DoD's $74.7M advance procurement for Lot 3 aircraft parts lacked competition, raising value concerns

Contract Overview

Contract Amount: $74,728,236 ($74.7M)

Contractor: Longbow LLC

Awarding Agency: Department of Defense

Start Date: 2012-08-30

End Date: 2016-09-30

Contract Duration: 1,492 days

Daily Burn Rate: $50.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FUNDING OF ADVANCE PROCUREMENT FOR LOT 3

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $74.7 million to LONGBOW LLC for work described as: FUNDING OF ADVANCE PROCUREMENT FOR LOT 3 Key points: 1. The contract's lack of competition suggests potential overpayment and limited price discovery. 2. Advance procurement for aircraft parts indicates a long-term need for specific components. 3. The firm-fixed-price structure shifts some risk to the contractor, but competition is key to ensuring fair pricing. 4. This contract falls within the 'Other Aircraft Parts' manufacturing sector, a critical component of defense logistics. 5. The duration of the contract (1492 days) suggests a significant, multi-year requirement. 6. The absence of small business involvement warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: questionable

Benchmarking the value of this advance procurement contract is challenging due to the lack of competitive bids. The $74.7 million awarded without competition raises concerns about whether the government secured the best possible price. While the firm-fixed-price contract type provides some cost certainty, the absence of multiple offers means there was no direct market pressure to drive down costs. Without comparable contracts or a competitive bidding process, it's difficult to definitively assess if the pricing is fair or represents good value for taxpayer money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. The data indicates only one offer was solicited and received. This lack of competition limits the government's ability to explore different pricing structures and potentially negotiate better terms. It also means that the market's full range of capabilities and cost efficiencies may not have been leveraged.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings typically achieved through competitive bidding, potentially leading to higher overall expenditure for the procured goods.

Public Impact

The Department of Defense is the primary beneficiary, securing critical components for its aircraft. This contract supports the manufacturing and supply chain for specialized aircraft parts. The geographic impact is concentrated in Florida, where the contractor is located. The contract likely supports a workforce involved in the manufacturing and logistics of aircraft components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices.
Sole-source award limits transparency in pricing.
Advance procurement without clear performance metrics can be risky.
Long contract duration without competition increases exposure to price changes.

Positive Signals

Firm-fixed-price contract shifts some cost risk to the contractor.
Advance procurement ensures availability of critical long-lead-time items.
Contract awarded to a single entity suggests specialized capability.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for specialized aircraft components is often characterized by high barriers to entry due to technical expertise, certifications, and established supply chains. Advance procurement is common in this sector to secure long-lead-time items and ensure program continuity. The total value of $74.7 million for advance procurement suggests a significant component of a larger defense program.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, nor does it appear to have a specific subcontracting requirement mentioned. The sole-source nature of the award further limits the likelihood of small business participation unless they are the direct supplier to the prime contractor. This suggests a missed opportunity to engage the small business industrial base in supporting this defense procurement.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance. However, the lack of competition and the sole-source nature limit the scope for performance-based oversight focused on price negotiation. Transparency is reduced due to the absence of a competitive process. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Parts Manufacturing
Defense Procurement
Advance Procurement Contracts
Sole-Source Contracts
Long-Term Supply Agreements

Risk Flags

Lack of Competition
Sole-Source Award
Potential for Overpricing
Long Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $74.7 million to LONGBOW LLC. FUNDING OF ADVANCE PROCUREMENT FOR LOT 3

Who is the contractor on this award?

The obligated recipient is LONGBOW LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $74.7 million.

What is the period of performance?

Start: 2012-08-30. End: 2016-09-30.

What is the track record of LONGBOW LLC in fulfilling defense contracts, particularly those involving advance procurement?

Assessing LONGBOW LLC's track record requires a deeper dive into historical contract data beyond this single award. While this $74.7 million advance procurement contract was awarded on a sole-source basis, it's crucial to examine if the company has a history of successful performance on similar defense contracts. Key indicators would include on-time delivery, adherence to quality standards, and any past performance reviews or disputes. Without this broader context, it's difficult to gauge their reliability and capability beyond the information provided for this specific contract. Further analysis would involve searching contract databases for other awards to LONGBOW LLC and reviewing their performance history.

How does the $74.7 million advance procurement cost compare to similar contracts for Lot 3 aircraft parts?

Direct comparison of the $74.7 million advance procurement cost for Lot 3 aircraft parts is difficult due to the sole-source nature of this award. Typically, value is assessed by benchmarking against competitively awarded contracts for similar items or by comparing unit costs. Since this contract was not competed, there are no direct market-driven price comparisons available. To perform a robust value assessment, one would need to identify comparable contracts awarded to other entities for similar aircraft parts, ideally through a competitive process. Analyzing the unit price of the components procured under this contract against industry averages or prices paid by other agencies for comparable items would also be necessary.

What are the primary risks associated with a sole-source advance procurement contract of this magnitude?

The primary risks associated with a sole-source advance procurement contract of this magnitude ($74.7 million) are significant. Firstly, the lack of competition inherently increases the risk of paying a non-competitive or inflated price, as there is no market pressure to ensure cost-effectiveness. Secondly, advance procurement, especially when sole-sourced, carries the risk of obsolescence or requirement changes over the long contract duration (1492 days). If the underlying aircraft program evolves or new technologies emerge, the procured parts might become less relevant or even obsolete before they are fully utilized. Lastly, there's a risk of contractor underperformance or financial instability, which is amplified when there are no alternative suppliers readily available due to the sole-source designation.

What is the expected program effectiveness or outcome tied to this advance procurement funding?

The expected program effectiveness tied to this $74.7 million advance procurement funding is the timely availability of critical components for Lot 3 aircraft. Advance procurement is specifically designed to secure long-lead-time items that are essential for the production or sustainment of these aircraft. By funding these parts early, the Department of Defense aims to prevent production delays and ensure that the aircraft program can proceed according to schedule. The ultimate outcome is the readiness and operational capability of the Lot 3 aircraft fleet. However, the effectiveness is contingent on the actual need for these specific parts and the successful integration of the procured components into the aircraft.

How has historical spending on advance procurement for similar aircraft parts evolved over time?

Analyzing historical spending on advance procurement for similar aircraft parts requires access to comprehensive historical contract data across the Department of Defense and potentially other agencies. Without specific data points for this analysis, it's challenging to provide a precise evolution. Generally, spending on advance procurement tends to fluctuate based on defense budgets, the lifecycle stage of major aircraft programs, and geopolitical demands. Periods of increased defense spending or the introduction of new aircraft platforms often correlate with higher advance procurement outlays. Conversely, budget constraints or program cancellations can lead to reduced spending. Understanding the specific evolution for 'Lot 3' aircraft parts would necessitate tracking this contract category over multiple fiscal years.

What are the implications of the firm-fixed-price (FFP) contract type in the context of this sole-source award?

The firm-fixed-price (FFP) contract type, when used in a sole-source award like this $74.7 million advance procurement, has mixed implications. On the positive side, it provides the government with cost certainty, as the price is fixed regardless of the contractor's actual costs. This shifts the risk of cost overruns to LONGBOW LLC. However, in a sole-source scenario, this FFP structure means the government is locked into a potentially non-competitive price. Without competition, the 'firm' aspect of the price might be set at a higher baseline than if multiple bids were considered. Therefore, while FFP offers budget predictability, its benefit in ensuring value for money is significantly diminished when competition is absent.

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: 5600 W SAND LAKE RD, 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: $74,728,236

Exercised Options: $74,728,236

Current Obligation: $74,728,236

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline