Air Force's $30.5M Lockheed Martin contract for flight test support awarded without competition

Contract Overview

Contract Amount: $30,492,781 ($30.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2009-10-30

End Date: 2011-10-31

Contract Duration: 731 days

Daily Burn Rate: $41.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: FY10 / FY11 BASELINE FLIGHT TEST SUPPORT

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $30.5 million to LOCKHEED MARTIN CORPORATION for work described as: FY10 / FY11 BASELINE FLIGHT TEST SUPPORT Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to cost overruns. 2. Sole-source award limits price discovery and potentially increases costs for taxpayers. 3. Contract duration of 2 years suggests a need for ongoing support services. 4. The contractor, Lockheed Martin, is a major defense contractor with extensive experience. 5. Engineering services are critical for complex defense systems like flight test support. 6. Awarded as a delivery order, indicating it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract.

Value Assessment

Rating: questionable

The contract's value of $30.5 million over two years for flight test support needs careful benchmarking against similar services. Without competition, it's difficult to definitively assess if the pricing is optimal. The cost-plus-fixed-fee structure introduces inherent risk for cost escalation, as the contractor is reimbursed for allowable costs plus a fixed fee. This structure is often used when the scope of work is not precisely defined, but it necessitates robust oversight to ensure costs remain reasonable.

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 bypasses the competitive bidding process, which typically yields multiple proposals and allows for price comparison. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities or urgent needs), they generally result in less favorable pricing for the government compared to fully competed contracts. The absence of competition here means taxpayers may not have received the best possible value.

Taxpayer Impact: The lack of competition means taxpayers did not benefit from potential cost savings that could have arisen from a bidding process. This could translate to higher overall program costs.

Public Impact

The primary beneficiary is the Department of the Air Force, receiving essential support for flight testing operations. Services delivered include engineering support crucial for the development and validation of aerospace systems. The contract is geographically focused in Texas (TX), indicating a specific operational base or facility. This contract supports a specialized segment of the aerospace and defense workforce, likely involving engineers and technical specialists.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus-fixed-fee contract type carries a risk of cost overruns.
Lack of transparency in pricing due to no competitive bidding.

Positive Signals

Contract awarded to a large, established defense contractor with proven capabilities.
Delivery order structure suggests it aligns with existing contract vehicles.
Flight test support is a critical function for defense system readiness.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting defense-related R&D and testing. The aerospace and defense industry is characterized by high R&D investment and complex procurement processes. Spending in this area is often driven by national security requirements and technological advancement. Comparable spending benchmarks would typically be found within other large defense contracts for similar engineering and technical support services, often awarded to major prime contractors.

Small Business Impact

This contract does not appear to involve a small business set-aside, as the awardee is Lockheed Martin Corporation, a large prime contractor. There is no explicit information regarding subcontracting plans for small businesses within this specific award. The absence of a set-aside suggests that opportunities for small businesses may be limited unless they are part of Lockheed Martin's broader supply chain for this contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Given the sole-source nature and cost-plus-fixed-fee structure, rigorous oversight of incurred costs, performance, and adherence to contract terms is essential. The Inspector General's office for the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Aerospace Engineering Services
Defense Flight Testing
Lockheed Martin Contracts
Air Force Research and Development
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.5 million to LOCKHEED MARTIN CORPORATION. FY10 / FY11 BASELINE FLIGHT TEST SUPPORT

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 $30.5 million.

What is the period of performance?

Start: 2009-10-30. End: 2011-10-31.

What is Lockheed Martin Corporation's track record with the Department of Defense for similar flight test support contracts?

Lockheed Martin Corporation is a major defense contractor with a long history of supporting U.S. military programs, including extensive involvement in flight testing and aerospace engineering services. They have held numerous contracts with the Department of Defense across various branches, including the Air Force, Navy, and Army. Their track record typically involves complex, high-value programs requiring advanced technical expertise. Specific to flight test support, Lockheed Martin has been involved in programs ranging from fighter jet development to missile systems testing. While their overall performance is generally considered strong, like any large contractor, they have experienced contract disputes and performance reviews on specific programs. A detailed analysis would require examining past performance evaluations and contract modifications for similar flight test support efforts.

How does the $30.5 million value compare to similar flight test support contracts awarded competitively?

Benchmarking this $30.5 million contract against competitively awarded flight test support contracts is challenging without more specific details on the scope of services and duration. However, sole-source awards are generally expected to be higher than competitively sourced ones due to the lack of price pressure. If similar, fully competed contracts for comparable flight test support over a two-year period were significantly lower, it would indicate a potential loss of value for the government in this instance. The cost-plus-fixed-fee structure also adds a layer of uncertainty to the final cost compared to fixed-price contracts often seen in competitive bids. A thorough comparison would require identifying contracts with similar technical requirements, contract types, and durations.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract for flight test support?

The primary risks associated with this contract structure are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated pricing and reduced incentive for the contractor to offer the most cost-effective solution. The government relies heavily on the contractor's proposed costs and the agency's negotiation skills. Secondly, the cost-plus-fixed-fee (CPFF) structure reimburses the contractor for allowable costs plus a predetermined fixed fee. While the fee is fixed, the total cost to the government can escalate if allowable costs increase significantly, which is a common risk in complex engineering projects where scope can evolve. This necessitates stringent oversight to monitor costs and ensure they remain reasonable and allocable to the contract.

How effective is the cost-plus-fixed-fee structure in ensuring program effectiveness for flight test support?

The effectiveness of the CPFF structure for program effectiveness in flight test support is mixed. On one hand, it allows for flexibility in projects where the exact technical requirements or challenges may not be fully known at the outset, which is common in flight testing. This flexibility can enable the contractor to adapt to unforeseen issues and pursue necessary technical solutions without being constrained by a rigid fixed price. On the other hand, the inherent risk of cost escalation can sometimes divert focus from pure program effectiveness towards cost management. Effective oversight is crucial to ensure that the contractor prioritizes achieving the technical objectives of the flight tests while managing costs responsibly. Without strong oversight, the flexibility of CPFF can lead to inefficiencies.

What are historical spending patterns for flight test support services within the Department of the Air Force?

Historical spending patterns for flight test support services within the Department of the Air Force (and the broader Department of Defense) show a consistent need for these specialized engineering and technical services. These contracts are often awarded to large, established aerospace and defense companies like Lockheed Martin, Boeing, Northrop Grumman, and Raytheon. Spending can fluctuate based on the development cycles of major weapon systems, aircraft upgrades, and new technology insertions. Contracts can range from short-term, project-specific support to long-term sustainment and development efforts. The use of both competitive and sole-source awards is common, with sole-source often justified for unique capabilities or existing platform integration. Overall, flight test support represents a significant, albeit specialized, portion of the Air Force's R&D and procurement budget.

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

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

Financial Breakdown

Contract Ceiling: $63,532,530

Exercised Options: $63,532,530

Current Obligation: $30,492,781

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F4262001D0058

IDV Type: IDC

Timeline