Lockheed Martin awarded $3.88B for C-130 Hercules airframes and spares, a sole-source contract

Contract Overview

Contract Amount: $3,881,957,673 ($3.9B)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2003-03-14

End Date: 2012-12-31

Contract Duration: 3,580 days

Daily Burn Rate: $1.1M/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: 200307!000084!5700!GU04 !ASC/GR !F3365703C2014 !A!N! !N! !20030314!20090930!003268869!003268869!834951691!N!LOCKHEED MARTIN CORPORATION !86 SOUTH COBB DRIVE !MARIETTA !GA!30063!49756!067!13!MARIETTA !COBB !GEORGIA !+000271600000!N!Y!004050000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !3ACD!C-130 HERCULES !336411!E! !3! ! ! ! ! !99990909!B! ! !N!Z!C!Y!J!1!001!N!1B!Z!N!E! ! !Y!C!N! ! ! !A!A!A!A!000!A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: MARIETTA, COBB County, GEORGIA, 30063

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $3.88 billion to LOCKHEED MARTIN CORP for work described as: 200307!000084!5700!GU04 !ASC/GR !F3365703C2014 !A!N! !N! !20030314!20090930!003268869!003268869!834951691!N!LOCKHEED MARTIN CORPORATION !86 SOUTH COBB DRIVE !MARIETTA !GA!30063!49756!067!13!MARIETTA !COBB … Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential overpayment. 2. Significant contract value suggests a critical role for C-130 Hercules aircraft in defense operations. 3. Long contract duration (over 9 years) indicates a sustained need for these airframes and spares. 4. Fixed Price with Economic Price Adjustment (FPEPA) contract type introduces inflation risk for the government. 5. The contract is for airframes and spares, essential components for aircraft maintenance and readiness. 6. Awarded by the Department of Defense, highlighting its importance in national security.

Value Assessment

Rating: questionable

The total award amount of $3.88 billion for C-130 Hercules airframes and spares is substantial. However, without a competitive bidding process, it is difficult to benchmark the value for money. The FPEPA contract type also introduces risk, as economic adjustments can lead to higher costs over time. Comparing this to similar sole-source procurements for aircraft components would be necessary for a more definitive value assessment.

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 lack of competition limits the government's ability to explore alternative solutions or negotiate the best possible price. The absence of multiple bidders suggests potential barriers to entry for other manufacturers or a specific justification for a single source.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competition. Without competitive pressure, the awarded price might be higher than what could have been achieved in an open market.

Public Impact

The primary beneficiaries are the U.S. Department of Defense and its operational units relying on the C-130 Hercules aircraft. Services delivered include the provision of critical airframes and spare parts essential for aircraft maintenance and operational readiness. The geographic impact is national, supporting defense logistics and operations across various theaters. Workforce implications include continued employment for personnel involved in the manufacturing and support of C-130 components at Lockheed Martin facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Fixed Price with Economic Price Adjustment (FPEPA) contract type exposes the government to inflation risks.
Lack of transparency in the sole-source justification makes it difficult to assess the necessity of this specific award.
Long contract duration could mask inefficiencies or prevent the adoption of newer technologies if not managed carefully.

Positive Signals

Ensures continued availability of critical C-130 Hercules airframes and spares, vital for defense operations.
Provides a stable, long-term supplier for essential aircraft components, supporting readiness.
Award to a major defense contractor like Lockheed Martin suggests a focus on established capabilities and reliability.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. Contracts for major aircraft platforms like the C-130 Hercules represent substantial portions of defense spending. This contract fits within the military aircraft manufacturing sub-sector, where established players like Lockheed Martin dominate. Comparable spending benchmarks would involve analyzing other large sole-source or competitive contracts for similar military aircraft components or platforms.

Small Business Impact

This contract does not appear to have a small business set-aside component, as it was awarded to Lockheed Martin Corporation. There is no explicit information regarding subcontracting plans for small businesses within this data. The absence of a set-aside suggests that the primary focus was on securing the required components from the prime contractor, potentially limiting direct opportunities for small businesses in this specific procurement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management and oversight mechanisms, potentially involving the Defense Contract Management Agency (DCMA). Accountability measures would be defined by the contract terms and conditions. Transparency is limited due to the sole-source nature of the award, making detailed public scrutiny of the pricing and justification challenging. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

C-130 Hercules Sustainment Programs
Military Aircraft Procurement
Aerospace Manufacturing Contracts
Defense Logistics Support

