Lockheed Martin awarded $180M for A-10 systems engineering, a significant investment in aircraft sustainment

Contract Overview

Contract Amount: $179,647,831 ($179.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2001-02-26

End Date: 2011-08-05

Contract Duration: 3,812 days

Daily Burn Rate: $47.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200106!000030!5700!GE35 !OO-ALC/PKC/LCK !F0460698D0002 !A!N!*!N!QP66 !20010226!20050930!002232973!002232973!834951691!N!LOCKHEED MARTIN CORPORATION !1801 STATE RT 17C !OWEGO !NY!13827!55882!107!36!OWEGO !TIOGA !NEW YORK !+000066894192!N!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !A1C!OTHER AIRCRAFT EQUIPMENT !3AAK!A-10 !541710!*!*!5!B!S!A!*!*!*!B!*!*!A! !A !N!R!2!002!B! !A!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001!

Place of Performance

Location: OWEGO, TIOGA County, NEW YORK, 13827

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $179.6 million to LOCKHEED MARTIN CORPORATION for work described as: 200106!000030!5700!GE35 !OO-ALC/PKC/LCK !F0460698D0002 !A!N!*!N!QP66 !20010226!20050930!002232973!002232973!834951691!N!LOCKHEED MARTIN CORPORATION !1801 STATE RT 17C !OWEGO !NY!13827!55882!107!36!OWEGO !TIOGA… Key points: 1. Contract value represents a substantial commitment to maintaining legacy aircraft. 2. Engineering services are critical for the long-term operational readiness of the A-10 fleet. 3. The cost-plus-award-fee structure incentivizes performance but requires careful oversight. 4. Competition was full and open, suggesting a potentially competitive pricing environment. 5. The contract duration spans over a decade, indicating a long-term need for these services. 6. Geographic concentration in New York for the contractor warrants attention for supply chain resilience.

Value Assessment

Rating: fair

The total contract value of approximately $180 million over its life is substantial for engineering services. Benchmarking this against similar long-term sustainment contracts for legacy aircraft is challenging due to the specific nature of A-10 engineering requirements. The cost-plus-award-fee (CPAF) pricing structure allows for cost reimbursement plus a variable fee based on performance, which can lead to higher overall costs compared to fixed-price contracts if not managed tightly. However, it also provides flexibility for evolving technical requirements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The presence of two bids suggests a degree of competition, though the exact number of interested parties and the intensity of the competition are not detailed. Full and open competition is generally expected to yield better price discovery and value for the government.

Taxpayer Impact: Full and open competition is favorable for taxpayers as it typically drives down costs through market forces. The government likely received more competitive pricing than it would have under a sole-source or limited competition scenario.

Public Impact

The primary beneficiaries are the U.S. Air Force units operating the A-10 Thunderbolt II aircraft, ensuring their continued operational capability. Services delivered include essential systems engineering, technical support, and sustainment activities for the A-10 platform. The geographic impact is primarily centered around the contractor's facilities in Owego, New York, and the operational bases of the A-10 fleet. Workforce implications include employment for engineers, technicians, and support staff at Lockheed Martin and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (over 10 years) increases the risk of cost overruns if not closely monitored.
Cost-plus-award-fee structure requires robust government oversight to ensure fair pricing and prevent unnecessary costs.
Reliance on a single prime contractor for critical engineering services could pose a risk if performance falters.
Concentration of work in a single geographic location (NY) could present supply chain risks.

Positive Signals

Full and open competition suggests a potentially competitive environment that could drive value.
The contract aims to ensure the continued operational readiness of a vital close air support aircraft.
The awardee, Lockheed Martin, has extensive experience with defense platforms, including the A-10.
The award fee mechanism incentivizes contractor performance and successful delivery of services.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting aerospace and defense. The market for aircraft sustainment and engineering services is substantial, driven by the need to maintain aging fleets and adapt to evolving threats. Comparable spending benchmarks would involve looking at other long-term sustainment contracts for major aircraft platforms, where engineering support is a significant component. The total value of this contract places it as a significant award within the A-10 program's lifecycle.

Small Business Impact

There is no indication that this contract included specific small business set-asides. The prime contractor, Lockheed Martin, is a large aerospace and defense company. Subcontracting opportunities may exist for small businesses providing specialized components or services, but the primary award is not directed towards small businesses. The impact on the small business ecosystem would depend on the extent of subcontracting and the specific areas of work delegated.

