DoD awards $37.5M for aircraft parts and equipment, with Lockheed Martin as sole source

Contract Overview

Contract Amount: $37,466,819 ($37.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2024-09-30

End Date: 2027-08-31

Contract Duration: 1,065 days

Daily Burn Rate: $35.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: THIS CONTRACT IS FOR THE PROCUREMENT, DELIVERY, AND INSTALLATION OF DEPOT, SPECIAL TEST EQUIPMENT, TOOLING, SUPPORT EQUIPMENT DEPOT EQUIPMENT OPERATOR TRAINING EVENT AND DATA ITEMS.

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $37.5 million to LOCKHEED MARTIN CORPORATION for work described as: THIS CONTRACT IS FOR THE PROCUREMENT, DELIVERY, AND INSTALLATION OF DEPOT, SPECIAL TEST EQUIPMENT, TOOLING, SUPPORT EQUIPMENT DEPOT EQUIPMENT OPERATOR TRAINING EVENT AND DATA ITEMS. Key points: 1. Contract value represents a significant investment in specialized aviation support. 2. Sole-source award raises questions about competition and potential cost efficiencies. 3. Long contract duration suggests a need for sustained support and integration. 4. Focus on depot equipment and training indicates a strategic approach to maintenance. 5. Geographic concentration in Florida may impact regional economic development. 6. The contract type (Cost Plus Fixed Fee) requires careful monitoring of costs.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its specialized nature and sole-source award. The $37.5 million over approximately three years for depot equipment, tooling, and training is substantial. Without competitive bids, it's difficult to definitively assess if this represents optimal value for money. Comparisons to similar sole-source procurements for highly specialized defense systems would be necessary for a more robust assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Lockheed Martin Corporation, was solicited. This approach is typically used when a unique capability or proprietary technology is required, or in cases of urgent need where competition is not feasible. The lack of competition limits price discovery and may result in higher costs compared to a fully competed procurement.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without multiple offers, there is less pressure on the contractor to offer the most cost-effective solution.

Public Impact

The Department of the Navy benefits from the acquisition of critical depot equipment and tooling for aircraft maintenance. This contract supports the operational readiness and sustainment of naval aviation assets. The training component ensures personnel are equipped to operate and maintain specialized equipment. The primary geographic impact is in Florida, where the equipment will be delivered and installed. The contract may indirectly support a specialized workforce in aviation maintenance and logistics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Cost Plus Fixed Fee contract type necessitates robust oversight to manage costs effectively.
Long contract duration increases the risk of cost overruns if not managed diligently.
Lack of transparency in the sole-source justification requires scrutiny.
Potential for vendor lock-in due to specialized equipment and training.

Positive Signals

Addresses a specific and critical need for specialized aviation support equipment.
Includes operator training, which enhances the utility and effectiveness of the equipment.
Long-term contract provides stability for sustainment and maintenance operations.
Award to a major defense contractor like Lockheed Martin suggests a high level of technical capability.

Sector Analysis

This contract falls within the broader aerospace and defense manufacturing sector, specifically focusing on aircraft parts and auxiliary equipment. The market for specialized depot equipment and tooling is often characterized by high barriers to entry due to technical complexity and stringent quality requirements. Spending in this area is critical for maintaining the operational readiness of military aviation fleets, and contracts are often awarded to established prime contractors with deep expertise in defense systems.

Small Business Impact

This contract was not competed and there is no indication of small business set-asides or subcontracting plans. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal, unless Lockheed Martin voluntarily engages small businesses for specific components or services not covered by the primary scope.

