DoD awards $421M F-35 AME requirements to Lockheed Martin, a sole-source contract

Contract Overview

Contract Amount: $42,134,921 ($42.1M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2022-02-25

End Date: 2024-12-31

Contract Duration: 1,040 days

Daily Burn Rate: $40.5K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THIS ORDER PROCURES F35 LOT 16 AME REQUIREMENTS FOR US SERVICES, PARTNERS, AND FMS COUNTRIES.

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $42.1 million to LOCKHEED MARTIN CORPORATION for work described as: THIS ORDER PROCURES F35 LOT 16 AME REQUIREMENTS FOR US SERVICES, PARTNERS, AND FMS COUNTRIES. Key points: 1. This contract addresses critical sustainment needs for the F-35 program. 2. The sole-source nature raises questions about potential price inflation and limited market leverage. 3. Performance risk is moderate given the established nature of the F-35 program and contractor. 4. The contract duration extends through late 2024, indicating a long-term sustainment requirement. 5. This spending falls within the broader defense aerospace manufacturing sector. 6. The absence of competition limits opportunities for smaller, innovative suppliers to enter the F-35 ecosystem.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging without competitive data. The $421 million award for F-35 AME requirements suggests a significant investment in sustainment. However, the lack of competition means there's no direct comparison to assess if this represents a fair price. Without a competitive bidding process, it's difficult to determine if Lockheed Martin's pricing reflects market pressures or if there's potential for cost efficiencies that were forgone.

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 considered. This approach is often used when a specific contractor possesses unique capabilities or intellectual property essential for the requirement, as is common with established defense platforms like the F-35. The lack of competition means that price discovery through market forces was not utilized, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure, which typically drives down prices. The government has limited leverage to negotiate better terms when only one supplier is available.

Public Impact

US military services benefit from the continued availability of critical F-35 aircraft components and support. Partner nations utilizing the F-35 through Foreign Military Sales (FMS) also receive necessary sustainment. The contract supports the operational readiness of a key strategic defense asset. Workforce in Texas, where the contractor is based, is likely supported by this significant award.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive opportunities and potentially inflates costs.
Lack of transparency in pricing due to non-competitive nature.
Dependence on a single contractor for critical F-35 sustainment components.
Potential for cost overruns without competitive oversight.

Positive Signals

Ensures continued availability of essential F-35 sustainment requirements.
Supports a critical national defense asset and its operational readiness.
Leverages the established expertise of the incumbent contractor for a complex system.

Sector Analysis

The aerospace manufacturing sector is characterized by high barriers to entry, significant R&D investment, and long production cycles. This contract for F-35 sustainment falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sub-sector. Spending in this area is crucial for maintaining the operational readiness of advanced military fleets. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of defense platforms, but overall defense procurement represents a substantial portion of the federal budget.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements mentioned in the provided data. As a sole-source award to a large prime contractor, the direct impact on small businesses is limited unless they are existing subcontractors within Lockheed Martin's supply chain. Opportunities for small businesses to directly compete for this specific requirement are non-existent.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management oversight structures. The Defense Contract Management Agency (DCMA) likely plays a role in monitoring performance and compliance. Transparency is limited due to the sole-source nature, but contract modifications and performance reports would be subject to internal DoD review and potentially Inspector General audits if performance issues or financial irregularities arise.

Related Government Programs

F-35 Lightning II Program
Defense Logistics Agency (DLA) Sustainment Contracts
Aircraft Parts Manufacturing
Foreign Military Sales (FMS) Support

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for cost overruns
Long-term sustainment dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $42.1 million to LOCKHEED MARTIN CORPORATION. THIS ORDER PROCURES F35 LOT 16 AME REQUIREMENTS FOR US SERVICES, PARTNERS, AND FMS COUNTRIES.

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 $42.1 million.

What is the period of performance?

Start: 2022-02-25. End: 2024-12-31.

What is the historical spending trend for F-35 AME requirements with Lockheed Martin?

