prime contractor, may engage small businesses as subcontractors for specialized services or components, though this is not explicitly detailed in the provided data. The absence of set-asides suggests the focus was on securing the specific capabilities of the sole-source provider rather than promoting small business participation.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a sole-source award, there may be enhanced scrutiny to ensure the justification for non-competition is valid and that the pricing is fair and reasonable. Transparency is limited due to the sole-source nature and the lack of detailed public information on the specific deliverables. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected or identified during the contract's performance.

Related Government Programs

Department of Defense Research, Development, Test, and Evaluation (RDT&E)
Naval Aviation Sustainment Programs
Aircraft Component Manufacturing Contracts
Aerospace Non-Recurring Engineering Services

Risk Flags

Sole-source award lacks competitive justification.
Lack of specific deliverable details hinders value assessment.
Potential for cost overruns due to lack of competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.1 million to LOCKHEED MARTIN CORPORATION. OTPS NON-RECURRING ENGINEERING (NRE)

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 $16.1 million.

What is the period of performance?

Start: 2021-09-14. End: 2026-01-31.

What specific aircraft parts or auxiliary equipment are being developed under this non-recurring engineering contract?

The provided data indicates the contract falls under NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing.' However, it does not specify the exact nature of these parts or equipment. Non-recurring engineering (NRE) typically involves the design, development, testing, and validation of new or significantly modified components. Without further details, it is impossible to ascertain if these are structural components, avionics, propulsion system parts, or other specialized equipment. This lack of specificity makes it difficult to assess the technical scope, potential risks, and the ultimate value proposition of the contract beyond its financial value.

How was the $16.1 million price determined for this sole-source contract, and is it considered fair and reasonable?

As a sole-source award, the $16.1 million price was likely determined through direct negotiation between the Department of the Navy and Lockheed Martin. The government would typically seek to establish price reasonableness by comparing the proposed costs to historical pricing for similar work, using cost-plus-incentive-fee or other pricing structures that allow for government insight into contractor costs, or by obtaining independent cost estimates. However, without access to the contractor's cost proposals, the government's cost analysis, or specific benchmarks for comparable NRE projects, it is challenging for external analysts to definitively assess if the price is fair and reasonable. The absence of competition inherently reduces the leverage for price negotiation.

What are the key performance indicators (KPIs) and milestones for this contract, and how will performance be measured?

The provided data does not specify the key performance indicators (KPIs) or milestones for this contract. Typically, for NRE contracts, performance is measured against the successful completion of design reviews, prototype development, testing phases, and final delivery of validated components or designs. Milestones would likely be tied to these development stages. The Department of the Navy's contracting officers and program managers are responsible for monitoring Lockheed Martin's progress against the contract's Statement of Work (SOW) and any established schedule. Failure to meet critical milestones or performance standards could result in contract modifications, penalties, or termination, depending on the contract terms.

What is Lockheed Martin's track record with similar non-recurring engineering contracts for the Department of the Navy or other defense agencies?

Lockheed Martin Corporation is a major defense contractor with extensive experience in aerospace engineering, research, and development across various platforms for the Department of Defense and allied nations. They have a long history of undertaking complex NRE projects, including the development of new aircraft systems, avionics, and specialized components. While specific details on past NRE contracts for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' are not provided here, Lockheed Martin's overall track record suggests they possess the technical capabilities and infrastructure to execute such work. However, the performance on any specific contract can vary, and a deeper dive into their past performance ratings and any past issues on similar projects would be necessary for a comprehensive assessment.

How does this $16.1 million contract compare to historical spending on aircraft parts and auxiliary equipment manufacturing by the Department of the Navy?

Comparing this specific $16.1 million NRE contract to historical spending requires context on the nature of the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing.' The Department of the Navy spends billions annually on aircraft procurement, sustainment, and modernization, which includes a vast array of parts and auxiliary equipment. This $16.1 million represents a specific investment in the non-recurring engineering phase for potentially new or significantly upgraded components. It is a relatively small portion of the overall naval aviation budget. To assess its comparability, one would need to analyze historical NRE spending for similar types of components or systems, considering factors like technological complexity, program phase, and inflation over time. Without that granular data, a direct comparison is difficult.

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: $20,684,791

Exercised Options: $16,112,766

Current Obligation: $16,112,766

Subaward Activity

Number of Subawards: 14

Total Subaward Amount: $991,338

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