DoD's $136M aircraft engine support contract awarded to Lockheed Martin shows strong competition

Contract Overview

Contract Amount: $136,335,560 ($136.3M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2019-03-29

End Date: 2020-03-31

Contract Duration: 368 days

Daily Burn Rate: $370.5K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 8506392857!AF GEN III SUPPORT

Place of Performance

Location: MIDDLE RIVER, BALTIMORE County, MARYLAND, 21220

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $136.3 million to LOCKHEED MARTIN CORPORATION for work described as: 8506392857!AF GEN III SUPPORT Key points: 1. Value for money appears reasonable given the firm-fixed-price structure and competitive award. 2. Strong competition was present, indicating a healthy market for these specialized services. 3. Risk indicators are moderate, with a defined period of performance and clear contract type. 4. Performance context is within the Defense Logistics Agency's mission to support military readiness. 5. Sector positioning is within the aerospace and defense manufacturing industry, a critical area for national security.

Value Assessment

Rating: good

The contract's firm-fixed-price nature suggests a degree of cost certainty for the government. Benchmarking against similar sole-source or less competitive contracts would be beneficial, but the competitive award itself implies a fair market price was achieved. The total award value of $136.3 million over approximately one year indicates significant investment in maintaining critical aircraft engine components.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple qualified vendors were invited to bid. The presence of a competitive process is a positive sign for price discovery and ensures that the government receives offers from a wide range of potential suppliers. Specific details on the number of bids received are not provided but the 'full and open' designation implies a robust selection process.

Taxpayer Impact: Taxpayers benefit from the competitive nature of this award, as it drives down prices and ensures the government is not overpaying for essential aircraft engine support services.

Public Impact

The primary beneficiaries are the U.S. Air Force and potentially other branches of the military relying on the supported aircraft engines. Services delivered include crucial support for aircraft engines, ensuring operational readiness and reducing downtime. Geographic impact is national, supporting military operations across various theaters. Workforce implications include the potential for skilled labor in manufacturing, maintenance, and logistics within the aerospace sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if specific engine types require proprietary support.
Reliance on a single large contractor could limit future competition if capabilities are not maintained across the industry.

Positive Signals

Firm-fixed-price contract limits cost overrun risk for the government.
Full and open competition suggests a healthy market and potential for competitive pricing.
Award to a major defense contractor like Lockheed Martin indicates access to established expertise and supply chains.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft engine components. This is a highly specialized and critical segment of the defense industrial base. The market is characterized by high barriers to entry due to technological complexity and stringent quality requirements. Comparable spending benchmarks would likely involve other major engine support contracts for military aircraft, which often represent significant portions of defense budgets.

Small Business Impact

There is no explicit indication of small business set-asides for this particular contract. However, large prime contractors like Lockheed Martin are often required to meet subcontracting goals with small businesses. The extent to which small businesses will participate through subcontracting opportunities is not detailed here but is a common practice in major defense procurements.

Oversight & Accountability

Oversight is likely managed by the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA), responsible for ensuring compliance with contract terms and financial accountability. The firm-fixed-price nature of the contract provides a degree of cost control. Transparency is facilitated through contract award databases, though detailed performance metrics may be internal.

Related Government Programs

Aircraft Engine Maintenance and Repair
Defense Logistics Agency Procurement
Air Force Aircraft Sustainment Programs
Aerospace Manufacturing Contracts

Risk Flags

Contract Awarded to Incumbent/Major Prime
High Value Contract
Specialized Technical Services

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $136.3 million to LOCKHEED MARTIN CORPORATION. 8506392857!AF GEN III 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 (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $136.3 million.

What is the period of performance?

Start: 2019-03-29. End: 2020-03-31.

What is Lockheed Martin's track record with similar aircraft engine support contracts for the Department of Defense?