Analyzing historical spending trends for F-35 AME requirements with Lockheed Martin requires access to detailed contract databases beyond the provided data. However, it is well-documented that the F-35 program, including its sustainment and component needs, represents a significant and growing portion of the Department of Defense budget. As the fleet matures and operational hours increase, sustainment costs, including those for Airframe Mounted Equipment (AME), tend to rise. Without specific historical data points for this particular contract vehicle or similar ones, it's difficult to quantify the trend precisely. However, the overall trajectory for F-35 sustainment spending has been upward, driven by fleet growth and the increasing complexity of maintaining advanced aircraft systems over their lifecycle. This $421 million award for Lot 16 AME requirements is likely part of a larger, multi-year sustainment strategy that reflects this broader trend.

How does the pricing of this contract compare to similar sustainment contracts for other major defense aircraft?

Directly comparing the pricing of this $421 million F-35 AME requirements contract to similar sustainment contracts for other major defense aircraft is challenging due to several factors. Firstly, the F-35 is a 5th-generation fighter with unique technological complexities and a global sustainment strategy involving multiple nations, which inherently impacts cost structures. Secondly, the 'AME requirements' are specific components and support, not a total aircraft sustainment package. Thirdly, this contract is sole-source, meaning competitive benchmarking is absent. However, generally, sustainment costs for advanced military platforms are substantial and represent a significant lifecycle cost. Contracts for sustainment of aircraft like the F-22, F-15, or F/A-18 involve complex logistics, specialized parts, and extensive technical support, often running into hundreds of millions or even billions of dollars over their service life. The value proposition is typically assessed against operational readiness rates and total cost of ownership, rather than direct per-unit price comparisons across different platforms and contract types.

What are the primary risks associated with a sole-source award for critical aircraft components?

The primary risks associated with a sole-source award for critical aircraft components like the F-35 AME requirements are multifaceted. Foremost is the risk of inflated pricing, as the absence of competition removes the incentive for the contractor to offer the most cost-effective solution. The government has limited leverage to negotiate favorable terms. Secondly, there's a risk of reduced innovation and responsiveness; without competitive pressure, the sole provider may be less motivated to invest in process improvements or develop more efficient solutions. Thirdly, dependence on a single supplier creates supply chain vulnerability. If the sole-source contractor experiences production issues, financial instability, or geopolitical disruptions, it can severely impact the availability of critical parts and the operational readiness of the aircraft. Finally, transparency in cost and performance can be diminished, making it harder for oversight bodies to ensure value for taxpayer money.

What is Lockheed Martin's track record in delivering F-35 components and sustainment services?

Lockheed Martin Corporation has an extensive and long-standing track record as the prime contractor for the F-35 Lightning II program, responsible for its design, development, production, and sustainment. They have delivered thousands of F-35 aircraft and associated components to the U.S. military and international partners. Their performance in delivering F-35 components and sustainment services is generally characterized by meeting program milestones, albeit often with schedule adjustments and cost challenges inherent in programs of this scale and complexity. The company has established global supply chains and maintenance networks to support the F-35 fleet. While specific performance metrics for individual contracts like this AME requirements order are not publicly detailed, Lockheed Martin's overall role as the sole manufacturer and primary sustainment provider for the F-35 indicates a deep, albeit sometimes contentious, history of fulfilling these critical defense needs.

How does this contract contribute to the overall F-35 program's long-term sustainment strategy?

This contract for F-35 Lot 16 AME requirements is a crucial component of the program's long-term sustainment strategy. Airframe Mounted Equipment (AME) refers to systems and components integrated into the aircraft's structure, essential for its operation, including avionics, power systems, and structural elements. By procuring these requirements, the Department of Defense ensures the continued availability and maintainability of the F-35 fleet for the U.S. services and partner nations. The F-35 program relies on a comprehensive sustainment plan that covers logistics, maintenance, repair, and upgrades throughout the aircraft's expected service life, which extends for decades. This award represents a specific, yet vital, element of that ongoing effort, ensuring that the necessary parts and support are in place to keep the aircraft mission-capable and technologically relevant over time.

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

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: $42,134,921

Exercised Options: $42,134,921

Current Obligation: $42,134,921

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001919D0015

IDV Type: IDC

Timeline