Navy awards $20.9M contract for aircraft parts, with limited competition and a high unit cost

Contract Overview

Contract Amount: $20,876,141 ($20.9M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2023-05-01

End Date: 2026-04-30

Contract Duration: 1,095 days

Daily Burn Rate: $19.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LGTR (USN) BDU-59B/B

Place of Performance

Location: ARCHBALD, LACKAWANNA County, PENNSYLVANIA, 18403

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $20.9 million to LOCKHEED MARTIN CORPORATION for work described as: LGTR (USN) BDU-59B/B Key points: 1. The contract value represents a significant investment in aircraft parts. 2. Competition for this contract was limited, potentially impacting price. 3. The unit cost appears high when compared to industry benchmarks. 4. This contract is for aircraft parts, a critical component for military readiness. 5. The duration of the contract suggests a long-term need for these parts.

Value Assessment

Rating: questionable

The awarded amount of $20.9 million for 1095 days raises concerns about value for money. The unit price of $19,065 is notably high, especially when compared to similar aircraft components or parts manufactured at scale. Without further breakdown of the specific parts included, it is difficult to definitively assess the pricing, but the benchmark suggests potential overpayment.

Cost Per Unit: $19,065 per unit, which appears high compared to market rates for comparable aircraft components.

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder was considered. This lack of competition significantly limits the government's ability to negotiate the best possible price and may lead to inflated costs. The absence of multiple bids suggests potential inefficiencies in the procurement process or a lack of available qualified suppliers.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding, as the government did not have the opportunity to leverage multiple offers to secure a lower price.

Public Impact

The U.S. Navy benefits directly through the acquisition of essential aircraft parts. This contract ensures the continued operational readiness of naval aircraft. The parts supplied will likely be used across various naval aviation platforms. The contract supports the aerospace manufacturing sector, potentially impacting jobs within that industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High unit cost raises concerns about potential overspending.
Sole-source award limits price negotiation and may inflate costs.
Lack of competition could indicate market concentration or barriers to entry for other suppliers.

Positive Signals

Ensures critical aircraft parts are supplied to the Navy.
Long-term contract provides supply chain stability for essential components.
Awarding to a known entity may leverage existing expertise and quality control.

Sector Analysis

This contract falls within the broader aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for specialized aircraft components is often characterized by high barriers to entry due to technical expertise, certifications, and established relationships. Spending in this area is critical for maintaining military readiness and supporting the defense industrial base. Comparable spending benchmarks would typically involve analyzing unit costs for similar components across different military branches or allied nations.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting requirements for small businesses. This suggests that the primary awardee is likely a large corporation. The absence of small business participation in the prime contract could limit opportunities for smaller firms within the aerospace supply chain, although they might still be involved as lower-tier subcontractors.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management systems. Accountability measures are inherent in the firm-fixed-price structure, which places the cost risk on the contractor. Transparency is generally facilitated through contract databases like FPDS, though the specifics of sole-source justifications may have limited public detail. Inspector General involvement would be triggered by allegations of fraud, waste, or abuse.

Related Government Programs

Aircraft Maintenance and Repair
Aerospace Component Manufacturing
Defense Procurement
Naval Aviation Support

Risk Flags

High Unit Cost
Sole-Source Award
Limited Competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.9 million to LOCKHEED MARTIN CORPORATION. LGTR (USN) BDU-59B/B

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 $20.9 million.

What is the period of performance?

Start: 2023-05-01. End: 2026-04-30.

What specific aircraft parts are being procured under this contract?

The provided data identifies the contract as being for 'LGTR (USN) BDU-59B/B', which are typically bomb rack components or related aircraft hardware used by the U.S. Navy. However, the exact specifications, quantities, and detailed breakdown of the parts are not publicly available in this summary. Understanding the precise nature of these components is crucial for a more accurate assessment of their unit cost and overall value. Without this granular detail, comparisons to market rates remain generalized.

How does the unit cost of $19,065 compare to similar aircraft parts procured by the DoD?

The unit cost of $19,065 for the BDU-59B/B component appears significantly high when benchmarked against a wide range of aircraft parts. While specialized or complex components can command higher prices, this figure warrants scrutiny. For context, many standard aircraft components, even those with advanced materials or certifications, often fall into lower unit cost ranges, sometimes in the hundreds or low thousands of dollars, depending on complexity and volume. Without knowing the exact specifications and manufacturing complexity of the BDU-59B/B, a direct comparison is challenging, but the benchmark suggests this part may be exceptionally expensive or that the contract's pricing structure includes factors beyond just the raw part cost.

What are the risks associated with a sole-source procurement for critical aircraft parts?

Sole-source procurements, like this one, carry several risks. Primarily, the lack of competition means the government likely pays a higher price than if multiple bids were solicited, as the contractor faces no pressure to offer competitive pricing. There's also a risk of reduced innovation, as the incumbent contractor may have less incentive to improve processes or offer cost-saving alternatives. Furthermore, reliance on a single source can create supply chain vulnerabilities; if the sole provider experiences production issues, the Navy's operational readiness could be jeopardized. Finally, it can foster a perception of favoritism or lack of due diligence in the procurement process.

What is the historical spending pattern for this specific part or similar components by the Navy?

Historical spending data for the specific 'LGTR (USN) BDU-59B/B' component is not detailed in the provided summary. To assess historical patterns, one would need to access comprehensive contract databases (like FPDS) and search for previous awards to Lockheed Martin Corporation or other entities for this National Stock Number (NSN) or similar parts. Analyzing past contract values, quantities, and unit prices over several years would reveal trends in pricing, demand, and potential cost increases or decreases. This historical context is vital for determining if the current $20.9 million award represents a significant escalation or is in line with previous investments.

What is Lockheed Martin Corporation's track record with the U.S. Navy for similar contracts?

Lockheed Martin Corporation is a major defense contractor with an extensive history of supplying various components and systems to the U.S. Navy. They are known for producing complex aircraft, weapons systems, and related support equipment. Their track record with the Navy is generally characterized by large-scale, high-value contracts. While specific performance metrics for this particular part are not detailed, Lockheed Martin's established presence and capabilities in the defense sector suggest they possess the technical expertise and manufacturing capacity to fulfill this requirement. However, the sole-source nature of this award means past competitive performance is not directly relevant to this specific procurement's price discovery.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $20,876,141

Exercised Options: $20,876,141

Current Obligation: $20,876,141

Subaward Activity

Number of Subawards: 36

Total Subaward Amount: $6,974,280

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