DoD awards $80.4M for aircraft parts to Lockheed Martin, raising questions about competition and value

Contract Overview

Contract Amount: $80,388,908 ($80.4M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2009-12-23

End Date: 2014-03-31

Contract Duration: 1,559 days

Daily Burn Rate: $51.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CY10 ASC SUPPORT

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $80.4 million to LOCKHEED MARTIN CORPORATION for work described as: CY10 ASC SUPPORT Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant contract value suggests a critical need for these specialized aircraft parts. 3. Long contract duration of over 4 years may indicate a stable, long-term requirement. 4. Fixed-price contract type aims to control costs, but sole-source nature may negate savings. 5. Contractor's extensive experience in defense manufacturing suggests technical capability. 6. Geographic location in Florida may point to specific operational or logistical needs.

Value Assessment

Rating: questionable

The contract's value of $80.4 million over approximately 4 years for aircraft parts warrants scrutiny, especially given the lack of competitive bidding. Without a benchmark against other suppliers or similar contracts, it's difficult to definitively assess value for money. However, sole-source awards often carry a premium compared to competitively sourced contracts. The firm fixed-price structure is a positive cost-control measure, but its effectiveness is diminished when competition is absent.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Lockheed Martin Corporation, was solicited. This approach bypasses the competitive process, which typically drives down prices and encourages innovation. The lack of competition means there's no direct market comparison to assess if the price offered is truly competitive or if alternative solutions were overlooked.

Taxpayer Impact: Taxpayers may be paying a premium for this contract due to the absence of a competitive bidding process. Without multiple offers, there is less assurance that the government secured the best possible price and terms.

Public Impact

The primary beneficiaries are the Department of Defense and its aviation units requiring specialized aircraft parts. Services delivered include the supply of 'Other Aircraft Parts and Auxiliary Equipment'. The contract has a geographic impact within Florida (ST, SN). The contract supports the defense industrial base, likely sustaining jobs within Lockheed Martin and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs.
Lack of transparency in the bidding process makes it hard to verify fair pricing.
Long-term nature of the contract could lock the government into a potentially suboptimal arrangement if market conditions change.

Positive Signals

Firm fixed-price contract type provides cost certainty for the government.
Award to an established contractor like Lockheed Martin suggests a high likelihood of meeting technical requirements.
Contract duration implies a stable and predictable supply chain for critical parts.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for such specialized components is often characterized by high barriers to entry due to technical expertise, stringent quality control, and established relationships with government agencies. Spending in this area is critical for maintaining military readiness and operational capabilities. Comparable spending benchmarks would typically involve analyzing other sole-source or competitively awarded contracts for similar aircraft components within the DoD.

Small Business Impact

The data indicates this contract was not set aside for small businesses (sb: false). Given the nature of specialized aircraft parts and the award to a large corporation like Lockheed Martin, it is unlikely that significant subcontracting opportunities for small businesses were a primary consideration or requirement within this specific award. Further analysis would be needed to determine if Lockheed Martin has a broader small business subcontracting plan in place that might indirectly benefit smaller firms.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The firm fixed-price nature of the contract provides a degree of accountability for cost overruns, as the contractor is responsible for delivering the specified goods within the agreed-upon price. Transparency is limited due to the sole-source award, but contract modifications and performance reports would be subject to internal DoD review and potentially Inspector General oversight.

Related Government Programs

Aircraft Component Procurement
Defense Logistics Support
Aerospace Manufacturing Contracts
Sole-Source Defense Awards
Lockheed Martin Contracts

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for inflated pricing
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $80.4 million to LOCKHEED MARTIN CORPORATION. CY10 ASC 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 Contract Management Agency).

What is the total obligated amount?

The obligated amount is $80.4 million.

What is the period of performance?

Start: 2009-12-23. End: 2014-03-31.

