DoD awards $315M for aircraft parts, with Lockheed Martin as sole source

Contract Overview

Contract Amount: $315,537,674 ($315.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2021-09-15

End Date: 2026-11-28

Contract Duration: 1,900 days

Daily Burn Rate: $166.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: BSP/GSP SPARES PART 2

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $315.5 million to LOCKHEED MARTIN CORPORATION for work described as: BSP/GSP SPARES PART 2 Key points: 1. Contract value represents a significant investment in specialized aircraft components. 2. Sole-source award raises questions about price competitiveness and potential for overpayment. 3. Long contract duration suggests a sustained need for these critical spare parts. 4. Geographic concentration in Texas for delivery may indicate specific operational hubs. 5. Lack of competition limits opportunities for other manufacturers to supply these parts.

Value Assessment

Rating: questionable

The contract's value of $315.5 million for aircraft spare parts is substantial. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The firm-fixed-price structure offers some cost certainty, but the absence of competition prevents a thorough value-for-money assessment. Further analysis would be needed to determine if this price reflects fair market value.

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. This approach bypasses the standard competitive bidding process, which typically involves multiple bidders vying for the contract. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they generally lead to less price discovery and potentially higher costs for the government.

Taxpayer Impact: The lack of competition means taxpayers may not be receiving the best possible price for these aircraft parts, as there was no market pressure to drive down costs.

Public Impact

The Department of the Navy benefits from the continued availability of critical aircraft spare parts. This contract supports the operational readiness of specific aircraft platforms used by the U.S. military. The primary geographic impact is in Texas, where the parts are scheduled for delivery. The contract supports jobs within Lockheed Martin Corporation and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Long-term contract duration may lock in potentially suboptimal pricing.
Lack of transparency in the sole-source justification process.

Positive Signals

Firm-fixed-price contract provides cost certainty.
Contract supports critical national defense needs.
Long duration indicates a stable, long-term requirement.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for specialized military aircraft components is often characterized by high barriers to entry due to technical expertise, proprietary technology, and established relationships with defense agencies. Spending in this sub-sector is driven by military readiness requirements and the lifecycle of aging aircraft fleets. Comparable spending benchmarks would typically involve other sole-source or limited-competition contracts for similar high-value, specialized components.

Small Business Impact

This contract does not appear to involve a small business set-aside. As a sole-source award to a large prime contractor, there is a potential risk that subcontracting opportunities for small businesses may be limited or not fully maximized. Further investigation into Lockheed Martin's subcontracting plan would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. 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 in cases of suspected fraud, waste, or abuse.

Related Government Programs

Aircraft Maintenance and Repair
Defense Logistics Agency Procurement
Naval Aviation Sustainment
Aerospace Component Manufacturing

Risk Flags

Sole-source award
Lack of competitive bidding
High contract value

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $315.5 million to LOCKHEED MARTIN CORPORATION. BSP/GSP SPARES PART 2

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 $315.5 million.

What is the period of performance?

Start: 2021-09-15. End: 2026-11-28.

What is the specific justification for awarding this contract on a sole-source basis to Lockheed Martin Corporation?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are justified when only one responsible source can provide the required supplies or services, such as when the item is unique, proprietary, or requires specialized expertise only possessed by a single contractor. For this contract, the justification would likely relate to the proprietary nature of the specific aircraft parts (BSP/GSP SPARES PART 2) or a unique manufacturing capability held by Lockheed Martin. Without access to the official justification document (e.g., a Justification and Approval - J&A), it's impossible to definitively state the reason. However, the nature of specialized military aircraft components often leads to such sole-source awards to the original equipment manufacturer or a designated supplier.

How does the contract's duration of 1900 days (approximately 5.2 years) impact its overall value and risk?

The contract duration of approximately 5.2 years (1900 days) for the delivery of aircraft spare parts suggests a long-term, sustained need for these components by the Department of the Navy. From a value perspective, a longer duration can sometimes lead to better pricing if negotiated effectively, as it provides the contractor with a predictable revenue stream. However, it also carries risks. For the government, a long-term commitment, especially under a sole-source award, can lock in prices that may become uncompetitive over time if market conditions change or if more efficient production methods become available. It also reduces flexibility to adapt to evolving technological requirements or alternative solutions. For the contractor, it offers stability but requires careful management of production and supply chains over an extended period.

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

Sole-source awards for critical aircraft spare parts present several potential risks. The most significant is the lack of price competition, which can lead to inflated costs for the government and, consequently, for taxpayers. Without competing bids, there is no market pressure to ensure the contractor offers the most competitive price. This can also extend to quality and innovation, as the contractor may have less incentive to improve processes or offer superior products when they are the only option. Furthermore, reliance on a single source can create supply chain vulnerabilities; if the sole provider experiences production issues, natural disasters, or financial instability, the government's access to critical parts could be severely disrupted, impacting military readiness. Finally, sole-source awards can sometimes be perceived as less transparent, raising concerns about fairness and potential favoritism.

Are there any comparable contracts or spending benchmarks for similar aircraft spare parts that could be used to assess the value of this award?

Assessing the value of this $315.5 million contract for 'BSP/GSP SPARES PART 2' without direct competitive benchmarks is challenging. Comparable spending would ideally involve other contracts for similar types of spare parts for the same or comparable aircraft platforms, particularly those awarded through full and open competition. However, given this is a sole-source award to Lockheed Martin, direct comparisons might be scarce. Industry reports on aerospace and defense component manufacturing costs, or data from organizations like the Government Accountability Office (GAO) or the Defense Contract Audit Agency (DCAA) that analyze defense spending trends, could provide broader benchmarks. Analyzing historical spending patterns for these specific part numbers, if available, would also be crucial. Without such data, a definitive value assessment remains difficult.

What is the historical spending pattern for 'BSP/GSP SPARES PART 2' or similar components by the Department of Defense?

The provided data indicates a single award of $315,537,673.98 for 'BSP/GSP SPARES PART 2' with an anticipated completion date in late 2026. This suggests that this specific contract represents a significant, potentially consolidated, procurement effort for these parts. Historical spending patterns for these exact 'BSP/GSP SPARES PART 2' are not detailed in the provided data. However, the nature of spare parts procurement for military aircraft often involves recurring orders over the lifespan of the aircraft fleet. If this is a new contract, it might represent a shift in procurement strategy or a consolidation of previous, smaller orders. If it's a continuation, the duration and value suggest a substantial ongoing requirement. To understand historical patterns, one would need to access broader federal procurement databases to search for previous awards related to these part numbers or similar components under different contract vehicles or by different agencies.

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: $315,537,674

Exercised Options: $315,537,674

Current Obligation: $315,537,674

Subaward Activity

Number of Subawards: 8

Total Subaward Amount: $3,229,272

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001921D0001

IDV Type: IDC

Timeline