Lockheed Martin awarded $14M for aircraft engineering changes, with limited competition

Contract Overview

Contract Amount: $14,051,933 ($14.1M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2024-09-12

End Date: 2027-03-31

Contract Duration: 930 days

Daily Burn Rate: $15.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: THIS DELIVERY ORDER IS PLACING AN ORDER FOR THE DEVELOPMENT OF PRODUCTION ENGINEERING CHANGE PROPOSALS (ECPS), RETROFIT ENGINEERING RELEASE REPORTS (ERRS), AND LEVEL OF EFFORT (LOE) INVESTIGATIONS.

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76101

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $14.1 million to LOCKHEED MARTIN CORPORATION for work described as: THIS DELIVERY ORDER IS PLACING AN ORDER FOR THE DEVELOPMENT OF PRODUCTION ENGINEERING CHANGE PROPOSALS (ECPS), RETROFIT ENGINEERING RELEASE REPORTS (ERRS), AND LEVEL OF EFFORT (LOE) INVESTIGATIONS. Key points: 1. Contract focuses on engineering change proposals and investigations, indicating ongoing product support needs. 2. The sole-source nature of this award warrants scrutiny regarding price reasonableness and potential for better value through competition. 3. A Cost Plus Fixed Fee contract type introduces risk of cost overruns if not closely managed. 4. The duration of 930 days suggests a significant, long-term requirement for these engineering services. 5. This contract falls under the Aircraft Manufacturing sector, a critical area for defense readiness.

Value Assessment

Rating: questionable

Benchmarking the value of this Cost Plus Fixed Fee contract is challenging without detailed cost breakdowns. However, the lack of competition for a $14 million award raises concerns about potential overpricing. Comparing this to similar engineering support contracts for aircraft programs would be necessary to assess if the fixed fee is reasonable given the scope of work. The absence of competitive bidding suggests that taxpayers may not be receiving the best possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning no other companies were solicited for bids. This approach is typically used when only one contractor possesses the necessary specialized capabilities or when urgency precludes a competitive process. The lack of competition limits the government's ability to leverage market forces to drive down costs and ensure the most innovative solutions are considered.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from competitive pricing, potentially leading to higher overall expenditures for these engineering services.

Public Impact

The Department of the Navy benefits from continued engineering support for its aircraft fleet. Services include the development of production engineering change proposals and investigations, ensuring aircraft maintainability and upgrades. The contract's impact is primarily within the defense sector, supporting military aviation readiness. Workforce implications include specialized engineering roles within Lockheed Martin, potentially in Texas where the contract is managed.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Cost Plus Fixed Fee contract type carries inherent risk of cost escalation if not rigorously managed.
Lack of transparency in the justification for sole-source procurement.
Limited visibility into the specific engineering challenges being addressed by the ECPs and ERRs.

Positive Signals

Ensures continued engineering support for critical naval aircraft.
Leverages specialized expertise of a known incumbent contractor.
Provides a defined period for essential aircraft modifications and investigations.

Sector Analysis

This contract operates within the Aircraft Manufacturing sector, a significant segment of the aerospace and defense industry. This sector is characterized by high barriers to entry, complex supply chains, and substantial R&D investment. Spending in this area is often driven by national security requirements and the need for advanced technological capabilities. Comparable spending benchmarks would involve analyzing other sole-source or limited-competition contracts for aircraft sustainment and modification services across the Department of Defense.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information indicating specific subcontracting plans for small businesses. 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 support services.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy contracting and program management offices. Accountability measures would be tied to the delivery of specified engineering change proposals and investigation reports within the agreed-upon timeline and budget. Transparency is limited due to the sole-source nature and the Cost Plus Fixed Fee structure, which often requires detailed audits and reviews to ensure cost reasonableness.

Related Government Programs

Aircraft Manufacturing
Engineering Services
Defense Procurement
Naval Aviation Support
Production Engineering

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Potential for cost overruns
Limited competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.1 million to LOCKHEED MARTIN CORPORATION. THIS DELIVERY ORDER IS PLACING AN ORDER FOR THE DEVELOPMENT OF PRODUCTION ENGINEERING CHANGE PROPOSALS (ECPS), RETROFIT ENGINEERING RELEASE REPORTS (ERRS), AND LEVEL OF EFFORT (LOE) INVESTIGATIONS.

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 $14.1 million.

What is the period of performance?

Start: 2024-09-12. End: 2027-03-31.

What is the specific justification provided by the Department of the Navy 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 circumstances such as the unique capability of a single contractor, urgent and compelling needs that preclude full and open competition, or when only one responsible source is available. For this contract, the justification would likely relate to Lockheed Martin's proprietary knowledge and established role in the specific aircraft platforms requiring these engineering change proposals and investigations. A detailed review of the contract file and associated justifications would be necessary to ascertain the precise rationale.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other potential contract types for this scope of work, and what are the associated risks?

The Cost Plus Fixed Fee (CPFF) contract type is often used when the scope of work is not precisely defined, or when there is significant uncertainty in the cost of performance, such as in research and development or complex engineering efforts. Under CPFF, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. Compared to fixed-price contracts, CPFF shifts more cost risk to the government, as the contractor is incentivized to incur costs to cover their fixed fee. The primary risk for the government is potential cost overruns if the contractor's costs exceed initial estimates, as the fixed fee remains constant. Effective oversight, detailed cost monitoring, and clear definition of allowable costs are crucial to mitigate these risks and ensure value for money.

What is the historical spending pattern for similar engineering support services for the specific aircraft platforms this contract pertains to?

The provided data does not contain historical spending patterns for similar engineering support services. To assess this, one would need to access historical contract databases (e.g., FPDS-NG) and search for previous contracts awarded to Lockheed Martin or other entities for engineering change proposals (ECPs), retrofit engineering release reports (ERRs), and level of effort investigations related to the specific naval aircraft platforms. Analyzing the value, duration, and contract types of these past awards would provide context for the current $14 million, 930-day delivery order and help identify any trends or significant deviations in spending.

What are the potential performance risks associated with Lockheed Martin Corporation's track record on similar defense contracts?

While the provided data does not detail Lockheed Martin's specific track record on similar contracts, the company is a major defense contractor with extensive experience. Potential performance risks on complex engineering contracts like this could include schedule delays in delivering ECPs and ERRs, cost overruns (especially under a CPFF structure), and challenges in meeting technical specifications. Historically, large defense contractors can face scrutiny over contract performance, cost management, and adherence to delivery timelines. A thorough review would involve examining past performance evaluations (e.g., CPARS reports) for Lockheed Martin on comparable contracts to identify any recurring issues or areas of concern.

How does the $14 million value of this delivery order compare to the overall annual spending on aircraft manufacturing and support by the Department of the Navy?

The $14 million value of this specific delivery order represents a portion of the Department of the Navy's broader spending on aircraft manufacturing and support. The Navy's total budget for aviation programs, including procurement, research, development, testing, evaluation, and sustainment, runs into the tens of billions of dollars annually. Therefore, this $14 million order, while substantial for a single task, is relatively small in the context of the Navy's overall aviation expenditure. It highlights the ongoing need for specialized engineering services to maintain and upgrade existing fleets, rather than a major new acquisition program.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001922R0065

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 1 LOCKHEED BLVD, FORT WORTH, TX, 76108

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $14,051,933

Exercised Options: $14,051,933

Current Obligation: $14,051,933

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0001923D0022

IDV Type: IDC

Timeline