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

Lockheed Martin Corporation is a major defense contractor with a long and extensive history of supplying aircraft, components, and related services to the Department of Defense. Analyzing their past performance on similar contracts would involve reviewing contract databases for awards related to aircraft parts, auxiliary equipment, and maintenance services. Key metrics to examine would include on-time delivery rates, quality compliance, past performance reviews, and any instances of contract disputes or overruns. Given their size and scope, Lockheed Martin typically holds numerous contracts across various defense platforms, suggesting a robust capability but also necessitating careful oversight to ensure consistent performance and fair pricing across all engagements.

How does the pricing of this $80.4 million contract compare to market rates for similar aircraft parts?

Directly comparing the pricing of this $80.4 million contract to market rates is challenging due to its sole-source nature. Without competitive bids, there is no direct market validation of the price. To assess value, one would typically benchmark against prices paid by other government agencies or commercial entities for identical or comparable parts, or analyze historical pricing trends for these specific parts if available. The firm fixed-price structure suggests an attempt to cap costs, but the absence of competition means the baseline price itself may not reflect the lowest achievable cost. Further investigation into the specific part numbers and their commercial equivalents, if any, would be necessary for a more robust comparison.

What are the primary risks associated with awarding a contract of this magnitude on a sole-source basis?

The primary risks associated with a sole-source award of this magnitude ($80.4 million) include potential overpayment due to lack of competition, reduced incentive for the contractor to innovate or offer cost efficiencies, and the risk of the government becoming dependent on a single supplier. There's also a risk that the government may not be aware of or have access to potentially superior or more cost-effective alternative solutions that a competitive process might have uncovered. Furthermore, sole-source awards can sometimes face greater public and congressional scrutiny regarding fairness and justification.

How effective is the firm fixed-price (FFP) contract type in managing costs for specialized aircraft parts, especially in a sole-source scenario?

The firm fixed-price (FFP) contract type is generally effective in managing costs by shifting the risk of cost overruns to the contractor. This incentivizes the contractor to control expenses and deliver the product within the agreed-upon price. However, in a sole-source scenario, the effectiveness of FFP in achieving the *lowest possible* cost is diminished. While the price is fixed, that fixed price might be set higher than it would be in a competitive environment. The FFP structure still provides cost certainty for the government regarding the final payment, but it doesn't guarantee the best value if the initial price negotiation lacked competitive pressure.

What is the historical spending pattern for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' by the Department of Defense?

Historical spending patterns for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' by the Department of Defense are substantial, reflecting the continuous need to maintain and modernize a vast and complex air fleet. This category encompasses a wide range of components, from engine parts to avionics and structural elements. Spending in this area fluctuates based on modernization programs, operational tempo, and the lifecycle of various aircraft platforms. Analyzing historical data reveals significant annual outlays, often in the billions of dollars, with major defense contractors like Lockheed Martin being consistent recipients of such contracts. The trend often shows sustained investment, punctuated by increases during periods of heightened global security or major fleet upgrades.

What specific aircraft platforms or systems does this contract for CY10 ASC SUPPORT likely relate to?

The designation 'CY10 ASC SUPPORT' and the nature of 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' suggest this contract likely supports specific aircraft platforms or systems managed by the Air Force Sustainment Center (ASC). While the exact platforms are not specified in the provided data, ASC is responsible for depot-level maintenance, repair, and overhaul for a wide array of Air Force aircraft, including fighters (like F-16, F-22, F-35), bombers (like B-1, B-2, B-52), and transport aircraft (like C-130, C-17). Therefore, the parts procured under this contract could be critical components for maintaining the operational readiness of these diverse and vital military assets.

Industry Classification

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

Product/Service Code: MAINT/REPAIR SHOP EQPT

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: 5600 W SAND LAKE RD # MP-265, ORLANDO, FL, 32819

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

Financial Breakdown

Contract Ceiling: $80,721,027

Exercised Options: $80,721,027

Current Obligation: $80,388,908

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline