DoD awards $30.8M for aircraft parts, with limited competition and a 4-year duration

Contract Overview

Contract Amount: $30,814,318 ($30.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2014-02-18

End Date: 2018-02-21

Contract Duration: 1,464 days

Daily Burn Rate: $21.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: RECEIVER,TRANSMITTE

Place of Performance

Location: OWEGO, TIOGA County, NEW YORK, 13827

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $30.8 million to LOCKHEED MARTIN CORPORATION for work described as: RECEIVER,TRANSMITTE Key points: 1. Contract awarded for aircraft parts, indicating a need for ongoing maintenance and support. 2. The firm-fixed-price contract type suggests predictable costs for the government. 3. The contract was not competed, raising questions about potential cost savings and market fairness. 4. The duration of over four years suggests a long-term requirement for these parts. 5. The awardee, Lockheed Martin Corporation, is a major defense contractor with extensive experience. 6. The contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific part details or market comparisons. However, the $30.8 million award over four years suggests an average annual spend of approximately $7.7 million. Given the sole-source nature, it's difficult to assess if this represents optimal value for money. Further analysis would require comparing the unit prices of the specific parts to industry benchmarks or prices paid by other agencies for similar components.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not open to competition from other potential suppliers. This approach is typically used when a specific product or service is only available from a single source, or in cases of urgent need. The lack of competition means that the government did not benefit from the price discovery mechanisms that typically occur in a competitive bidding process.

Taxpayer Impact: The absence of competition for this $30.8 million contract means taxpayers may not have received the lowest possible price. Without competitive bids, there's a risk that the awarded price is higher than it would have been in a more open market.

Public Impact

The primary beneficiaries are the Department of Defense and its operational units relying on aircraft. The contract ensures the supply of essential aircraft parts, contributing to the readiness and operational capability of military aircraft. The geographic impact is primarily within the United States, with potential implications for the supply chain and logistics supporting military operations. The contract supports jobs within Lockheed Martin Corporation and its supply chain, contributing to the aerospace manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher prices than a competitive award.
Sole-source awards can limit opportunities for other qualified suppliers to enter the market.
Long contract duration without re-competition could reduce pressure on the contractor to innovate or reduce costs.

Positive Signals

Award to a large, established defense contractor like Lockheed Martin suggests a high likelihood of successful delivery.
Firm-fixed-price contract provides cost certainty for the government.
The contract addresses a specific need for aircraft parts, crucial for military readiness.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for aircraft components is characterized by high technical requirements, stringent quality control, and often long production cycles. Major defense contractors like Lockheed Martin are key players in this sector, often holding proprietary knowledge or existing production lines for specific aircraft systems. Spending in this area is critical for maintaining the operational readiness of military fleets.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the awardee is a large corporation, suggesting that subcontracting opportunities for small businesses may be limited or dependent on Lockheed Martin's internal subcontracting strategy. Without specific subcontracting plans, the direct impact on the small business ecosystem is unclear, though large prime contracts can sometimes flow down to smaller suppliers.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense and the Defense Logistics Agency. As a firm-fixed-price contract, the primary oversight focus would be on ensuring delivery of the correct parts according to specifications and on schedule. Transparency is generally maintained through contract award databases, but detailed performance metrics and cost breakdowns may not be publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Maintenance and Repair
Aerospace Manufacturing
Defense Logistics Support
Military Aircraft Procurement

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Long contract duration without re-competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.8 million to LOCKHEED MARTIN CORPORATION. RECEIVER,TRANSMITTE

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 $30.8 million.

What is the period of performance?

Start: 2014-02-18. End: 2018-02-21.

What is the specific type of aircraft parts being procured under this contract?

The provided data indicates the NAICS code is '336413 - Other Aircraft Parts and Auxiliary Equipment Manufacturing'. This broad category encompasses a wide range of components, including but not limited to engine parts, airframe components, landing gear, avionics, and other specialized equipment for aircraft. Without more granular information, it is impossible to determine the exact nature of the parts. However, the contract's duration and value suggest they are critical, potentially long-lead-time items necessary for maintaining a fleet of aircraft.

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

Sole-source awards are typically justified when only one responsible source can provide the required supplies or services. This could be due to proprietary technology, unique capabilities, existing infrastructure, or urgent and compelling circumstances where competition is not feasible. For aircraft parts, it might involve components specifically designed for a particular aircraft model where only the original equipment manufacturer (OEM) or an authorized supplier can provide them, or where the cost of qualifying a new supplier would outweigh the potential savings from competition. The specific justification for this sole-source award would be detailed in the contract's justification and approval (J&A) document, which is not provided here.

How does the $30.8 million contract value compare to similar procurements for aircraft parts?

Direct comparison of the $30.8 million total contract value is difficult without knowing the specific parts procured and the aircraft platforms they support. However, the average annual spend of approximately $7.7 million ($30.8M / 4 years) falls within a typical range for sustainment contracts for major defense systems. Larger fleets or more complex aircraft would naturally incur higher sustainment costs. To provide a more precise benchmark, one would need to compare the unit prices of the specific parts against market rates, prices paid by other agencies for similar components, or historical pricing trends for these items.

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

Lockheed Martin Corporation is one of the largest defense contractors globally and has an extensive and long-standing relationship with the Department of Defense. They are a primary contractor for numerous major defense platforms, including fighter jets (like the F-35 and F-16), helicopters, and various missile systems. Their track record with the DoD for supplying aircraft parts and related services is substantial, encompassing a wide array of contracts, many of which are large-scale and complex. While specific performance metrics for this particular contract are not detailed, Lockheed Martin's overall history suggests a high capability in fulfilling defense supply chain requirements.

What are the potential risks associated with a sole-source award for aircraft parts?

The primary risk of a sole-source award for aircraft parts is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may pay more than necessary. Another risk is reduced innovation, as the sole provider may have less incentive to improve efficiency or develop cost-saving alternatives. Furthermore, reliance on a single supplier can create supply chain vulnerabilities; if the sole source experiences production issues or goes out of business, it could significantly disrupt the availability of critical parts. This also limits opportunities for other capable small and large businesses to participate in the defense industrial base.

How does the duration of this contract (over 4 years) impact its overall value and risk?

A contract duration of over four years for aircraft parts suggests a stable, long-term need for these components, likely tied to the operational life or sustainment plan of specific aircraft. From a value perspective, a longer duration can provide cost stability and predictability for the government, potentially allowing for better long-term budget planning and possibly volume discounts if quantities are committed. However, it also extends the period during which the government is locked into a potentially non-competitive price. The risk is that technology or market conditions could change, making the contracted parts or pricing less optimal over time. Without periodic re-evaluation or price adjustment clauses, the government might miss out on savings if market prices decrease.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 1801 STATE RT 17 C, 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: $30,814,318

Exercised Options: $30,814,318

Current Obligation: $30,814,318

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPRWA113D2000

IDV Type: IDC

Timeline