Lockheed Martin awarded $96.5M for aircraft manufacturing, with limited competition and a long performance period

Contract Overview

Contract Amount: $96,466,445 ($96.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2022-05-04

End Date: 2026-08-31

Contract Duration: 1,580 days

Daily Burn Rate: $61.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: THE PURPOSE OF THIS CONTRACT IS TO MODIFY THE PROGRAM OF RECORD MISSION REHEARSAL TRAINING DEVICE.

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32825

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $96.5 million to LOCKHEED MARTIN CORPORATION for work described as: THE PURPOSE OF THIS CONTRACT IS TO MODIFY THE PROGRAM OF RECORD MISSION REHEARSAL TRAINING DEVICE. Key points: 1. Contract awarded to a single, large defense contractor, indicating potential for limited competition. 2. The contract spans over three years, suggesting a significant, ongoing need for the services. 3. The pricing structure (Cost Plus Fixed Fee) can sometimes lead to cost overruns if not closely managed. 4. The contract is a delivery order under a larger contract, implying a pre-existing relationship and framework. 5. The geographic location of performance is Florida, which may have implications for local economic impact. 6. The North American Industry Classification System (NAICS) code 336411 points to aircraft manufacturing.

Value Assessment

Rating: fair

Benchmarking the value of this specific delivery order is challenging without knowing the scope of the underlying contract. However, the Cost Plus Fixed Fee (CPFF) structure warrants careful monitoring to ensure costs remain within reasonable bounds. Comparing this to similar aircraft manufacturing support contracts would require detailed analysis of the specific services rendered and the fixed fee negotiated. The total award amount of $96.5 million over approximately 3.5 years suggests a substantial investment, but its value-for-money depends heavily on the successful delivery of mission rehearsal training capabilities.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source delivery order, meaning it was not competed. This approach is often used when a specific contractor possesses unique capabilities or when the work is a logical follow-on to a previously awarded contract. The lack of competition means that pricing and terms were negotiated directly with Lockheed Martin, potentially limiting opportunities for cost savings that might arise from a competitive bidding process.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no competitive pressure to drive down prices. This necessitates robust oversight to ensure fair pricing and prevent potential overcharges.

Public Impact

The primary beneficiaries are the Department of the Navy and its personnel, who will receive enhanced mission rehearsal training. The services delivered are critical for preparing aircrews for complex operational missions, improving mission success rates. Performance is concentrated in Florida, potentially creating or sustaining jobs in the aerospace and defense sector within that state. The contract supports the readiness and operational effectiveness of naval aviation forces.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs for taxpayers.
Cost Plus Fixed Fee contracts carry inherent risks of cost escalation if not managed diligently.
Long performance period increases exposure to potential scope creep or changing requirements.
Lack of transparency in the sole-source negotiation process makes independent value assessment difficult.

Positive Signals

Award to a major defense contractor like Lockheed Martin suggests access to specialized expertise and technology.
Delivery order under an existing contract framework may indicate streamlined acquisition and efficient execution.
Focus on mission rehearsal training directly supports military readiness and operational effectiveness.

Sector Analysis

The aircraft manufacturing sector, particularly within defense, is characterized by high barriers to entry, significant R&D investment, and long-term government contracts. This contract falls under the broader aerospace and defense industry, which is a critical component of national security. Spending in this sector is often driven by technological advancements, geopolitical factors, and the need for advanced training solutions. Comparable spending benchmarks would typically involve analyzing other large-scale aircraft modification, training system development, or sustainment contracts within the Department of Defense.

Small Business Impact

This contract does not appear to involve a small business set-aside, as it was awarded to Lockheed Martin Corporation, a large prime contractor. There is no explicit information regarding subcontracting plans for small businesses within this specific delivery order. The focus on a sole-source award to a large entity suggests that opportunities for small business participation may be limited unless actively pursued by the prime contractor.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a Cost Plus Fixed Fee contract, rigorous financial oversight is crucial to monitor expenditures and ensure the fixed fee remains appropriate. Transparency is limited due to the sole-source nature, but contract performance reviews and audits by the Defense Contract Audit Agency (DCAA) or the Inspector General could provide accountability measures.

