DoD's $17M contract for UAE aircraft manufacturing awarded to Lockheed Martin, lacking competition

Contract Overview

Contract Amount: $17,028,676 ($17.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2010-03-31

End Date: 2016-05-31

Contract Duration: 2,253 days

Daily Burn Rate: $7.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: UNITED ARAB EMIRATES PBL

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $17.0 million to LOCKHEED MARTIN CORPORATION for work described as: UNITED ARAB EMIRATES PBL Key points: 1. The contract's value of $17 million for aircraft manufacturing raises questions about cost-effectiveness given the lack of competitive bidding. 2. Sole-source awards can limit price discovery and potentially lead to higher costs for taxpayers. 3. The duration of the contract (2253 days) suggests a long-term commitment, emphasizing the need for robust oversight. 4. Performance context is limited without specific details on deliverables and outcomes for the United Arab Emirates. 5. The contract falls within the Aircraft Manufacturing sector, a critical area for defense capabilities. 6. The absence of small business involvement indicates a focus on large prime contractors for this specific award.

Value Assessment

Rating: questionable

Benchmarking the value of this $17 million contract is challenging without specific details on the aircraft manufactured or the services provided. However, the fact that it was a sole-source award to Lockheed Martin suggests that competitive pricing dynamics were not leveraged. This raises concerns about whether the government secured the best possible value. Comparing it to similar sole-source contracts for specialized aircraft components or manufacturing services would be necessary for a more definitive assessment, but generally, competition drives down costs.

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 bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, national security), they inherently limit price negotiation and comparison, potentially leading to less favorable terms for the government.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that typically arise from a competitive bidding environment. This can result in higher overall spending for the same goods or services.

Public Impact

The primary beneficiary is the United Arab Emirates, which receives manufactured aircraft components or services. The contract supports the production or modification of aircraft, contributing to defense capabilities. The geographic impact is primarily within Florida, where the contract was managed. The contract likely supports specialized roles within the aerospace manufacturing workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Sole-source awards reduce transparency in pricing.
Long contract duration without clear performance metrics could mask inefficiencies.

Positive Signals

Awarded to a major defense contractor with established capabilities.
Contract is for aircraft manufacturing, a critical defense sector.
Managed by the Defense Contract Management Agency, indicating established oversight processes.

Sector Analysis

This contract falls within the Aircraft Manufacturing sector, a significant segment of the aerospace and defense industry. This sector is characterized by high barriers to entry, complex supply chains, and substantial R&D investment. Spending in this area is often driven by government defense needs and international partnerships. Comparable spending benchmarks would typically involve analyzing other sole-source or competitively awarded contracts for similar aircraft platforms or manufacturing services, which are often in the multi-million to billion-dollar range.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The award was made directly to Lockheed Martin Corporation, a large prime contractor. There is no information provided regarding subcontracting plans to small businesses. This suggests that the primary focus was on the prime contractor's capabilities, and the impact on the small business ecosystem for this specific award is likely minimal unless subcontracting opportunities are pursued independently by the prime.

Oversight & Accountability

The contract was managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractors meet performance and cost requirements. Oversight mechanisms would typically include contract surveillance, performance reviews, and financial audits. Transparency is enhanced through contract databases like FPDS, but the specifics of sole-source justifications and detailed performance metrics are not always publicly disclosed. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Foreign Military Sales
Aircraft Procurement
Defense Manufacturing Contracts
Lockheed Martin Contracts

Risk Flags

Lack of Competition
Potential for Cost Overruns
Limited Transparency in Pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.0 million to LOCKHEED MARTIN CORPORATION. UNITED ARAB EMIRATES PBL

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 $17.0 million.

What is the period of performance?

Start: 2010-03-31. End: 2016-05-31.

What specific aircraft or components were manufactured under this contract?

The provided data does not specify the exact aircraft or components manufactured under this contract. It is categorized under NAICS code 336411, which covers 'Aircraft Manufacturing.' This broad classification suggests the contract could encompass a range of activities, from the production of entire aircraft to the manufacturing of critical sub-assemblies, engines, or avionics. Without further details from the contract award documentation, it is impossible to determine the precise nature of the manufactured goods. This lack of specificity hinders a thorough value assessment and understanding of the contract's direct impact.

What was the justification for awarding this contract on a sole-source basis?

The data indicates this contract was 'NOT COMPETED,' signifying a sole-source award. The specific justification for this sole-source determination is not provided in the abbreviated data. Common reasons for sole-source awards in defense contracting include unique technological capabilities possessed by only one contractor, urgent national security needs where competition is not feasible, or follow-on work to a previous contract where only the original contractor has the necessary knowledge and tooling. A full justification would typically be documented by the contracting agency and may be subject to review by oversight bodies.

How does the $17 million value compare to similar sole-source aircraft manufacturing contracts?

Directly comparing the $17 million value to similar sole-source aircraft manufacturing contracts is difficult without knowing the specific type of aircraft or components involved. However, $17 million is a moderate sum for aircraft manufacturing, potentially covering specialized components, modifications, or a small number of training aircraft rather than major combat platforms. Sole-source contracts, by their nature, often carry a price premium compared to competitively bid contracts. To assess value, one would need to benchmark against contracts for comparable scope and complexity, considering factors like technology, quantity, and lead time, while acknowledging the inherent cost implications of a non-competitive award.

What is Lockheed Martin Corporation's track record with sole-source defense contracts?

Lockheed Martin Corporation, as one of the largest defense contractors globally, has a significant history of receiving both competitively awarded and sole-source contracts from the U.S. Department of Defense and allied nations. Their extensive portfolio includes major platforms like the F-35 fighter jet, C-130 transport aircraft, and various missile systems. Sole-source awards to Lockheed Martin are often justified by their proprietary technologies, established production lines for specific platforms, and critical role in maintaining U.S. and allied defense capabilities. Analyzing their broader contract history reveals a pattern of substantial government awards, with sole-source procurements being a component, often related to unique system sustainment or upgrades.

What are the potential risks associated with a sole-source contract of this duration?

A sole-source contract, especially one spanning over 2000 days (approximately 6 years), carries several risks. Firstly, the lack of competition can lead to reduced incentive for the contractor to control costs, potentially resulting in overspending. Secondly, without regular competitive pressure, there's a risk of complacency regarding innovation and efficiency. Thirdly, the long duration increases exposure to market fluctuations, technological obsolescence, and potential changes in the geopolitical landscape that might affect the contract's relevance or cost. Finally, oversight becomes critical to ensure the contractor remains accountable for performance and pricing throughout the extended period, mitigating risks of cost creep or substandard delivery.

What oversight mechanisms are typically in place for sole-source defense contracts managed by DCMA?

The Defense Contract Management Agency (DCMA) typically employs a range of oversight mechanisms for sole-source defense contracts. These include contract administration, which involves monitoring contractor performance against contract requirements, ensuring timely delivery, and verifying quality standards. DCMA also performs financial oversight, reviewing invoices, monitoring expenditures, and ensuring compliance with payment terms. For sole-source contracts, particular attention may be paid to cost reasonableness and contractor efficiency, often involving audits and negotiations. Surveillance of the contractor's facilities and processes is also common. The level of oversight is often tailored to the contract's value, complexity, and risk profile.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

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: $17,028,676

Exercised Options: $17,028,676

Current Obligation: $17,028,676

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline