DoD's $26.5M Lockheed Martin contract for airframe support services awarded without competition

Contract Overview

Contract Amount: $26,474,495 ($26.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2005-11-30

End Date: 2007-11-30

Contract Duration: 730 days

Daily Burn Rate: $36.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200603!000001!5700!FA8615!ASC/YPK !F4262001D0058 !A!N! !Y!SC75 ! !20051130!20071130!008016958!008016958!834951691!N!LOCKHEED MARTIN CORPORATION !LOCKHEED BLVD !FORT WORTH !TX!76108!27000!439!48!FORT WORTH !TARRANT !TEXAS !+000003370101!Y!N!000000000000!R408!PROGRAM MANAGEMENT/SUPPORT SERVICES !A1A!AIRFRAMES AND SPARES !000 !NOT DISCERNABLE !541330!E! !5!B!S! ! ! !99990909!B! ! !N!Z!D!U!U!1!001!N!1A!Z!Y!D! ! !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 $26.5 million to LOCKHEED MARTIN CORPORATION for work described as: 200603!000001!5700!FA8615!ASC/YPK !F4262001D0058 !A!N! !Y!SC75 ! !20051130!20071130!008016958!008016958!834951691!N!LOCKHEED MARTIN CORPORATION !LOCKHEED BLVD !FORT WORTH !TX!76108!27000!439!48!FORT WORTH !TARR… Key points: 1. Contract awarded on a sole-source basis, raising questions about potential cost savings through competition. 2. Significant portion of contract value allocated to program management and support services. 3. Duration of over two years suggests a need for sustained support for airframe components. 4. Contractor has a strong track record, but lack of competition limits benchmarking. 5. Geographic concentration of awardee in Texas may have local economic implications. 6. Cost-plus-fixed-fee structure allows for cost reimbursement plus a fixed fee, potentially incentivizing efficiency.

Value Assessment

Rating: fair

The contract's total value of $26.5 million over two years for engineering services is substantial. While the cost-plus-fixed-fee (CPFF) pricing structure is common for complex defense contracts where costs are hard to predict, it can lead to higher overall costs compared to fixed-price contracts. Benchmarking this specific contract is challenging due to its sole-source nature and specialized services. However, the average cost per day is approximately $36,266, which needs to be evaluated against the criticality and complexity of the airframe support provided.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not openly competed. This approach is typically used when only one contractor possesses the necessary capabilities, security clearances, or proprietary knowledge. The lack of competition means that the government did not receive multiple bids, which could have potentially driven down the price through a competitive bidding process. This limits the government's ability to ensure it received the best possible value.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing offers, it's difficult to ascertain if the negotiated price reflects the most economical option available in the market.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Air Force, which receives essential support for its airframes. Services include program management and support for airframes and spares, crucial for maintaining operational readiness. The geographic impact is concentrated in Fort Worth, Texas, where Lockheed Martin Corporation is located, potentially supporting local jobs and the regional economy. Workforce implications include the utilization of skilled engineers and support staff at Lockheed Martin to fulfill the contract requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential taxpayer savings.
Cost-plus-fixed-fee contract type can sometimes lead to higher costs if not managed diligently.
Lack of detailed performance metrics in the provided data makes it difficult to assess efficiency.

Positive Signals

Award to a major defense contractor like Lockheed Martin suggests access to specialized expertise.
Contract duration indicates a sustained need and potential for long-term partnership.
Focus on airframes and spares is critical for maintaining military aviation capabilities.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on engineering services related to airframes and their associated spare parts. The market for such specialized support is often dominated by a few large, established defense contractors due to the high barriers to entry, including technical expertise, security clearances, and existing relationships with the military. Comparable spending benchmarks are difficult to establish without more specific details on the airframe type and services rendered, but significant government investment in aircraft sustainment is typical.

Small Business Impact

This contract does not appear to have a small business set-aside component, as it was awarded directly to Lockheed Martin Corporation. There is no explicit information regarding subcontracting plans for small businesses within the provided data. This means that the direct economic benefit to the small business ecosystem from this specific award is likely minimal, unless Lockheed Martin voluntarily engages small businesses for specific components or services not detailed here.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program management personnel within the Department of the Air Force. Accountability measures would be tied to the terms of the Cost Plus Fixed Fee contract, requiring Lockheed Martin to adhere to cost controls and deliver specified services. Transparency is limited by the sole-source nature of the award and the proprietary information inherent in defense contracting. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Air Force Aircraft Maintenance Contracts
Defense Logistics Agency (DLA) Spare Parts Procurement
Aerospace Engineering Services Contracts
Department of Defense Program Management Support

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of detailed performance metrics

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.5 million to LOCKHEED MARTIN CORPORATION. 200603!000001!5700!FA8615!ASC/YPK !F4262001D0058 !A!N! !Y!SC75 ! !20051130!20071130!008016958!008016958!834951691!N!LOCKHEED MARTIN CORPORATION !LOCKHEED BLVD !FORT WORTH !TX!76108!27000!439!48!FORT WORTH !TARRANT !TEXAS !+000003370101!Y!N!000000000000!R408!PROGRAM MANAGEMENT/SUPPORT SERVICES !A1A!AIRFRAMES AND SPARES !000 !NOT DISCERNABLE !541330!E! !5!B!S! ! ! !999

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 $26.5 million.

