DoD's $20.5M Lockheed Martin contract for F-16 systems engineering services awarded without competition

Contract Overview

Contract Amount: $20,565,017 ($20.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2003-02-20

End Date: 2005-11-30

Contract Duration: 1,014 days

Daily Burn Rate: $20.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: 200305!000029!5700!GU82 !ASC/YPK !F4262001D0058 !A!N! !N!SC18 !20030220!20051130!008016958!008016958!834951691!N!LOCKHEED MARTIN CORPORATION !LOCKHEED BLVD !FORT WORTH !TX!76101!27000!439!48!FORT WORTH !TARRANT !TEXAS !+000029533518!Y!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !A7 !ELECTRONICS AND COMMUNICATION !3AFH!F-16 FALCON !541330!E! !5!B!S! ! ! !99990909!B! ! !N!Z!B!U!L!1!001!N!4A!Z!Y!A! ! !N!C!N! ! ! !Z!Z!A!A!* !A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $20.6 million to LOCKHEED MARTIN CORPORATION for work described as: 200305!000029!5700!GU82 !ASC/YPK !F4262001D0058 !A!N! !N!SC18 !20030220!20051130!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, raising questions about price discovery and potential overpayment. 2. Significant duration of over 3 years suggests a long-term need for these specialized engineering services. 3. The fixed-price incentive contract type aims to control costs but requires careful monitoring of performance metrics. 4. Focus on F-16 Falcon systems indicates a continued reliance on legacy aircraft within the Air Force's fleet. 5. The large dollar value for engineering services highlights the complexity and cost associated with maintaining advanced military platforms.

Value Assessment

Rating: questionable

The contract's value of $20.5 million for engineering services over approximately 3.3 years warrants scrutiny, especially given the lack of competition. Without comparative bids, it's difficult to benchmark the pricing against market rates or similar government contracts. The fixed-price incentive structure suggests an attempt to manage costs, but the absence of competitive pressure could lead to less favorable terms for the government. Further analysis would be needed to determine if this price represents fair value for the specialized systems engineering provided for the F-16 program.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, or in urgent situations. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms. It also means that Lockheed Martin was the only entity considered for this specific requirement, potentially reducing the incentive for competitive pricing.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without competing offers, the government cannot be assured it received the most cost-effective solution available in the market.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Air Force, which receives critical systems engineering support for its F-16 fighter jet fleet. Services delivered include specialized engineering expertise essential for maintaining and potentially upgrading the F-16's complex systems. The geographic impact is concentrated around Lockheed Martin's facilities in Fort Worth, Texas, where the work is likely performed. Workforce implications include the employment of highly skilled engineers and technical personnel at Lockheed Martin, contributing to the aerospace and defense sector's specialized labor market.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs for taxpayers.
Lack of transparency in the procurement process due to non-competitive nature.
Contract duration of over three years may indicate a lack of agile procurement strategies.
Fixed-price incentive contracts can be complex to manage and may not always yield the best value if not properly overseen.

Positive Signals

Award to a known incumbent contractor (Lockheed Martin) likely ensures continuity of essential services for the F-16 program.
Specialized nature of systems engineering for advanced aircraft often necessitates specific contractor expertise.
Fixed-price incentive contract structure provides a framework for cost control and performance alignment.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on engineering services for military aircraft. The market for such specialized services is dominated by a few large prime contractors with deep historical ties to defense programs. The value of this contract, while significant, represents a portion of the broader spending on aircraft sustainment and modernization, which runs into billions annually. Benchmarking this specific engineering service contract is challenging without access to comparable sole-source awards for similar F-16 support.

Small Business Impact

This contract does not appear to have a small business set-aside component. As a sole-source award to a large prime contractor, Lockheed Martin, the primary focus is on direct service delivery rather than subcontracting opportunities for small businesses. While large prime contractors are often encouraged to subcontract with small businesses on larger programs, the specific terms and extent of such subcontracting are not detailed here. The impact on the small business ecosystem is likely indirect, depending on Lockheed Martin's internal subcontracting policies.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. Accountability measures are embedded within the fixed-price incentive contract structure, linking payment to performance outcomes. 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 the contract.