Lockheed Martin Corporation, through its various divisions and subsidiaries, has a long and extensive history of supporting complex defense systems, including aircraft engines, for the U.S. military. They are a prime contractor on numerous programs involving fighter jets, transport aircraft, and other platforms that rely on sophisticated engine technology. Their experience typically encompasses manufacturing, sustainment, repair, and upgrade services for a wide range of engine types. While specific contract performance data for every engagement is not publicly detailed, their sustained position as a major defense contractor suggests a generally reliable performance history in delivering complex technical services and products. However, like any large organization, they have faced scrutiny and performance reviews on specific contracts over their history, underscoring the importance of ongoing oversight for all government procurements.

How does the value of this contract compare to other aircraft engine support contracts within the DoD?

The $136.3 million award for approximately one year of aircraft engine support is a substantial sum, reflecting the high cost and critical nature of maintaining advanced military powerplants. To provide a precise comparison, one would need to analyze contracts for similar engine types (e.g., turbofan, turboprop) and similar service scopes (e.g., depot-level maintenance, component repair, spare parts provisioning) across different military branches and timeframes. However, in the context of major defense procurements, this value is within the expected range for significant sustainment efforts. Contracts for entire engine overhauls or long-term fleet support can easily run into hundreds of millions or even billions of dollars over their lifecycle. This specific award appears to be for a defined period of support, likely covering a specific set of tasks or a particular fleet requirement, making it a significant but not necessarily outlier-level expenditure when viewed against the broader landscape of DoD aviation sustainment.

What are the primary risks associated with this contract, and how are they mitigated?

Primary risks include potential cost overruns (mitigated by the firm-fixed-price structure), schedule delays impacting aircraft readiness, and technical performance issues. The firm-fixed-price contract shifts much of the cost risk to Lockheed Martin, incentivizing them to manage expenses efficiently. Schedule adherence is critical for military operations, and contract terms likely include performance metrics and potential penalties for delays. Technical performance is managed through stringent quality assurance processes, acceptance testing, and the contractor's established expertise. Furthermore, the competitive award process itself helps mitigate risks by selecting a capable provider. Ongoing government oversight by agencies like DCMA plays a crucial role in monitoring progress and addressing emerging issues proactively.

What is the historical spending pattern for aircraft engine support by the Defense Logistics Agency?

The Defense Logistics Agency (DLA) is a major procurer of aviation-related parts and services, including engine support, for all branches of the U.S. military. Historical spending patterns for DLA in this category are substantial and fluctuate based on fleet readiness requirements, modernization programs, and depot maintenance schedules. Over the past decade, DLA's aviation spending, which encompasses engine support, has consistently been in the billions of dollars annually. Specific figures for engine support alone would require detailed analysis of DLA's procurement data, breaking down spending by Product Service Code (PSC) and contract type. However, it is evident that DLA plays a pivotal role in ensuring the availability of engines and related components, making contracts like this a recurring and significant part of their operational budget. Trends may show shifts towards more performance-based logistics or sustainment contracts over time.

How does the 'full and open competition' designation impact the potential for innovation from the contractor?

A 'full and open competition' environment generally encourages innovation by allowing any responsible source to submit a bid. This broad participation can bring diverse approaches and technologies to the table. For a contract like aircraft engine support, innovation could manifest in more efficient repair techniques, advanced diagnostic tools, improved logistics, or the development of more durable components. Contractors are motivated to propose innovative solutions not only to win the initial contract but also to gain a competitive edge and potentially secure future follow-on work. The firm-fixed-price structure can also incentivize innovation if it leads to cost savings that the contractor can retain. However, the degree of innovation is also influenced by the specific technical requirements outlined in the solicitation and the contractor's internal R&D capabilities.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Engine and Engine Parts Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 2323 EASTERN BLVD, BALTIMORE, MD, 21220

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $136,335,560

Exercised Options: $136,335,560

Current Obligation: $136,335,560

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE4AX17D9006

IDV Type: IDC

Timeline