DoD's $391M F-16 sustainment contract awarded to Lockheed Martin, raising questions on competition and value

Contract Overview

Contract Amount: $390,952,462 ($391.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2003-03-31

End Date: 2009-11-30

Contract Duration: 2,436 days

Daily Burn Rate: $160.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE

Sector: Defense

Official Description: 200306!000065!5700!GU82 !ASC/YPK !F4262001D0058 !A!N! !N!SC01 !20030331!20091130!008016958!008016958!834951691!N!LOCKHEED MARTIN CORPORATION !LOCKHEED BLVD !FORT WORTH !TX!76101!27000!439!48!FORT WORTH !TARRANT !TEXAS !+000026627667!N!N!000000000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !3AFH!F-16 FALCON !336411!E! !5!B!S! ! ! !99990909!B! ! !N!Z!D!U!J!1!001!N!1A!Z!Y!A! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! !Y! ! !0001! !

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $391.0 million to LOCKHEED MARTIN CORPORATION for work described as: 200306!000065!5700!GU82 !ASC/YPK !F4262001D0058 !A!N! !N!SC01 !20030331!20091130!008016958!008016958!834951691!N!LOCKHEED MARTIN CORPORATION !LOCKHEED BLVD !FORT WORTH !TX!76101!27000!439!48!FORT WORTH !TARRA… Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant contract value suggests a critical role in maintaining Air Force readiness. 3. Long contract duration indicates a sustained need for F-16 support services. 4. The award to a single, established prime contractor may limit opportunities for smaller, innovative firms. 5. Performance context is crucial to assess if the high expenditure translates to effective fleet sustainment. 6. Sector positioning highlights the defense industry's reliance on major prime contractors for complex aircraft support.

Value Assessment

Rating: questionable

The total contract value of $391 million for F-16 sustainment over approximately 6.7 years appears substantial. Without comparable sole-source contracts for similar aircraft sustainment, a direct value-for-money assessment is challenging. However, the lack of competition inherently removes a key mechanism for ensuring competitive pricing. Benchmarking against industry standards for aircraft maintenance and support would be necessary to determine if the pricing is reasonable, but this data is not readily available for sole-source awards.

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 specific capability or proprietary technology is required, or when there is an urgent need that cannot be met through competitive bidding. The lack of competition means there was no opportunity for other qualified firms to bid, which can limit price negotiation and potentially lead to higher costs for the government.

Taxpayer Impact: For taxpayers, a sole-source award means the government did not benefit from the potential cost savings that can arise from a competitive bidding process. This could result in a higher overall expenditure for the F-16 sustainment services than might have been achieved otherwise.

Public Impact

The primary beneficiaries are the U.S. Air Force, ensuring the continued operational readiness of its F-16 fighter jet fleet. Services delivered include sustainment, maintenance, repair, and potentially upgrades for F-16 aircraft. Geographic impact is national, supporting Air Force bases and operations across the United States and potentially overseas deployments. Workforce implications include employment for engineers, technicians, and support staff at Lockheed Martin facilities, particularly in Fort Worth, Texas.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Long-term sustainment contracts can become entrenched, making future competition difficult.
Reliance on a single contractor for critical aircraft parts and expertise poses a supply chain risk.

Positive Signals

Lockheed Martin is the original equipment manufacturer (OEM) of the F-16, possessing unique technical knowledge.
A dedicated sustainment contract ensures specialized support for a complex weapon system.
The contract value suggests a significant commitment to maintaining a key Air Force asset.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft sustainment and support. The market for military aircraft maintenance is dominated by original equipment manufacturers (OEMs) and large defense contractors due to the specialized knowledge, facilities, and security clearances required. Spending in this area is critical for maintaining the operational readiness of military fleets. Comparable spending benchmarks are difficult to establish precisely due to the proprietary nature of sustainment contracts and the unique configurations of different aircraft types.

Small Business Impact

This contract does not appear to have a small business set-aside component, as it was awarded sole-source to Lockheed Martin Corporation. There is no explicit information regarding subcontracting plans for small businesses within this specific award. However, large prime contractors like Lockheed Martin often engage small businesses for various components and services, but the extent of this contract's impact on the small business ecosystem is not detailed here.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures would be defined by the contract's terms and conditions, including performance metrics and delivery schedules. Transparency is limited due to the sole-source nature of the award. The Inspector General of the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

F-16 Fighting Falcon Program
Air Force Sustainment and Logistics Contracts
Aircraft Maintenance and Repair Services
Defense Contractor Support Services

Risk Flags

Sole-source award
Lack of competitive pricing
Potential for cost overruns
Long-term contractor dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $391.0 million to LOCKHEED MARTIN CORPORATION. 200306!000065!5700!GU82 !ASC/YPK !F4262001D0058 !A!N! !N!SC01 !20030331!20091130!008016958!008016958!834951691!N!LOCKHEED MARTIN CORPORATION !LOCKHEED BLVD !FORT WORTH !TX!76101!27000!439!48!FORT WORTH !TARRANT !TEXAS !+000026627667!N!N!000000000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !3AFH!F-16 FALCON !336411!E! !5!B!S! ! ! !99990909!B

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 Air Force).

What is the total obligated amount?

The obligated amount is $391.0 million.

What is the period of performance?

Start: 2003-03-31. End: 2009-11-30.

What is Lockheed Martin's track record with F-16 sustainment contracts?

Lockheed Martin, as the original manufacturer of the F-16, has a long-standing and extensive track record in sustaining the F-16 fleet. They have been involved in the production, upgrades, and ongoing support of F-16 aircraft for decades. Their experience encompasses a deep understanding of the aircraft's systems, maintenance requirements, and potential issues. This historical involvement suggests a high level of technical expertise and familiarity with the platform, which is often a key factor in sole-source awards for complex defense systems. Their performance on previous F-16 sustainment contracts would typically be evaluated by the Air Force, influencing decisions regarding subsequent awards.

How does the $391 million value compare to similar F-16 sustainment contracts?

Direct comparison of the $391 million value is challenging without access to specific, contemporaneous sole-source sustainment contracts for the F-16 or similarly complex fighter aircraft. However, the value represents a significant investment over the contract's duration (approximately 6.7 years). Sustaining a fleet of fighter jets involves numerous components, labor, specialized tooling, and technical data. The total contract value reflects the comprehensive nature of sustainment, which can include scheduled maintenance, unscheduled repairs, parts replacement, and engineering support. Without competitive bidding, it's difficult to ascertain if this figure represents optimal value, but it aligns with the substantial costs associated with maintaining advanced military aviation assets.

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

The primary risk associated with this sole-source contract is the lack of competitive pressure, which can lead to inflated pricing and reduced incentive for the contractor to innovate or improve efficiency. There's also a risk of vendor lock-in, where the government becomes heavily reliant on Lockheed Martin for F-16 sustainment, making it difficult and costly to switch providers in the future. Furthermore, a sole-source award can limit opportunities for smaller, specialized businesses to participate in the F-16 sustainment ecosystem, potentially hindering broader industry innovation. Supply chain disruptions or performance issues from the sole provider could also pose significant risks to fleet readiness.

How effective is the F-16 sustainment program likely to be under this contract?

The effectiveness of the F-16 sustainment program under this contract is likely to be high in terms of technical execution, given Lockheed Martin's OEM status and deep expertise. The Air Force's decision to award a sole-source contract suggests a belief that Lockheed Martin is uniquely capable of meeting the sustainment requirements. However, effectiveness in terms of cost efficiency is less certain due to the absence of competition. The program's success will ultimately depend on the specific performance metrics outlined in the contract, the government's oversight, and Lockheed Martin's commitment to delivering reliable support to ensure the F-16 fleet's operational readiness.

What are the historical spending patterns for F-16 sustainment by the Department of Defense?

Historical spending patterns for F-16 sustainment by the Department of Defense have been substantial and ongoing for decades, reflecting the F-16's long service life and its role as a primary fighter aircraft for the U.S. Air Force and allied nations. Spending typically covers a wide range of activities, including depot-level maintenance, component repair and overhaul, spare parts procurement, technical data updates, and engineering support. These contracts are often multi-year and can involve significant dollar amounts, frequently awarded to Lockheed Martin as the OEM. The total lifecycle cost of operating and sustaining the F-16 fleet represents a considerable portion of the Air Force's overall budget for tactical aircraft.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

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

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F4262001D0058

IDV Type: IDC

Timeline