Related Government Programs

F-16 Sustainment Programs
Air Force Aircraft Maintenance Contracts
Defense Engineering Services
Aerospace Systems Integration
Lockheed Martin Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.6 million to LOCKHEED MARTIN CORPORATION. 200305!000029!5700!GU82 !ASC/YPK !F4262001D0058 !A!N! !N!SC18 !20030220!20051130!008016958!008016958!834951691!N!LOCKHEED MARTIN CORPORATION !LOCKHEED BLVD !FORT WORTH !TX!76101!27000!439!48!FORT WORTH !TARRANT !TEXAS !+000029533518!Y!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !A7 !ELECTRONICS AND COMMUNICATION !3AFH!F-16 FALCON !541330!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 $20.6 million.

What is the period of performance?

Start: 2003-02-20. End: 2005-11-30.

What is Lockheed Martin's track record with similar systems engineering contracts for the F-16 program or comparable aircraft?

Lockheed Martin has a long and extensive history as the prime contractor for the F-16 Fighting Falcon program, encompassing development, production, and sustainment. Their track record with systems engineering for this platform is therefore deeply established. They have consistently provided engineering services for upgrades, modifications, and ongoing support throughout the F-16's operational life. This includes managing complex system integrations, addressing obsolescence issues, and ensuring the aircraft's continued airworthiness and mission capability. Given their sole-source position on many F-16 related sustainment efforts, detailed performance metrics and value comparisons for specific engineering tasks are often internal or not publicly disclosed, making independent benchmarking difficult.

How does the $20.5 million contract value compare to historical spending on F-16 systems engineering services?

Comparing the $20.5 million value of this specific contract to historical spending on F-16 systems engineering requires a nuanced approach due to the nature of defense contracting. This figure represents a single delivery order with a defined period of performance (February 2003 - November 2005). The total life-cycle cost for F-16 sustainment, including all engineering, maintenance, and upgrade activities over decades, amounts to many billions of dollars. This $20.5 million likely covers a specific set of engineering tasks during that period. Without access to detailed historical breakdowns of F-16 engineering expenditures by task and fiscal year, a direct comparison is challenging. However, it reflects a significant investment in maintaining the operational readiness and technological relevance of a key Air Force asset during that timeframe.

What are the primary risks associated with awarding a sole-source contract of this magnitude for engineering services?

The primary risks associated with awarding a sole-source contract of this magnitude ($20.5 million) for engineering services include potential lack of price competition, leading to inflated costs for the government. There's also a risk of reduced innovation and efficiency, as the contractor may face less pressure to optimize performance or explore cost-saving alternatives. Furthermore, sole-source awards can create a perception of favoritism or limit opportunities for other capable firms to enter the market or gain experience. Ensuring adequate oversight and robust performance metrics becomes even more critical to mitigate these risks and verify that the government is receiving fair value and necessary services.

How effective is the fixed-price incentive (FPI) contract type in managing costs and ensuring performance for complex engineering services?

The Fixed-Price Incentive (FPI) contract type aims to provide a middle ground between fixed-price and cost-reimbursement contracts, offering potential cost savings while ensuring contractor performance. In an FPI contract, the final price is adjusted based on the contractor's performance relative to target cost and target profit goals. This structure incentivizes the contractor to control costs and meet performance specifications. For complex engineering services like those provided for the F-16, the FPI can be effective if the performance metrics and cost targets are well-defined, measurable, and achievable. However, the complexity of defining these parameters for advanced systems engineering can be challenging, and effective administration and oversight are crucial to ensure the incentive structure truly drives desired outcomes and prevents unintended consequences.

What is the strategic importance of continued investment in F-16 systems engineering, given the platform's age?

The strategic importance of continued investment in F-16 systems engineering, despite the platform's age, lies in maintaining the operational readiness and effectiveness of a significant portion of the Air Force's fighter fleet. The F-16 remains a crucial asset for air interdiction, close air support, and suppression of enemy air defenses. Engineering services are vital for addressing obsolescence in aging components, integrating new technologies or munitions, ensuring compliance with evolving safety and environmental regulations, and adapting the aircraft for new mission requirements. Without sustained engineering support, the F-16's capabilities would degrade, impacting the Air Force's overall combat power and potentially increasing reliance on newer, more expensive platforms.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

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