Risk Flags

Sole-source award
Potential for cost overruns due to FPEPA
Lack of competitive benchmarking
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $3.88 billion to LOCKHEED MARTIN CORP. 200307!000084!5700!GU04 !ASC/GR !F3365703C2014 !A!N! !N! !20030314!20090930!003268869!003268869!834951691!N!LOCKHEED MARTIN CORPORATION !86 SOUTH COBB DRIVE !MARIETTA !GA!30063!49756!067!13!MARIETTA !COBB !GEORGIA !+000271600000!N!Y!004050000000!1510!AIRCRAFT FIXED WING !A1A!AIRFRAMES AND SPARES !3ACD!C-130 HERCULES !336411!E! !3! ! ! ! ! !99990909!B

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $3.88 billion.

What is the period of performance?

Start: 2003-03-14. End: 2012-12-31.

What is the historical spending trend for C-130 Hercules airframes and spares with Lockheed Martin?

Analyzing historical spending for C-130 Hercules airframes and spares with Lockheed Martin requires access to historical contract data beyond this single award. This $3.88 billion award, spanning from March 2003 to December 2012 (with an end date of 20090930 in the raw data, but a contract end date of 2012-12-31), represents a significant investment over its duration. To understand trends, one would need to examine previous contracts for similar components, track annual spending, and identify any fluctuations in demand or pricing. Factors such as fleet size, operational tempo, and modernization efforts would influence these historical patterns. Without a broader dataset, it's challenging to establish a definitive trend, but the magnitude of this award suggests a consistent and substantial requirement for C-130 support.

How does the per-unit cost of C-130 airframes and spares under this contract compare to market rates or similar contracts?

Determining the per-unit cost and comparing it to market rates or similar contracts is challenging for this sole-source award. The provided data includes a total award amount but not a breakdown of units or specific spare parts. Sole-source contracts inherently lack the price discovery mechanism of competitive bidding, making direct benchmarking difficult. To perform such a comparison, one would need access to detailed line-item pricing within the contract and data from competitive procurements of similar C-130 components or comparable aircraft parts from other manufacturers. Without this granular data and competitive context, any assessment of per-unit cost would be speculative and potentially inaccurate.

What are the specific risks associated with the Fixed Price with Economic Price Adjustment (FPEPA) contract type for this procurement?

The FPEPA contract type introduces several risks for the government in this procurement. Primarily, it exposes the contract value to fluctuations in economic factors such as inflation, labor costs, and material prices. While intended to protect the contractor from unforeseen cost increases, it means the final cost to the government is not fixed and can exceed initial estimates. This can lead to budget uncertainty and potentially higher overall expenditure than a firm-fixed-price contract. The government bears the risk of these economic adjustments, which could be substantial over the contract's long duration, especially in periods of high inflation. Effective monitoring and negotiation of the economic price adjustment clauses are crucial to mitigate these risks.

What is Lockheed Martin's track record in delivering C-130 components and fulfilling large defense contracts?

Lockheed Martin has an extensive and long-standing track record as the original manufacturer of the C-130 Hercules aircraft. They have been responsible for the production, sustainment, and upgrade of these aircraft for decades. Their experience encompasses delivering complex aerospace systems and managing large-scale defense contracts. While specific performance metrics for this particular contract (3365703C2014) are not detailed here, Lockheed Martin's overall history with the C-130 program suggests a deep understanding of the aircraft's requirements and a robust capability to produce necessary components and spares. However, like any large contractor, they may have faced performance challenges on specific contracts, which would require a deeper dive into contract performance reports and historical data.

What are the implications of this contract being awarded as a sole-source procurement for the C-130 Hercules program's future?

Awarding this substantial contract for C-130 Hercules airframes and spares as a sole-source procurement has several implications for the program's future. It reinforces Lockheed Martin's position as the sole provider for these critical components, potentially limiting the development of alternative suppliers or next-generation solutions in the short to medium term. This reliance on a single source can reduce competitive pressure to innovate or reduce costs in future procurements. It also means the Department of Defense is heavily dependent on Lockheed Martin's production capabilities and pricing strategies for the continued operation and sustainment of its C-130 fleet. Future program strategies might need to consider how to introduce more competition or explore alternative platforms to mitigate this long-term sole-source dependency.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Address: 86 SOUTH COBB DRIVE, MARIETTA, GA, 30063

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $3,884,259,985

Exercised Options: $3,884,259,985

Current Obligation: $3,881,957,673

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline