Air Force awards $29M to Lockheed Martin for F-16 flight test support, raising value-for-money questions

Contract Overview

Contract Amount: $28,973,119 ($29.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2011-11-01

End Date: 2013-10-31

Contract Duration: 730 days

Daily Burn Rate: $39.7K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: F-16 FLIGHT TEST SUPPORT FOR DT&E AND OT&E

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $29.0 million to LOCKHEED MARTIN CORPORATION for work described as: F-16 FLIGHT TEST SUPPORT FOR DT&E AND OT&E Key points: 1. Contract awarded on a sole-source basis, limiting price competition and potentially increasing costs. 2. The contract's cost-plus-fixed-fee structure may incentivize cost overruns. 3. Limited competition raises concerns about achieving the best possible value for taxpayer funds. 4. The duration of 730 days for a delivery order suggests a significant scope of work. 5. The contract is for engineering services, a sector with established market rates for comparison. 6. No small business set-aside was utilized, indicating a lack of specific focus on small business participation.

Value Assessment

Rating: questionable

The awarded amount of approximately $29 million for F-16 flight test support appears substantial. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The cost-plus-fixed-fee (CPFF) contract type, while allowing for flexibility, can lead to higher costs if not managed rigorously, as the contractor is reimbursed for all allowable costs plus a fixed fee. This structure warrants close scrutiny to ensure cost efficiency and value for money.

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 process, which typically involves multiple bidders vying for the contract. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they generally result in less price discovery and potentially higher costs for the government compared to full and open competition.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings that typically arise from a competitive bidding environment, potentially leading to a higher overall expenditure for the services rendered.

Public Impact

The primary beneficiaries are the Department of the Air Force, receiving critical support for F-16 flight testing. Services delivered include developmental test and evaluation (DT&E) and operational test and evaluation (OT&E) for the F-16 aircraft. The geographic impact is primarily within Texas, where Lockheed Martin's operations are located. The contract supports a highly specialized workforce of engineers and technical personnel involved in aerospace testing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus-fixed-fee structure may not incentivize maximum cost efficiency.
Lack of small business participation may limit broader economic impact.
Contract duration of two years for a delivery order suggests significant resource commitment.

Positive Signals

Lockheed Martin is a well-established prime contractor with extensive experience in F-16 programs.
Flight test support is critical for ensuring the safety and effectiveness of military aircraft.
The contract is for essential engineering services directly supporting defense capabilities.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting aerospace and defense. The market for such specialized services is dominated by large, established defense contractors. Benchmarking would involve comparing the rates and overall cost to similar flight test support contracts for other aircraft platforms or to internal Air Force test capabilities, if available. The total value of $29 million is significant for a two-year delivery order, reflecting the complexity and criticality of F-16 testing.

Small Business Impact

This contract did not include a small business set-aside, nor is there any indication of subcontracting requirements for small businesses. This suggests that the primary contractor, Lockheed Martin, will likely perform the majority of the work internally. Consequently, the direct impact on the small business ecosystem is minimal, and opportunities for small businesses to participate in this specific contract are unlikely.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Accountability measures would be tied to the performance metrics outlined in the contract and the terms of the cost-plus-fixed-fee structure. Transparency is limited due to the sole-source nature of the award, making public scrutiny of the pricing and justification more challenging. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

F-16 Sustainment Programs
Air Force Test and Evaluation Command
Aerospace Engineering Services Contracts
Defense Contract Management Agency (DCMA)

Risk Flags

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

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.0 million to LOCKHEED MARTIN CORPORATION. F-16 FLIGHT TEST SUPPORT FOR DT&E AND OT&E

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 $29.0 million.

What is the period of performance?

Start: 2011-11-01. End: 2013-10-31.

What is Lockheed Martin's track record with F-16 flight test support contracts?

Lockheed Martin Corporation has a long and established history as the prime contractor for the F-16 Fighting Falcon program, including its development, production, and sustainment. This extensive experience naturally extends to providing flight test support for various modifications, upgrades, and new capabilities throughout the aircraft's lifecycle. Their track record typically involves close collaboration with Air Force test wings and agencies to conduct developmental and operational testing. While specific performance metrics for past flight test support contracts are often proprietary or embedded within broader program reviews, Lockheed Martin's continued role as the F-16 prime contractor suggests a generally satisfactory performance history in meeting the technical and logistical demands of such critical testing activities. However, the sole-source nature of this particular award warrants scrutiny beyond historical performance, focusing on the justification for not seeking competitive proposals.

How does the $29 million value compare to similar F-16 flight test support contracts?

Direct comparison of the $29 million value for this specific two-year delivery order is challenging without access to detailed historical contract data for F-16 flight test support. Contract values can fluctuate significantly based on the scope of testing (e.g., new weapon integration vs. routine diagnostics), the specific F-16 variant, the duration of the test period, and the level of engineering effort required. However, given that this is a sole-source award for engineering services, the value is substantial. Typically, competitive solicitations allow for price discovery, which can lead to more optimized pricing. The absence of competition here means this figure represents the negotiated price with Lockheed Martin, and its 'fairness' or 'reasonableness' is harder to ascertain without comparative benchmarks from similar, competitively awarded contracts or internal government cost estimates.

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

The primary risk associated with this sole-source contract is the potential for reduced value for money due to the lack of competition. Without competing bids, there is less pressure on Lockheed Martin to offer the most competitive pricing, potentially leading to higher costs for the Air Force. Another risk stems from the Cost-Plus-Fixed-Fee (CPFF) contract type. While CPFF contracts provide flexibility for evolving requirements, they can incentivize contractors to incur higher costs, as their fee is fixed regardless of the actual costs incurred (within allowable limits). Effective government oversight and robust cost control measures are crucial to mitigate this risk. Additionally, reliance on a single source could pose a risk if unforeseen issues arise with the contractor's performance or capacity.

How effective is the Cost-Plus-Fixed-Fee (CPFF) structure for flight test support?

The Cost-Plus-Fixed-Fee (CPFF) contract structure can be effective for flight test support when requirements are not fully defined at the outset or are expected to evolve during the testing phases. It allows the contractor to be reimbursed for all allowable costs incurred while performing the work, plus a predetermined fixed fee representing profit. This structure provides flexibility to adapt to unforeseen technical challenges or changes in test objectives, which are common in flight testing. However, its effectiveness is highly dependent on stringent government oversight to ensure costs are reasonable and allocable. Without rigorous monitoring, the CPFF structure can incentivize cost escalation, as the contractor's profit margin is fixed and not directly tied to cost savings. Therefore, while offering flexibility, it requires diligent management to ensure value for money.

What are the historical spending patterns for F-16 flight test support?

Historical spending patterns for F-16 flight test support, particularly through delivery orders against indefinite-delivery/indefinite-quantity (IDIQ) contracts or specific sole-source awards, would likely show consistent investment by the Air Force. The F-16 has been a frontline fighter for decades, necessitating ongoing testing for upgrades, modifications, and operational readiness. Spending would likely correlate with major program milestones, such as the introduction of new avionics, weapons systems integration, or structural enhancements. While specific aggregate figures for 'F-16 flight test support' across all contracts are not readily available in the provided data, the recurring need for such services suggests a sustained, albeit variable, level of expenditure over the F-16's operational life. The $29 million for this 730-day delivery order represents a significant, but likely not unprecedented, investment for a defined testing 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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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

Financial Breakdown

Contract Ceiling: $30,721,140

Exercised Options: $30,721,140

Current Obligation: $28,973,119

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F4262001D0058

IDV Type: IDC

Timeline