What is the period of performance?

Start: 2005-11-30. End: 2007-11-30.

What is the specific type of airframe this contract supports, and what is the criticality of these airframes to current Air Force operations?

The provided data indicates the contract is for 'AIRFRAMES AND SPARES' and falls under the Product Service Code (PSC) 'R408' for Program Management/Support Services. However, the specific airframe model is not explicitly stated in the abbreviated data. The criticality of these airframes to current Air Force operations is presumed to be high, given the substantial contract value and the nature of defense spending on sustainment and support services. Without knowing the specific airframe, it's impossible to detail its operational role, but contracts of this magnitude typically support platforms essential for national security missions, such as fighter jets, bombers, transport aircraft, or reconnaissance platforms. The duration of the contract (730 days) further suggests a sustained need for support, reinforcing the idea that the supported airframes are integral to ongoing military readiness and deployment capabilities.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for similar services, and what are the potential risks and benefits for the government?

The Cost-Plus-Fixed-Fee (CPFF) contract type is often used when the scope of work is not precisely defined, or when the costs are difficult to estimate beforehand, which is common in complex defense programs like aircraft sustainment. Under CPFF, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. Compared to fixed-price contracts, CPFF offers greater flexibility for the contractor to adapt to unforeseen technical challenges or changes in requirements, which can be beneficial for ensuring mission success. However, for the government, the primary risk is cost overrun, as the contractor is incentivized to incur costs to cover their base, and the fixed fee does not decrease if costs are lower than anticipated. The benefit for the government is access to specialized services where precise cost estimation is impractical, ensuring that necessary support is provided even with evolving needs. Diligent oversight and cost monitoring by the government are crucial to mitigate the risks associated with CPFF contracts.

What is Lockheed Martin Corporation's historical performance record with the Department of Defense, particularly on similar program management and support contracts?

Lockheed Martin Corporation is one of the largest defense contractors globally and has a long-standing, extensive relationship with the Department of Defense (DoD). Historically, they have been awarded numerous large-scale contracts across various defense platforms, including aircraft, missiles, and space systems. Their performance record with the DoD is generally considered strong, marked by the successful delivery of complex systems and services. However, like any major contractor, they have also faced scrutiny and challenges on specific contracts related to cost, schedule, and performance. For program management and support services specifically, Lockheed Martin's track record involves managing intricate supply chains, providing technical expertise, and ensuring the operational readiness of military assets. While the provided data does not detail specific past performance metrics for this exact contract type, their overall standing as a prime contractor suggests a high level of capability and experience in fulfilling such requirements for the DoD.

What were the specific justifications for awarding this contract on a sole-source basis rather than through full and open competition?

The provided data indicates the contract was 'NOT COMPETED'. While the specific justification is not detailed in the abbreviated data, sole-source awards in defense contracting are typically justified under circumstances where only one responsible source can provide the required supplies or services. Common reasons include: unique capabilities or proprietary technology held by a single contractor, urgent and compelling needs where competition would cause unacceptable delays, or when the contract is a follow-on to a previous competition where only the original contractor can provide necessary sustainment or upgrades. For a contract involving program management and support services for specific airframes and spares, it's plausible that Lockheed Martin possesses unique technical data, intellectual property, or established infrastructure essential for the maintenance and support of the particular airframe(s) in question, making full and open competition impractical or detrimental to operational readiness.

How does the annual spending on this contract compare to the overall DoD budget for aircraft sustainment and support services?

This contract is valued at approximately $26.5 million over two years, averaging about $13.25 million per year. The Department of Defense's overall budget for aircraft sustainment and support services is in the tens of billions of dollars annually. For example, the Air Force alone spends billions each year on depot maintenance, spare parts, and contractor logistics support for its vast fleet of aircraft. Therefore, this $13.25 million annual expenditure, while significant for a single contract, represents a relatively small fraction of the total DoD spending in this category. It likely supports a specific program, platform, or set of services rather than encompassing the entirety of aircraft sustainment efforts across the department. This context highlights that while the contract is substantial in absolute terms, it is a component within a much larger and more complex sustainment ecosystem.

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: COST PLUS FIXED FEE (U)

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

Parent Contract

Parent Award PIID: F4262001D0058

IDV Type: IDC

Timeline