DoD's $235M U-2 Support Contract Awarded to Lockheed Martin, Raising Competition Concerns
Contract Overview
Contract Amount: $235,397,886 ($235.4M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2023-04-01
End Date: 2026-10-31
Contract Duration: 1,309 days
Daily Burn Rate: $179.8K/day
Competition Type: NOT COMPETED
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: FY23 U-2 SUPPORT AND SUSTAINMENT PROGRAMMED DEPOT MAINTENANCE (ORDERING PERIOD 5)
Place of Performance
Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93599
Plain-Language Summary
Department of Defense obligated $235.4 million to LOCKHEED MARTIN CORPORATION for work described as: FY23 U-2 SUPPORT AND SUSTAINMENT PROGRAMMED DEPOT MAINTENANCE (ORDERING PERIOD 5) Key points: 1. Significant contract value of $235.4M for U-2 aircraft sustainment. 2. Sole-source award to Lockheed Martin limits competitive pricing. 3. Potential risk of inflated costs due to lack of competition. 4. IT and Defense sectors often see high sustainment costs for legacy platforms.
Value Assessment
Rating: questionable
The contract's Cost Plus Fixed Fee structure, combined with a sole-source award, makes a direct pricing assessment difficult. Benchmarking against similar sustainment contracts for aging aircraft is crucial to determine value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to Lockheed Martin. The lack of competition likely hindered price discovery and may have resulted in a higher overall cost to the government.
Taxpayer Impact: Taxpayers may bear a higher cost due to the absence of competitive bidding, potentially impacting the efficient use of defense funds.
Public Impact
Continued operation of aging U-2 aircraft relies on this sole-source sustainment. Potential for taxpayer funds to be used inefficiently without competitive pressure. Future sustainment costs for similar legacy platforms could be influenced by this precedent.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Lack of competition
- Cost Plus Fixed Fee contract type
- Aging aircraft platform
Positive Signals
- Ensures continued operational capability for the U-2 fleet
Sector Analysis
This contract falls within the Defense sector, specifically supporting legacy aircraft sustainment. Spending benchmarks for aircraft maintenance and support can vary widely based on platform age and complexity, but sole-source awards often exceed competitive ones.
Small Business Impact
The data indicates no specific set-aside for small businesses. Large sole-source contracts like this often bypass opportunities for small business participation unless they are subcontractors.
Oversight & Accountability
The sole-source nature of this award warrants close oversight to ensure costs are reasonable and that efforts are made to introduce competition for future sustainment needs.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Sole-source award limits competition.
- Potential for inflated costs due to lack of competitive bidding.
- Contract type (CPFF) requires strong government oversight.
- Aging platform may have increasing sustainment challenges and costs.
Tags
aircraft-manufacturing, department-of-defense, ca, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $235.4 million to LOCKHEED MARTIN CORPORATION. FY23 U-2 SUPPORT AND SUSTAINMENT PROGRAMMED DEPOT MAINTENANCE (ORDERING PERIOD 5)
Who is the contractor on this award?
The obligated recipient is LOCKHEED MARTIN CORPORATION.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Air Force).
What is the total obligated amount?
The obligated amount is $235.4 million.
What is the period of performance?
Start: 2023-04-01. End: 2026-10-31.
What is the justification for awarding this contract sole-source, and what steps are being taken to ensure cost reasonableness?
The justification for a sole-source award typically involves unique capabilities or proprietary technology held by the incumbent contractor. However, for sustainment contracts of aging platforms, the absence of competition is a significant concern. Robust oversight is essential to scrutinize cost elements, ensure fair pricing, and explore potential future competition or alternative sustainment strategies to mitigate long-term cost increases for taxpayers.
What is the long-term strategy for U-2 sustainment, and how will competition be fostered?
The long-term strategy for U-2 sustainment is critical given its age. While this contract covers a specific period, the Air Force should be actively planning for the eventual retirement or replacement of the U-2. For any remaining sustainment needs, exploring options for breaking down the contract into smaller, more competitive packages or encouraging new entrants into the support market should be a priority to drive down costs.
How does the Cost Plus Fixed Fee structure impact oversight and potential cost overruns for this sole-source contract?
The Cost Plus Fixed Fee (CPFF) structure means the contractor is reimbursed for allowable costs plus a fixed fee representing profit. In a sole-source environment, this can increase the risk of cost overruns if the government's oversight of allowable costs is not rigorous. The fixed fee provides some incentive for efficiency, but without competitive pressure, the contractor may have less motivation to control costs aggressively.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: FA852822R0010
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Lockheed Martin Corp
Address: 1011 LOCKHEED WAY, PALMDALE, CA, 93599
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: $240,849,090
Exercised Options: $240,849,090
Current Obligation: $235,397,886
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: FA852819D0015
IDV Type: IDC
Timeline
Start Date: 2023-04-01
Current End Date: 2026-10-31
Potential End Date: 2026-10-31 00:00:00
Last Modified: 2025-07-31
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