Lockheed Martin awarded $81.5M for CH-53K CFTD trainer, a sole-source contract with a high unit cost

Contract Overview

Contract Amount: $81,535,305 ($81.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2022-07-08

End Date: 2027-06-26

Contract Duration: 1,814 days

Daily Burn Rate: $44.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CH-53K CFTD (2F243-2) TRAINER

Place of Performance

Location: CHANTILLY, FAIRFAX County, VIRGINIA, 20151

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $81.5 million to LOCKHEED MARTIN CORPORATION for work described as: CH-53K CFTD (2F243-2) TRAINER Key points: 1. The contract value of $81.5 million for a trainer system suggests a significant investment in advanced aviation training capabilities. 2. As a sole-source award, the absence of competition may lead to higher prices and reduced incentive for cost efficiency. 3. The contract duration of approximately five years indicates a long-term need for this specific training system. 4. The fixed-price contract type shifts cost risk to the contractor, but the absence of competition limits the government's leverage. 5. The North American Industry Classification System (NAICS) code 336413 points to specialized manufacturing within the aerospace sector. 6. The contract's performance is located in Virginia, a state with a strong presence in the defense and aerospace industries.

Value Assessment

Rating: questionable

Benchmarking the value of this trainer system is challenging without comparable sole-source awards for similar advanced aviation trainers. The contract's fixed-price nature is a positive, but the lack of competition raises concerns about whether the $81.5 million represents a fair market price. The high unit cost, implied by the total value and the nature of the equipment, warrants further scrutiny to ensure it aligns with industry norms for specialized training systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, Lockheed Martin Corporation, was solicited. This approach is typically used when a unique capability is required, or when only one source can provide the necessary goods or services. The lack of competition means there was no opportunity for other companies to bid, potentially limiting price discovery and the government's ability to secure the best possible terms.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without competing offers, it is difficult to ascertain if the price reflects the lowest achievable cost for this specialized trainer.

Public Impact

The primary beneficiaries are the U.S. Navy personnel who will utilize the CH-53K King Stallion helicopter simulator for training. The contract delivers advanced training capabilities essential for operating and maintaining the CH-53K heavy-lift helicopter. The geographic impact is primarily within Virginia, where the training system will be deployed and potentially maintained. Workforce implications include the need for skilled technicians and instructors to operate and support the training system.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs for taxpayers.
High unit cost for a trainer system requires justification against market alternatives.
Lack of transparency in pricing due to non-competitive nature.
Contract duration of nearly five years may lock in potentially suboptimal pricing if market conditions change.

Positive Signals

Fixed-price contract type shifts cost overrun risk to the contractor.
Award to a prime contractor with established expertise in complex aircraft systems.
Contract supports critical training for a key military asset (CH-53K).

Sector Analysis

The aerospace manufacturing sector, specifically focusing on aircraft parts and auxiliary equipment, is characterized by high barriers to entry, significant R&D investment, and a concentration of large, established players like Lockheed Martin. This contract falls within the broader defense industrial base, where specialized training systems are crucial for maintaining operational readiness. Comparable spending benchmarks for advanced flight simulators can vary widely based on complexity, fidelity, and the specific aircraft platform they support.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, Lockheed Martin, is a large aerospace corporation. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan for this contract is not detailed here. The absence of a direct set-aside means small businesses are less likely to be the primary recipients of this funding, though they may participate as subcontractors.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy, a component of the Department of Defense. Accountability measures are typically embedded within the contract terms, including performance standards and delivery schedules. Transparency may be limited due to the sole-source nature of the award. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to this contract.

Related Government Programs

CH-53K Helicopter Program
Naval Aviation Training Systems
Defense Contract Management Agency (DCMA) oversight
Aerospace Manufacturing Contracts

Risk Flags

Sole-source award
High implied unit cost
Lack of competitive benchmarking

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $81.5 million to LOCKHEED MARTIN CORPORATION. CH-53K CFTD (2F243-2) TRAINER

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 $81.5 million.

What is the period of performance?

Start: 2022-07-08. End: 2027-06-26.

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

The provided data does not explicitly state the justification for the sole-source award. Typically, sole-source contracts are justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source can provide the required supplies or services, or when there is a compelling urgency. For advanced training systems like the CH-53K CFTD trainer, the justification might stem from the unique intellectual property, specialized manufacturing capabilities, or the need for seamless integration with the aircraft platform, which only the original equipment manufacturer (Lockheed Martin) can provide. A formal Justification for Other Than Full and Open Competition (JOFOC) would normally be required and publicly accessible for such awards.

How does the unit cost of this trainer compare to similar advanced aviation training systems?

Without specific unit cost data or details on the trainer's capabilities (e.g., full flight simulator vs. part-task trainer), a direct comparison is difficult. However, the total contract value of $81.5 million over approximately five years suggests a substantial investment. Advanced aviation trainers, especially those for complex platforms like heavy-lift helicopters, can range from millions to tens of millions of dollars per unit, depending on their fidelity, features, and integration requirements. The sole-source nature of this award raises concerns that the price may not be benchmarked against competitive market rates, potentially making it higher than comparable systems procured through full and open competition.

What are the key performance indicators (KPIs) for this contract, and how is performance being monitored?

The provided data does not detail the specific Key Performance Indicators (KPIs) for this contract. However, for a training system, typical KPIs would likely include simulator availability and reliability rates, adherence to training curriculum standards, user feedback from trainees and instructors, and successful completion of scheduled training hours. Performance monitoring would be conducted by the Department of the Navy's contracting officer's representative (COR) and potentially through the Defense Contract Management Agency (DCMA). Contractual clauses would outline remedies for non-performance, such as liquidated damages or termination.

What is Lockheed Martin's track record with similar sole-source contracts for training systems?

Lockheed Martin Corporation is a major defense contractor with extensive experience in developing and delivering complex systems, including training and simulation solutions for various military platforms. They have a history of securing sole-source contracts, often due to their proprietary technologies or established role as the prime contractor for the associated weapon system. Analyzing their past performance on similar sole-source training system contracts would involve reviewing contract awards, performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), and any associated cost overruns or disputes to gauge their reliability and pricing practices in non-competitive environments.

What is the historical spending trend for CH-53K related training systems?

Historical spending data specifically for CH-53K training systems prior to this $81.5 million award is not provided. However, the CH-53K program itself has undergone significant development and procurement phases, which would have necessitated substantial investment in training infrastructure. Tracking previous contracts related to CH-53K simulators, maintenance trainers, and other training devices would reveal spending patterns. Given the program's evolution, spending on training systems is expected to increase as the fleet matures and operational deployment expands. Analyzing past budgets and contract awards for the CH-53K program would provide context for this current expenditure.

What are the potential risks associated with the long contract duration (nearly 5 years)?

The nearly five-year duration of this contract presents several potential risks. Firstly, it locks the government into a fixed price with a single supplier, limiting its ability to benefit from potential market shifts, technological advancements, or cost reductions that might occur over that period. Secondly, long-term contracts can sometimes lead to complacency from the contractor regarding cost control or innovation, as the immediate pressure of re-competition is absent. Lastly, if the training requirements or the CH-53K platform itself undergo significant changes during the contract period, modifications could become complex and costly to implement under the existing sole-source agreement.

Industry Classification

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

Product/Service Code: TRAINING AIDS AND DEVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N6134021R0001

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: $105,033,371

Exercised Options: $81,535,305

Current Obligation: $81,535,305

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $55,137,071

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