DoD's $48.8M contract for aircraft parts awarded to Lockheed Martin, raising questions about competition and value

Contract Overview

Contract Amount: $48,768,347 ($48.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2024-04-15

End Date: 2027-01-29

Contract Duration: 1,019 days

Daily Burn Rate: $47.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SC26 INFRASTRUCTURE

Place of Performance

Location: OWEGO, TIOGA County, NEW YORK, 13827

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $48.8 million to LOCKHEED MARTIN CORPORATION for work described as: SC26 INFRASTRUCTURE Key points: 1. The contract's value appears high relative to the estimated benchmark, suggesting potential overspending. 2. Lack of competition for this significant award limits price discovery and potentially inflates costs. 3. The long duration and firm-fixed-price nature present risks if requirements change or costs escalate. 4. This award falls within the 'Other Aircraft Parts' manufacturing sector, a critical but often complex area. 5. Oversight is crucial given the sole-source nature and substantial dollar value of this award.

Value Assessment

Rating: questionable

The contract's total value of $48.8 million for aircraft parts seems elevated when compared to the benchmark of $47.9 million. While the benchmark is close, the difference warrants scrutiny, especially for a sole-source award. The firm-fixed-price contract type offers cost certainty for the government, but only if the initial pricing accurately reflects the required work and market rates. Without competitive bids, it's difficult to definitively assess if this represents the best possible value for the taxpayer.

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 bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they inherently reduce price competition and may lead to higher costs for the government.

Taxpayer Impact: The lack of competition means taxpayers may not be receiving the most cost-effective solution. Without competing bids, there's less pressure on the contractor to offer the lowest possible price, potentially resulting in a higher overall expenditure for this requirement.

Public Impact

The Department of the Navy benefits from the acquisition of essential aircraft parts, ensuring operational readiness. This contract supports the maintenance and sustainment of military aircraft, crucial for national defense. The primary geographic impact is within New York, where the contractor is located. The award sustains jobs within Lockheed Martin's facilities in New York, contributing to the local economy.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
The substantial contract value raises concerns about whether a more competitive process could have yielded better pricing.
The long contract duration (over 3 years) increases the risk of cost overruns if market conditions or requirements change significantly.
Lack of transparency in the justification for a sole-source award requires further investigation.

Positive Signals

Award to a large, established defense contractor like Lockheed Martin suggests a high likelihood of technical capability and delivery reliability.
The firm-fixed-price contract type provides cost certainty for the government, assuming the initial price is fair.
The contract supports critical defense infrastructure and the sustainment of military aviation assets.

Sector Analysis

This contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, a segment of the aerospace and defense industry. This sector is characterized by specialized manufacturing processes, stringent quality control, and often involves complex supply chains. The market size for aircraft parts is substantial, driven by both military and commercial aviation needs. This specific award to Lockheed Martin, a major defense contractor, aligns with typical government procurement strategies for critical aerospace components.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false) and there is no explicit mention of subcontracting plans for small businesses (sb: false). This suggests that the primary awardee is a large corporation, and opportunities for small businesses to participate in this specific contract may be limited unless they are direct suppliers to Lockheed Martin. Further investigation into subcontracting requirements would be needed to fully assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and financial management offices, with potential involvement from the Department of the Navy's Inspector General. Given the sole-source nature and significant dollar value, robust oversight is essential to ensure the contractor is meeting performance requirements and that the pricing remains fair and reasonable throughout the contract's duration. Transparency regarding the justification for the sole-source award and ongoing performance monitoring will be key accountability measures.

Related Government Programs

Aircraft Parts Manufacturing
Defense Procurement
Aerospace Components
Military Sustainment Contracts
Sole-Source Defense Contracts

Risk Flags

Sole-source award raises concerns about competition and potential overpricing.
Lack of detailed justification for sole-source award requires further scrutiny.
Potential for cost overruns due to long contract duration and fixed-price nature if market conditions change.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $48.8 million to LOCKHEED MARTIN CORPORATION. SC26 INFRASTRUCTURE

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 $48.8 million.

What is the period of performance?

Start: 2024-04-15. End: 2027-01-29.

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 contracts are awarded when only one responsible source is available to meet the government's needs. This could be due to unique capabilities, proprietary technology, urgent and compelling circumstances, or a lack of adequate competition. A thorough review of the contract file and associated documentation would be necessary to understand the detailed rationale behind this decision. Without this justification, it is difficult to assess whether the sole-source approach was appropriate and in the best interest of the government.

How does the awarded amount of $48.8 million compare to historical spending on similar aircraft parts by the Department of the Navy or other defense agencies?

The provided data includes a benchmark value ('br') of $47,859, which appears to be significantly lower than the awarded contract value of $48,768,347.06. This discrepancy suggests that the benchmark may represent a different type of item or a much smaller quantity, or it could be an error in the data provided. To accurately compare historical spending, one would need to identify contracts for similar aircraft parts, with comparable quantities and specifications, awarded over a similar timeframe. Analyzing trends in pricing for these specific parts, considering inflation and market dynamics, would provide a more meaningful context for the current award's value.

What are the key performance indicators (KPIs) and delivery schedules associated with this contract, and how will performance be monitored?

The provided data indicates the contract start date is April 15, 2024, and the end date is January 29, 2027, giving a duration of approximately 1019 days. However, specific Key Performance Indicators (KPIs) and detailed delivery schedules are not included in the abbreviated data. Contract performance monitoring typically involves regular reviews of delivery timelines, quality control reports, and adherence to technical specifications. The Department of the Navy would establish these monitoring mechanisms, potentially including site visits, progress reports, and acceptance testing, to ensure Lockheed Martin meets its contractual obligations.

What is Lockheed Martin Corporation's track record with the Department of the Navy, particularly concerning contracts for aircraft parts?

Lockheed Martin Corporation is a major defense contractor with a long-standing relationship with the Department of the Navy and other branches of the U.S. military. They are known for producing a wide range of defense systems, including aircraft, missiles, and related components. While specific performance data for this particular contract is not available, Lockheed Martin generally has a substantial track record in delivering complex defense systems. However, like any large contractor, they may have experienced past performance issues on certain contracts. A comprehensive review would involve examining past performance evaluations and any disputes or corrective actions related to their previous contracts with the Navy.

Given the 'Other Aircraft Parts' classification (NAICS 336413), what specific types of parts or auxiliary equipment are covered under this $48.8 million contract?

The NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' is broad and encompasses a wide array of components beyond engines and airframes. This could include items such as landing gear components, avionics, electrical systems, hydraulic parts, structural components, or specialized auxiliary equipment necessary for aircraft operation and maintenance. Without more specific details within the contract's statement of work, it's impossible to pinpoint the exact nature of the parts. The significant value suggests these are likely critical, high-cost, or high-volume components essential for the Navy's aviation fleet.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

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

Financial Breakdown

Contract Ceiling: $48,768,347

Exercised Options: $48,768,347

Current Obligation: $48,768,347

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $531,745

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0001923G0002

IDV Type: BOA

Timeline