Department of the Navy awards $118.7M contract to Lockheed Martin for aircraft manufacturing support

Contract Overview

Contract Amount: $118,724,887 ($118.7M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2021-12-27

End Date: 2028-12-15

Contract Duration: 2,545 days

Daily Burn Rate: $46.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: SINGAPORE PROGRAM TEAM SUPPORT

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $118.7 million to LOCKHEED MARTIN CORPORATION for work described as: SINGAPORE PROGRAM TEAM SUPPORT Key points: 1. Contract awarded on a cost-plus incentive fee basis, suggesting potential for cost overruns if not managed closely. 2. Sole-source award to Lockheed Martin raises questions about competition and potential for better pricing. 3. Long contract duration of over 6 years may indicate a need for sustained support, but also limits flexibility. 4. The contract falls under the Aircraft Manufacturing NAICS code, aligning with established defense industry capabilities. 5. Awarded by the Department of the Navy, this contract supports a critical defense sector.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without detailed cost breakdowns and comparisons to similar sole-source awards. The cost-plus incentive fee structure means the final cost could exceed initial estimates, depending on contractor performance and cost control. Without competitive bidding, it's difficult to ascertain if the pricing reflects fair market value or if taxpayers are receiving optimal value for the services rendered. Further analysis of historical pricing for similar support services would be necessary for a more definitive assessment.

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 approach is typically used when a specific contractor possesses unique capabilities or when urgency dictates a direct award. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs for the government compared to a competitive procurement. The rationale for this sole-source award should be clearly documented and justified.

Taxpayer Impact: Taxpayers may not benefit from the cost savings typically achieved through competitive bidding. The absence of multiple offers means the government could be paying a premium for these services.

Public Impact

The primary beneficiary is the Department of the Navy, which will receive essential support for its aircraft manufacturing operations. This contract ensures the continued availability and maintenance of critical aircraft, supporting national defense readiness. The services delivered are crucial for the operational effectiveness of naval aviation assets. The contract's impact on the workforce is likely concentrated within Lockheed Martin's facilities and its supply chain, potentially supporting skilled jobs in aerospace manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential savings for taxpayers.
Cost-plus incentive fee structure carries inherent risk of cost overruns if not rigorously managed.
Long contract duration may reduce flexibility and lock the government into a specific vendor relationship.

Positive Signals

Award to a major defense contractor like Lockheed Martin suggests access to specialized expertise and established capabilities.
The contract supports critical defense needs, contributing to national security objectives.
The incentive fee component, if structured effectively, can align contractor performance with government goals.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft manufacturing and related support services. The market for such specialized services is dominated by a few large, established defense contractors. Spending in this area is driven by government defense budgets and the need to maintain a technologically advanced military fleet. Comparable spending benchmarks would involve analyzing other large-scale support contracts awarded by the Department of Defense for aircraft sustainment and manufacturing.

Small Business Impact

This contract does not appear to include specific small business set-aside provisions, nor is there an indication of significant subcontracting opportunities for small businesses based on the provided data. The award to a large prime contractor like Lockheed Martin suggests that the primary focus is on leveraging established capabilities rather than fostering small business participation directly through this specific award. Further review of subcontracting plans would be needed to assess any indirect impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Accountability measures would be embedded within the contract's terms, including performance metrics and reporting requirements tied to the incentive fee structure. Transparency may be limited due to the sole-source nature of the award, but contract award details are usually publicly available. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Department of Defense Aircraft Procurement
Naval Aviation Sustainment Programs
Aerospace Manufacturing Support Contracts
Cost-Plus Incentive Fee Contracts

Risk Flags

Sole-source award
Cost-plus incentive fee structure
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $118.7 million to LOCKHEED MARTIN CORPORATION. SINGAPORE PROGRAM TEAM SUPPORT

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 $118.7 million.

What is the period of performance?

Start: 2021-12-27. End: 2028-12-15.

What is the historical spending pattern for aircraft manufacturing support services by the Department of the Navy?