Oversight & Accountability

Oversight for this Cost Plus Fixed Fee contract will primarily reside with the Department of the Navy contracting and program management offices. Key accountability measures will involve rigorous monitoring of incurred costs against the fixed fee, performance reviews, and adherence to delivery schedules. Transparency is limited due to the sole-source nature, but contract modifications and performance reports should be accessible through federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Maintenance and Repair Services
Aerospace Manufacturing
Defense Logistics Support
Specialized Industrial Equipment Procurement
Naval Aviation Readiness Programs

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.5 million to LOCKHEED MARTIN CORPORATION. THIS CONTRACT IS FOR THE PROCUREMENT, DELIVERY, AND INSTALLATION OF DEPOT, SPECIAL TEST EQUIPMENT, TOOLING, SUPPORT EQUIPMENT DEPOT EQUIPMENT OPERATOR TRAINING EVENT AND DATA ITEMS.

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 $37.5 million.

What is the period of performance?

Start: 2024-09-30. End: 2027-08-31.

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

The provided data does not include the specific justification for the sole-source award. Typically, sole-source procurements are justified under specific circumstances outlined in federal acquisition regulations, such as the existence of only one responsible source capable of providing the required supplies or services, urgent and compelling needs, or when the acquisition is for a unique or proprietary item. For this contract, the justification would likely relate to Lockheed Martin's unique position as the original equipment manufacturer or a provider of highly specialized, proprietary technology essential for the operation or maintenance of specific naval aircraft systems. Further investigation into the contract's justification documentation (e.g., Justification and Approval - J&A) would be required to ascertain the precise reasons.

How does the Cost Plus Fixed Fee (CPFF) contract type influence cost control and contractor incentives in this procurement?

The Cost Plus Fixed Fee (CPFF) contract type means the contractor (Lockheed Martin) is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure incentivizes the contractor to control costs, as the fee remains constant regardless of the final cost. However, it also places a significant burden on the government to meticulously audit and verify all claimed costs to ensure they are reasonable, allocable, and allowable. Unlike fixed-price contracts, CPFF offers less cost certainty for the government upfront. The government's oversight and auditing capabilities are crucial for managing this contract type effectively and ensuring value for money, especially in a sole-source scenario where competitive pressure is absent.

What are the potential risks associated with the long duration (1065 days) of this contract?

A contract duration of 1065 days (approximately three years) for the procurement, delivery, and installation of depot equipment and training presents several potential risks. Firstly, there's an increased risk of cost escalation due to inflation or unforeseen changes in material costs over the extended period, even with a fixed fee component. Secondly, technological obsolescence could become a factor if the equipment is highly specialized and the underlying technology evolves rapidly. Thirdly, managing performance and ensuring contractor accountability over such a long timeframe requires sustained government oversight and resources. Finally, changes in military requirements or budget priorities during the contract's life could necessitate costly modifications or lead to inefficiencies if the scope needs to be adjusted.

What is the expected impact of this contract on the operational readiness of naval aviation assets?

This contract is expected to significantly enhance the operational readiness of naval aviation assets by providing essential depot-level equipment, tooling, and operator training. Depot equipment is critical for performing complex maintenance, repair, and overhaul tasks that are beyond the capabilities of intermediate-level maintenance. Having the right tools and trained personnel ensures that aircraft can be returned to service efficiently and effectively, minimizing downtime. This investment in sustainment infrastructure directly supports the Navy's ability to maintain a high operational tempo and ensure its aircraft are mission-capable when and where needed.

How does the specific North American Industry Classification System (NAICS) code 336413 relate to the contract's scope?

The NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' accurately categorizes the primary nature of this contract. While the contract involves procurement, delivery, and installation of equipment and training, the underlying purpose is to support the maintenance and operation of aircraft. This code encompasses establishments primarily engaged in manufacturing aircraft parts and auxiliary equipment, such as engines, propellers, landing gear, and avionics, but not the complete aircraft. The specialized test equipment and tooling procured under this contract are auxiliary to the manufacturing and maintenance of these aircraft parts and the aircraft themselves, aligning well with the scope defined by NAICS 336413.

Industry Classification

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

Product/Service Code: MAINT/REPAIR SHOP EQPT

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: 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

Financial Breakdown

Contract Ceiling: $37,466,819

Exercised Options: $37,466,819

Current Obligation: $37,466,819

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $263,761

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001923G0002

IDV Type: BOA

Timeline