DoD's $122.8M contract for aircraft parts awarded to Lockheed Martin, raising questions about competition and value

Contract Overview

Contract Amount: $122,787,680 ($122.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2022-01-01

End Date: 2026-12-31

Contract Duration: 1,825 days

Daily Burn Rate: $67.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ILS AND PRODUCTS LABOR SUPPORT

Place of Performance

Location: STRATFORD, FAIRFIELD County, CONNECTICUT, 06614

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $122.8 million to LOCKHEED MARTIN CORPORATION for work described as: ILS AND PRODUCTS LABOR SUPPORT Key points: 1. The contract's value of $122.8 million over five years warrants scrutiny for cost-effectiveness. 2. Awarded sole-source to Lockheed Martin, limiting competitive pressure and potentially inflating prices. 3. The 'Other Aircraft Parts' category is broad, requiring a deeper dive into specific components and their necessity. 4. Performance risk is moderate given the contractor's established presence, but oversight is crucial. 5. This contract falls within the Defense sector, specifically supporting aircraft sustainment. 6. The lack of competition suggests potential market concentration or specific technical requirements.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without detailed cost breakdowns and comparisons to similar sole-source awards for specialized aircraft parts. The $122.8 million total value, spread over five years, averages approximately $24.5 million annually. Given the sole-source nature, it's difficult to assess if this represents a fair market price. Further analysis would require comparing the specific parts and services to industry benchmarks and other government contracts for similar items, which are not readily available in the provided data.

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 bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified for unique capabilities or urgent needs, they inherently reduce price discovery and can lead to higher costs for the government compared to a fully competed contract.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without multiple offers, there is less incentive for the contractor to offer the lowest possible price, potentially leading to inefficient use of public funds.

Public Impact

The Department of the Navy benefits from the continued supply of essential aircraft parts and auxiliary equipment. This contract ensures the operational readiness and sustainment of military aircraft. The geographic impact is primarily centered around Lockheed Martin's facilities and the operational bases of the Navy's aircraft. Workforce implications include continued employment for individuals involved in the manufacturing and support of these aircraft parts at Lockheed Martin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Lack of transparency in the justification for a sole-source award.
Broad scope of 'Other Aircraft Parts' could obscure specific cost drivers.
Long contract duration (5 years) may reduce flexibility to adapt to market changes or new technologies.

Positive Signals

Award to a large, established defense contractor like Lockheed Martin suggests a degree of reliability and existing infrastructure.
Contract supports critical defense needs, ensuring aircraft readiness.
The contract is for essential parts and auxiliary equipment, indicating a necessary procurement.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government reliance. This contract for aircraft parts and auxiliary equipment fits within the broader defense industrial base, specifically supporting aircraft sustainment. The market for specialized aircraft components is often dominated by a few large prime contractors and their extensive supply networks. Comparable spending benchmarks are difficult to establish without knowing the specific nature of the parts, but overall defense spending on aircraft sustainment runs into billions annually.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a sole-source award to a large prime contractor, it is unlikely to involve significant subcontracting opportunities for small businesses unless explicitly mandated by the prime. This contract does not appear to directly benefit the small business ecosystem; rather, it consolidates spending with a major defense industrial player.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. The Inspector General for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse. Transparency is limited due to the sole-source nature, but contract award details are usually made public through federal procurement databases. Accountability rests with Lockheed Martin to deliver the specified parts and with the Navy to ensure proper oversight and payment.

Related Government Programs

Aircraft Parts and Auxiliary Equipment Manufacturing
Defense Logistics Agency (DLA) Procurement
Naval Air Systems Command (NAVAIR) Contracts
Lockheed Martin Corporation Defense Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of specific product details
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $122.8 million to LOCKHEED MARTIN CORPORATION. ILS AND PRODUCTS LABOR 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 $122.8 million.

What is the period of performance?

Start: 2022-01-01. End: 2026-12-31.

What specific aircraft parts and auxiliary equipment are covered under this contract?

The provided data categorizes this procurement under NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing.' However, it does not specify the exact nature of the parts or equipment. This broad classification suggests a range of components, potentially including structural parts, engine components, avionics, or other specialized systems. Without a detailed list or product description, it is difficult to assess the criticality, uniqueness, or market availability of these items, which are key factors in justifying a sole-source award and evaluating cost-effectiveness.

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

The justification for a sole-source award typically stems from unique technical capabilities, proprietary technology, urgent and compelling needs, or the unavailability of other sources. For Lockheed Martin, it could be related to specific designs, existing integration with their platforms, or specialized manufacturing processes. However, the provided data does not include the specific justification document (e.g., a Justification and Approval for Other Than Full and Open Competition). A thorough analysis would require reviewing this documentation to understand why competition was deemed impractical or impossible, and to assess the validity of the stated reasons.

How does the pricing structure (Cost Plus Fixed Fee) impact the overall value and risk for the government?

A Cost Plus Fixed Fee (CPFF) contract structure means the contractor is reimbursed for all allowable costs plus a fixed fee representing profit. While this can be useful for research and development or when cost uncertainties are high, it shifts much of the cost risk to the government. The government bears the risk of cost overruns, while the contractor has less incentive to control costs once the fixed fee is established. For a contract involving aircraft parts, the 'fixed fee' component needs careful negotiation to ensure it represents a reasonable profit margin for the work performed, especially given the sole-source nature which limits external price validation.

What is Lockheed Martin Corporation's track record with similar Department of Defense contracts?

Lockheed Martin Corporation is one of the largest defense contractors globally, with an extensive history of supplying aircraft, weapons systems, and support services to the Department of Defense (DoD). They have a significant portfolio of contracts related to aircraft manufacturing, sustainment, and parts. While their track record is generally extensive, specific performance on contracts of similar scope, complexity, and pricing structure (like CPFF sole-source awards for aircraft parts) would need to be examined. This would involve reviewing past performance evaluations, any documented issues or disputes, and their overall success rate in meeting delivery schedules and quality standards for comparable procurements.

Are there any comparable contracts for similar aircraft parts that could serve as a benchmark for this award?

Identifying directly comparable contracts is challenging without knowing the specific parts involved. However, general benchmarks for aircraft parts and sustainment services can be derived from other DoD contracts, particularly those awarded through competitive processes. The average cost per unit or per year for similar types of components (e.g., airframe components, engine parts, avionics) procured by the Navy or other branches can provide a reference point. The fact that this contract is sole-source and for 'other' parts makes direct comparison difficult, but analysis of broader spending trends in aircraft sustainment within the defense sector can offer context on overall market pricing.

What are the potential risks associated with the long duration (5 years) of this contract?

A five-year contract duration for aircraft parts can present several risks. Firstly, it locks the government into a specific supplier and pricing structure for an extended period, potentially missing out on cost savings if market prices decrease or more efficient alternatives emerge. Secondly, technological advancements in aircraft or parts manufacturing could render the contracted items obsolete or less effective over time. Thirdly, the longer the contract, the greater the potential for unforeseen cost increases due to inflation, supply chain disruptions, or changes in material costs, especially under a cost-reimbursement structure. Finally, it reduces the government's flexibility to re-evaluate its needs and explore different solutions.

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: COST PLUS FIXED FEE (U)

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: $139,726,034

Exercised Options: $139,726,034

Current Obligation: $122,787,680

Subaward Activity

Number of Subawards: 65

Total Subaward Amount: $11,898,134

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