DoD's $34M Lockheed Martin contract for aviation support services shows limited competition

Contract Overview

Contract Amount: $34,070,651 ($34.1M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2024-01-01

End Date: 2024-12-31

Contract Duration: 365 days

Daily Burn Rate: $93.3K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CY2024 TLS SUPPORT SERVICES PROGRAM SUPPORT: PROGRAM, MAINTENANCE AND LOGISTICS, SCHEDULED MAINTENANCE OF SUPPORT AND TEST EQUIPMENT, ELECTRONIC WARFARE SUPPORT, PLANNED MAINTENANCE INTERVALS (PMI) AND APPLICABLE GOODS AND SERVICES TAX (GST).

Plain-Language Summary

Department of Defense obligated $34.1 million to LOCKHEED MARTIN CORPORATION for work described as: CY2024 TLS SUPPORT SERVICES PROGRAM SUPPORT: PROGRAM, MAINTENANCE AND LOGISTICS, SCHEDULED MAINTENANCE OF SUPPORT AND TEST EQUIPMENT, ELECTRONIC WARFARE SUPPORT, PLANNED MAINTENANCE INTERVALS (PMI) AND APPLICABLE GOODS AND SERVICES TAX (GST). Key points: 1. Contract awarded to a single, large defense contractor, raising questions about competitive pricing. 2. Focus on essential aviation support, including maintenance and logistics, critical for operational readiness. 3. The firm-fixed-price structure aims to control costs, but price discovery is limited by competition. 4. This contract represents a significant investment in maintaining complex military aviation assets. 5. Potential for cost overruns exists due to the lack of competitive pressure. 6. Performance metrics and oversight will be crucial for ensuring value for taxpayer dollars.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without comparable sole-source or limited-competition awards for similar, highly specialized aviation support services. The firm-fixed-price contract type suggests an attempt to cap costs, but the absence of competition limits the ability to assess if the pricing is truly competitive against market rates or alternative providers. The total award amount of $34 million for a one-year period indicates a substantial investment, and without a competitive bid process, it's difficult to definitively state if this represents excellent value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. The specific reasons for this approach, such as unique capabilities or proprietary technology held by Lockheed Martin, are not detailed. The lack of competition means that multiple potential bidders were not considered, which can limit price discovery and potentially lead to higher costs for the government compared to a fully competed scenario.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding, as the government did not benefit from the price reductions typically driven by multiple offers.

Public Impact

The Department of the Navy benefits through the continued operational readiness of its aviation assets. Services include program support, maintenance, logistics, and scheduled maintenance for support and test equipment. Electronic warfare support is also a critical component, ensuring advanced capabilities. This contract supports the maintenance of complex military aircraft, indirectly benefiting the defense workforce involved in aviation operations and maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs than a competed contract.
Sole-source awards can reduce transparency in pricing and value assessment.
Reliance on a single contractor for critical support services poses a potential risk if performance issues arise.

Positive Signals

Firm-fixed-price contract type helps to establish cost certainty.
Contract focuses on essential maintenance and logistics, crucial for military readiness.
Award to a major defense contractor suggests access to specialized expertise and resources.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on support activities for air transportation. The market for specialized aviation maintenance and logistics services is often dominated by a few large, established contractors due to the high technical expertise, security clearances, and infrastructure required. Spending in this area is critical for maintaining the operational readiness of military fleets, and contracts can range from millions to billions of dollars depending on the scope and duration.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information indicating subcontracting opportunities for small businesses. The award to a large prime contractor like Lockheed Martin suggests that the primary focus is on the prime's capabilities, potentially limiting direct opportunities for small businesses within this specific contract's scope. Further analysis would be needed to determine if subcontracting plans exist.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. Accountability measures are typically embedded within the contract terms, including performance standards and reporting requirements. Transparency is limited by the sole-source nature of the award, but contract details and performance should be accessible through federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Aviation Maintenance Contracts
Naval Air Systems Command Support Services
Lockheed Martin Defense Contracts
Electronic Warfare Support Services
Military Logistics and Maintenance Programs

Risk Flags

Sole-source award limits price competition.
Potential for cost overruns due to lack of competitive pressure.
Reliance on a single contractor for critical support.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.1 million to LOCKHEED MARTIN CORPORATION. CY2024 TLS SUPPORT SERVICES PROGRAM SUPPORT: PROGRAM, MAINTENANCE AND LOGISTICS, SCHEDULED MAINTENANCE OF SUPPORT AND TEST EQUIPMENT, ELECTRONIC WARFARE SUPPORT, PLANNED MAINTENANCE INTERVALS (PMI) AND APPLICABLE GOODS AND SERVICES TAX (GST).

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 $34.1 million.

What is the period of performance?

Start: 2024-01-01. End: 2024-12-31.

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

Lockheed Martin Corporation has an extensive and long-standing track record of providing aviation support services, including maintenance, logistics, and program support, to various branches of the U.S. military, particularly the Department of the Navy and Air Force. They are a prime contractor on numerous large-scale defense programs involving complex aircraft systems. Their history includes managing large, multi-year contracts for aircraft sustainment, upgrades, and operational support. While this extensive experience suggests a high level of capability and reliability, it also means they are a frequent recipient of sole-source or limited-competition awards due to the specialized nature of their offerings and the deep integration with military platforms. Analyzing past performance on similar contracts, including any reported issues or successes, would provide further context on their ability to deliver on this specific award.

How does the pricing of this contract compare to similar sole-source aviation support contracts awarded by the DoD?

Directly comparing the pricing of this $34 million, one-year contract for TLS Support Services to other sole-source aviation support contracts is challenging without access to detailed pricing breakdowns and specific service scopes of comparable awards. Sole-source contracts inherently lack the price discovery mechanism of competition. However, the firm-fixed-price (FFP) structure indicates an attempt to cap costs. To assess value, one would typically benchmark the per-unit costs (e.g., per flight hour, per maintenance action) against industry standards or historical data for similar platforms, adjusted for inflation and specific service requirements. Given the specialized nature of electronic warfare support and scheduled maintenance for potentially advanced aircraft, the pricing could be within a reasonable range for a sole-source award, but without competitive bids, it's difficult to confirm optimal value for taxpayer dollars.

What are the primary risks associated with this sole-source contract for aviation support?

The primary risks associated with this sole-source contract are centered around cost and performance. Firstly, the lack of competition means the government may not be achieving the most favorable pricing, potentially leading to higher costs than if the contract were competed. There is a risk of cost escalation if the contractor's initial estimates are inaccurate or if unforeseen issues arise that are not adequately covered by the FFP structure's contingencies. Secondly, sole-source awards can sometimes lead to complacency from the contractor regarding performance, as there is no immediate threat of losing the business to a competitor. Robust oversight, clear performance metrics, and strong contract management are essential to mitigate these risks and ensure the government receives the required services at a fair price.

How effective is the firm-fixed-price (FFP) contract type in managing costs for specialized aviation support services?

The firm-fixed-price (FFP) contract type is generally considered effective for managing costs when the scope of work is well-defined and the risks are understood. For specialized aviation support services like maintenance, logistics, and electronic warfare support, FFP provides cost certainty to the government, as the contractor assumes most of the risk for cost overruns. This structure incentivizes the contractor to control costs and improve efficiency to maximize profit. However, if the scope is not precisely defined or if unforeseen technical challenges arise, the contractor might be disincentivized from addressing them thoroughly, or conversely, may have built significant contingencies into the price, making it appear high. In a sole-source scenario, the effectiveness of FFP in achieving competitive pricing is diminished.

What is the historical spending pattern for similar aviation support services within the Department of the Navy?

Historical spending patterns for similar aviation support services within the Department of the Navy typically show significant and consistent investment. The Navy operates a large and diverse fleet of aircraft, requiring continuous maintenance, logistics, and specialized support to ensure operational readiness. Spending in this category often runs into billions of dollars annually across various contracts, including those for depot-level maintenance, component repair, supply chain management, and technical support. Contracts are often awarded to major defense contractors like Lockheed Martin, Boeing, and others, frequently through sole-source or limited-competition vehicles due to the specialized nature of the platforms and systems involved. Analyzing historical spending trends can reveal patterns of increasing costs, shifts in technology focus (e.g., towards unmanned systems or advanced electronic warfare), and the prevalence of long-term sustainment contracts.

Industry Classification

NAICS: Transportation and Warehousing › Support Activities for Air Transportation › Other Support Activities for Air Transportation

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

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: $34,070,651

Exercised Options: $34,070,651

Current Obligation: $34,070,651

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0001920D0001

IDV Type: IDC

Timeline