Related Government Programs

Naval Aviation Training Systems
Mission Rehearsal Systems
Aircraft Modification Programs
Defense Contractor Support Services
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Sole-source award
Cost-plus pricing structure
Long performance period

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $96.5 million to LOCKHEED MARTIN CORPORATION. THE PURPOSE OF THIS CONTRACT IS TO MODIFY THE PROGRAM OF RECORD MISSION REHEARSAL TRAINING DEVICE.

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 $96.5 million.

What is the period of performance?

Start: 2022-05-04. End: 2026-08-31.

What is the specific nature of the 'Program of Record Mission Rehearsal Training Device' being modified?

The 'Program of Record Mission Rehearsal Training Device' refers to an established and approved system within the Department of Defense designed to simulate operational environments and scenarios for military personnel. These devices allow aircrews and other personnel to practice missions in a safe, controlled, and cost-effective virtual environment before executing them in the real world. Modifications typically involve updating software, hardware, or simulation fidelity to reflect new threats, tactics, or operational requirements. The specific device is likely tailored for naval aviation, given the awarding agency is the Department of the Navy, and aims to enhance pilot proficiency and mission planning effectiveness.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other contract types for similar services?

Cost Plus Fixed Fee (CPFF) contracts reimburse the contractor for allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used when the scope of work is not precisely defined or involves significant uncertainty, such as research and development or complex modifications. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers less cost certainty for the government, as costs can fluctuate. However, it provides greater flexibility to adapt to evolving requirements. For services like aircraft manufacturing support and training device modifications, FFP might be preferred if the scope is well-defined, potentially offering better value. However, CPFF can be advantageous when innovation or adaptation is paramount, provided robust oversight is in place to control costs and ensure the fixed fee remains fair.

What are the potential risks associated with a sole-source award for this type of contract?

Sole-source awards, like this one to Lockheed Martin, carry several risks. The primary risk is the lack of competitive pressure, which can lead to inflated prices and reduced incentive for the contractor to innovate or optimize performance. Without competing bids, the government may not achieve the best possible value for its investment. There's also a risk of contractor complacency or reduced responsiveness, as the contractor faces no immediate threat of losing future business to competitors. Furthermore, the absence of a competitive process can limit transparency and make it harder for the government to independently validate the fairness of the negotiated price and terms. This necessitates strong government oversight and negotiation skills.

What is Lockheed Martin Corporation's track record with the Department of the Navy for similar training systems?

Lockheed Martin Corporation has a long and extensive history of contracting with the Department of the Navy, particularly in areas related to aviation, training systems, and platform sustainment. They are a major defense contractor involved in numerous programs, including fighter aircraft (like the F-35), naval helicopters, and various simulation and training technologies. Their track record with the Navy includes developing, manufacturing, and supporting complex systems that require advanced engineering and integration capabilities. While specific performance metrics for past training system contracts would require detailed analysis, Lockheed Martin's position as a prime contractor suggests a generally accepted capability to meet the Navy's demanding requirements, though like any large contractor, they may have faced performance challenges on specific programs.

How does the duration of this contract (over 3 years) impact the overall cost and risk?

The extended duration of this contract, spanning from May 2022 to August 2026 (approximately 40 months), significantly influences both cost and risk. Longer contract periods allow for more predictable planning and potentially better utilization of resources for both the government and the contractor. It can also facilitate the development of more sophisticated and integrated training solutions. However, it also increases the government's exposure to potential cost increases due to inflation, changes in labor rates, or unforeseen technical challenges that may arise over time. Furthermore, a longer period increases the risk of requirements becoming outdated or misaligned with evolving operational needs, necessitating contract modifications. Robust change management and regular performance reviews are critical to mitigate these risks.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft 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: COST PLUS FIXED FEE (U)

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: $96,466,445

Exercised Options: $96,466,445

Current Obligation: $96,466,445

Subaward Activity

Number of Subawards: 73

Total Subaward Amount: $18,316,967

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001919G0008

IDV Type: BOA

Timeline