DoD awards $49M for B-1B DSU sustainment to Lockheed Martin, raising value-for-money questions

Contract Overview

Contract Amount: $48,970,992 ($49.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2025-09-27

End Date: 2028-10-30

Contract Duration: 1,129 days

Daily Burn Rate: $43.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: BAND 8 RFS AND EPACU FOR B-1B DSU

Place of Performance

Location: OWEGO, TIOGA County, NEW YORK, 13827

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $49.0 million to LOCKHEED MARTIN CORPORATION for work described as: BAND 8 RFS AND EPACU FOR B-1B DSU Key points: 1. Contract awarded to incumbent for sustainment, limiting competitive pressure. 2. High value for a single system sustainment contract. 3. Potential for cost overruns due to fixed-price nature and long duration. 4. Performance context is critical for ensuring long-term aircraft readiness. 5. Positioned within the defense aerospace manufacturing sector. 6. Limited transparency on specific sustainment activities and their necessity.

Value Assessment

Rating: questionable

The contract's value of approximately $49 million for sustainment of the B-1B DSU system appears high, especially given it was not competed. Benchmarking against similar sustainment contracts for complex aerospace systems is difficult without more detailed cost breakdowns. The fixed-price nature suggests a defined scope, but the long duration could expose the government to risks if costs escalate beyond initial projections. Without competitive bidding, it's challenging to definitively assess if this represents fair market value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This approach is typically justified when only one responsible source can provide the required goods or services, often due to proprietary technology, unique expertise, or existing system integration. The lack of competition means potential savings that could arise from a bidding process are foregone, and price discovery is limited.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure, as the contractor faces less incentive to offer the most cost-effective solution.

Public Impact

The primary beneficiaries are the U.S. Air Force units operating the B-1B Lancer bomber fleet. Services delivered include sustainment for the Defensive System Upgrade (DSU) components. Geographic impact is national, supporting the operational readiness of a strategic bomber. Workforce implications include continued employment for specialized technical personnel at Lockheed Martin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential taxpayer savings.
Long contract duration increases risk of cost escalation without competitive re-evaluation.
Lack of detailed public cost breakdown hinders value-for-money assessment.
Dependence on a single contractor for critical system sustainment.

Positive Signals

Award to incumbent contractor likely ensures continuity of essential sustainment services.
Fixed-price contract provides some cost certainty if scope is well-defined.
Focus on sustainment supports the operational readiness of the B-1B fleet.

Sector Analysis

This contract falls within the Defense Aerospace Manufacturing sector, specifically focusing on the sustainment of avionics and electronic systems for military aircraft. The market for such specialized sustainment services is often dominated by original equipment manufacturers due to the complexity and proprietary nature of the systems. Comparable spending benchmarks are difficult to establish publicly due to the classified or sensitive nature of specific defense system components and sustainment contracts.

Small Business Impact

This contract does not appear to involve a small business set-aside. Given the sole-source nature and the prime contractor being Lockheed Martin, a large aerospace corporation, the likelihood of significant subcontracting opportunities for small businesses within this specific award is uncertain without further details on the contract's structure and performance requirements.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management and the Defense Contract Management Agency (DCMA). Accountability measures are established through the contract terms and conditions, including performance metrics and reporting requirements. Transparency is limited due to the sole-source award and the nature of defense sustainment, though Inspector General oversight may be applicable for fraud or waste.

Related Government Programs

B-1B Bomber Sustainment Programs
Aerospace Avionics Manufacturing
Defense Contractor Logistics Support
Military Aircraft System Maintenance

Risk Flags

Sole-source award
Lack of competitive bidding
High contract value for sustainment
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $49.0 million to LOCKHEED MARTIN CORPORATION. BAND 8 RFS AND EPACU FOR B-1B DSU

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 $49.0 million.

What is the period of performance?

Start: 2025-09-27. End: 2028-10-30.

What is the specific nature of the 'DSU' system being sustained, and what are its critical functions for the B-1B bomber?

The 'DSU' likely refers to the Defensive System Upgrade for the B-1B Lancer bomber. This system is crucial for the aircraft's survivability, providing advanced electronic warfare capabilities to detect, identify, and counter enemy threats such as radar-guided missiles and surface-to-air missile systems. Its effective sustainment ensures the B-1B can continue to operate in contested airspace, a vital capability for its strategic bombing role. The specific components and technologies within the DSU are often proprietary and integral to the aircraft's overall mission effectiveness.

Why was this contract awarded on a sole-source basis instead of being competed?

Sole-source awards are typically justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source can provide the required supplies or services. For complex defense systems like the B-1B's DSU, this often occurs because the original equipment manufacturer (OEM) possesses unique technical data, proprietary knowledge, specialized tooling, or established integration expertise that cannot be replicated by other potential bidders. The Defense Logistics Agency (DLA) would have had to document the justification for this sole-source award, likely citing Lockheed Martin's unique position as the OEM or a highly specialized provider essential for maintaining the system's integrity and operational capability.

What are the key performance indicators (KPIs) or metrics used to evaluate Lockheed Martin's performance under this contract?

While the specific KPIs are not publicly detailed in the provided data, typical performance metrics for sustainment contracts of this nature include system availability rates, response times for technical support, defect resolution times, turnaround times for repairs, and adherence to delivery schedules for parts or services. The contract likely specifies acceptable performance thresholds, and failure to meet these could result in penalties or corrective action plans. The fixed-price nature suggests that performance is tied to delivering the contracted sustainment services effectively within the agreed-upon budget.

How does the $48.9 million contract value compare to historical spending on B-1B DSU sustainment?

Without access to historical spending data specifically for the B-1B DSU sustainment, a direct comparison is challenging. However, the $48.9 million figure represents a significant investment for the sustainment of a single system component over approximately four years. To assess its reasonableness, one would need to analyze trends in sustainment costs for similar complex avionics systems, factoring in inflation, technological obsolescence, and the number of aircraft supported. The lack of competition makes historical cost trends a more critical, albeit unavailable, benchmark for evaluating current value.

What are the potential risks associated with a long-term, sole-source sustainment contract for critical defense systems?

The primary risks associated with long-term, sole-source sustainment contracts include potential cost escalation over time, reduced incentive for innovation or efficiency improvements by the contractor, and a lack of competitive pressure to ensure the best value for taxpayers. There's also a risk of vendor lock-in, where the government becomes overly dependent on a single provider, making it difficult and costly to switch suppliers or bring sustainment in-house. Furthermore, without ongoing competition, the contractor may have less incentive to proactively address obsolescence or suggest more cost-effective sustainment strategies.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1801 STATE ROUTE 17C, OWEGO, NY, 13827

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: $48,970,992

Exercised Options: $48,970,992

Current Obligation: $48,970,992

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPRWA124D0008

IDV Type: IDC

Timeline