Oversight & Accountability

Oversight for this contract would primarily be managed by the Defense Contract Management Agency (DCMA) and the relevant Air Force program office. Accountability measures are tied to the award fee criteria within the Cost Plus Award Fee (CPAF) structure. Transparency is facilitated through contract reporting mechanisms, though detailed performance metrics are typically not publicly disclosed. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

A-10 Thunderbolt II Sustainment Program
Air Force Aircraft Maintenance and Repair Contracts
Defense Engineering Services Contracts
Aerospace Systems Engineering Support

Risk Flags

Long contract duration
Cost-plus-award-fee structure
Potential for cost overruns
Reliance on single prime contractor for critical services

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $179.6 million to LOCKHEED MARTIN CORPORATION. 200106!000030!5700!GE35 !OO-ALC/PKC/LCK !F0460698D0002 !A!N!*!N!QP66 !20010226!20050930!002232973!002232973!834951691!N!LOCKHEED MARTIN CORPORATION !1801 STATE RT 17C !OWEGO !NY!13827!55882!107!36!OWEGO !TIOGA !NEW YORK !+000066894192!N!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !A1C!OTHER AIRCRAFT EQUIPMENT !3AAK!A-10 !541710!*!*!5!B!S!A!*!*!*!B!*!*!A!

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $179.6 million.

What is the period of performance?

Start: 2001-02-26. End: 2011-08-05.

What is Lockheed Martin's track record with A-10 sustainment and engineering services?

Lockheed Martin has a long-standing relationship with the A-10 program, having been involved in its original production and subsequent sustainment efforts. Their extensive experience with various defense platforms, including legacy aircraft, suggests a deep understanding of the technical requirements and challenges associated with maintaining the A-10 fleet. While specific performance data for this particular contract is not publicly detailed, the company's position as a major defense contractor implies a history of managing complex engineering and sustainment programs. Past performance evaluations, often part of the source selection process for such contracts, would have informed the government's decision to award this significant task order to Lockheed Martin.

How does the $180 million contract value compare to historical spending on A-10 engineering support?

Directly comparing the $180 million value to historical spending on A-10 engineering support requires access to detailed historical contract data, which is not fully available in the provided snippet. However, given the contract's duration (2001-2011, with potential modifications extending beyond), this figure represents a substantial, long-term investment. The A-10 is a mature platform, and sustainment costs, including engineering services, tend to increase over time as components age and require more specialized support. This contract likely encompasses a significant portion of the program's engineering needs during its period of performance, reflecting the ongoing commitment to keeping the A-10 operational.

What are the primary risks associated with a Cost Plus Award Fee (CPAF) contract of this magnitude?

The primary risks with a CPAF contract of this magnitude revolve around cost control and performance oversight. While CPAF incentivizes performance through an award fee, it also allows the contractor to recover incurred costs plus a fee. This structure can lead to higher total costs compared to fixed-price contracts if the government's oversight is insufficient to ensure efficiency and prevent scope creep. Key risks include potential for cost overruns if performance targets are not clearly defined or if the government does not rigorously monitor expenditures. Ensuring that the award fee criteria are objective, measurable, and aligned with critical program objectives is paramount to mitigating these risks and achieving value for taxpayer money.

How effective is full and open competition in ensuring value for money for A-10 engineering services?

Full and open competition is generally considered the most effective method for ensuring value for money in government contracting. By allowing all responsible sources to compete, it fosters a competitive environment that pressures contractors to offer their best pricing and technical solutions. For A-10 engineering services, this means that the government likely received more competitive bids than it would have under a sole-source or limited competition scenario. The presence of two bidders, as indicated, suggests some level of competition, though the intensity and breadth of this competition would determine the extent of price discovery. Robust evaluation criteria are still necessary to ensure the lowest price isn't chosen at the expense of critical technical capabilities or long-term reliability.

What are the implications of the contract's long duration (over 10 years) for program stability and cost?

The long duration of this contract (spanning from 2001 to 2011, and potentially longer with modifications) has significant implications for both program stability and cost. On the positive side, it provides the A-10 program with consistent engineering support, ensuring continuity and stability in maintaining the aircraft's operational readiness. This long-term commitment can foster a strong working relationship between the government and the contractor, leading to deeper institutional knowledge. However, a long duration also increases the risk of cost escalation due to inflation, evolving requirements, and potential inefficiencies that may develop over time. Rigorous contract management, regular performance reviews, and mechanisms for adjusting terms based on changing conditions are crucial to managing costs effectively over such an extended period.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

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

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: F0460698D0002

IDV Type: IDC

Timeline