Analyzing historical spending patterns for aircraft manufacturing support services by the Department of the Navy reveals a consistent and significant investment in maintaining and upgrading its aviation fleet. Over the past decade, the Navy has allocated billions of dollars annually to contracts covering a wide range of services, including research and development, procurement of new aircraft, sustainment, modernization, and specialized support. Spending often fluctuates based on geopolitical events, technological advancements, and budgetary priorities. Contracts for manufacturing support, in particular, are crucial for ensuring the operational readiness of complex platforms. These often involve long-term agreements with major defense contractors, reflecting the intricate nature of aerospace production and the need for specialized expertise. The trend generally shows a sustained demand for these services, underscoring their critical role in national defense.

How does the cost-plus incentive fee (CPIF) structure typically impact contractor performance and final costs in defense contracts?

The Cost-Plus Incentive Fee (CPIF) contract structure is designed to incentivize contractors to control costs while achieving specific performance targets. Under a CPIF arrangement, the final profit is adjusted based on the contractor's ability to meet or exceed mutually agreed-upon cost and performance objectives. If the contractor performs better than expected (e.g., by reducing costs below the target or exceeding performance metrics), they receive a higher fee. Conversely, if costs exceed the target or performance falls short, the contractor's fee is reduced. This structure aims to align the contractor's financial interests with those of the government, encouraging efficiency and innovation. However, it also requires robust government oversight to ensure that cost targets are realistic and that performance metrics are clearly defined and measurable. The potential for cost overruns still exists if the target cost is set too high or if unforeseen issues arise, but the incentive mechanism provides a framework for managing these risks and achieving better value.

What are the potential risks associated with sole-source defense contracts compared to competitively awarded ones?

Sole-source defense contracts carry several inherent risks compared to competitively awarded ones. The most significant risk is the potential for inflated pricing, as the absence of competition removes the market pressure that typically drives down costs. Without multiple bids, the government may end up paying a premium for goods or services. Another risk is reduced innovation; contractors may have less incentive to develop novel or cost-saving solutions when they are guaranteed the contract regardless of competitive alternatives. Furthermore, sole-source awards can limit the government's access to a broader range of capabilities or technologies that might be offered by other potential suppliers. This can also lead to vendor lock-in, making it difficult and costly to switch providers in the future. Finally, sole-source awards can sometimes raise concerns about fairness and transparency in the procurement process, potentially leading to scrutiny or challenges.

What is Lockheed Martin Corporation's track record with Department of the Navy contracts?

Lockheed Martin Corporation has a long and extensive track record of contracting with the Department of the Navy, serving as a primary defense contractor for decades. The company has been involved in numerous high-value programs, including the development and production of naval aircraft (like the F-35C), submarines, and various defense systems. Their history with the Navy includes contracts for research, development, manufacturing, sustainment, and modernization across a wide spectrum of naval platforms. While specific performance metrics for individual contracts are often proprietary, Lockheed Martin is generally recognized for its capabilities in complex defense manufacturing and systems integration. However, like any large defense contractor, they have also faced scrutiny over contract costs, performance issues, and schedule delays on certain programs. Overall, their relationship with the Department of the Navy is characterized by deep integration and significant reliance on their technological and manufacturing expertise for critical defense capabilities.

How does the geographic location of contract performance (Texas) influence cost and logistics for this Department of the Navy contract?

The geographic location of contract performance, indicated as Texas (TX), can influence the cost and logistics of this Department of the Navy contract in several ways. Texas has a significant aerospace and defense industry presence, which can mean access to a skilled workforce and established supply chains, potentially leading to more efficient operations and competitive labor rates compared to some other regions. However, transportation costs for materials and finished products to naval bases or deployment locations could be a factor, depending on the specific end-use of the aircraft manufacturing support. Proximity to major military installations or key suppliers within Texas could offer logistical advantages. Furthermore, state and local economic incentives or regulations might also play a role in the overall cost structure. For a large-scale manufacturing support contract, the presence of robust infrastructure, including transportation networks and industrial facilities, in Texas is generally beneficial for managing complex operations and ensuring timely delivery.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

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: $118,724,887

Exercised Options: $118,724,887

Current Obligation: $118,724,887

Subaward Activity

Number of Subawards: 8

Total Subaward Amount: $33,926,385

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline