DoD's $68.5M Lockheed Martin contract for aircraft parts shows long-term engagement with a single supplier

Contract Overview

Contract Amount: $68,544,165 ($68.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2006-12-29

End Date: 2012-03-30

Contract Duration: 1,918 days

Daily Burn Rate: $35.7K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PEACE KRYPTON FOS II

Place of Performance

Location: GOODYEAR, MARICOPA County, ARIZONA, 85338

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $68.5 million to LOCKHEED MARTIN CORPORATION for work described as: PEACE KRYPTON FOS II Key points: 1. The contract's duration suggests a sustained need for specialized aircraft parts. 2. Lockheed Martin's extensive experience in defense manufacturing likely contributed to their selection. 3. The firm-fixed-price structure shifts cost risk to the contractor. 4. The contract was awarded under a competitive process, indicating potential for price negotiation. 5. The geographic location of the contractor may influence logistical considerations. 6. The absence of small business set-asides warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics or detailed cost breakdowns. The total award amount of $68.5 million over approximately five years (2006-2012) averages to roughly $13.7 million annually. This figure needs to be compared against the specific types and quantities of aircraft parts procured, as well as the complexity and criticality of those components. Without comparable contract data for similar specialized aircraft parts, it's difficult to definitively assess if the pricing was optimal or if there were opportunities for greater cost savings.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'Full and Open Competition After Exclusion of Sources,' which implies that while the competition was initially broad, certain sources were excluded, potentially due to specific technical requirements or prior relationships. The number of bidders is not specified, but the designation suggests that multiple qualified vendors were considered. This level of competition, even with exclusions, generally aims to achieve fair market pricing and ensure that the government receives the best value.

Taxpayer Impact: A competitive award process, even with exclusions, is generally favorable for taxpayers as it encourages multiple companies to bid, driving down prices and improving the quality of goods or services offered.

Public Impact

The primary beneficiaries are the U.S. Air Force and potentially other branches of the Department of Defense requiring these specific aircraft parts. The services delivered involve the manufacturing and supply of 'Other Aircraft Parts and Auxiliary Equipment'. The geographic impact is primarily within Arizona, where Lockheed Martin's facility is located, and wherever the supplied parts are ultimately utilized. Workforce implications include employment opportunities at Lockheed Martin and its supply chain partners involved in the production of these components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of transparency on the specific types and quantities of parts procured makes it difficult to assess true value for money.
The long contract duration without clear performance milestones could indicate potential for complacency or reduced urgency.
The exclusion of certain sources, even in a full and open competition, raises questions about the breadth of the competitive landscape.
No indication of small business participation or subcontracting goals requires further review to ensure equitable distribution of contract value.

Positive Signals

Award to a major defense contractor like Lockheed Martin suggests a high level of trust in their manufacturing capabilities and quality.
The firm-fixed-price contract type effectively transfers cost overrun risks to the contractor.
The contract was awarded through a competitive process, indicating that multiple vendors were evaluated.
The sustained nature of the contract suggests a consistent and reliable supply of critical aircraft components.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The North American Industry Classification System (NAICS) code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' represents a significant segment of the defense industrial base. Spending in this area is driven by the need to maintain and modernize military aircraft fleets. Comparable spending benchmarks would involve analyzing the total DoD budget allocated to aircraft component procurement and maintenance, as well as the average contract values for similar specialized parts across different manufacturers.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This suggests that the procurement was likely focused on large-scale manufacturing capabilities typically found in larger corporations. There is no explicit information regarding subcontracting plans or requirements. Further analysis would be needed to determine if Lockheed Martin was encouraged or required to subcontract portions of this work to small businesses, which is crucial for fostering a diverse and inclusive defense industrial ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with contract terms and specifications. Accountability measures are embedded within the firm-fixed-price structure, which incentivizes the contractor to manage costs effectively. Transparency regarding the specific parts procured and their associated costs is limited in the provided data, making a full assessment of transparency challenging. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Aircraft Component Procurement
Defense Logistics and Sustainment
Aerospace Manufacturing Contracts
Lockheed Martin Defense Contracts
Department of Defense Aircraft Maintenance

Risk Flags

Long contract duration without clear performance metrics
Limited transparency on specific parts procured
Potential for limited competition due to source exclusion
Lack of explicit small business subcontracting requirements

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $68.5 million to LOCKHEED MARTIN CORPORATION. PEACE KRYPTON FOS II

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 $68.5 million.

What is the period of performance?

Start: 2006-12-29. End: 2012-03-30.

What specific types of aircraft parts were procured under this contract, and what was their criticality to military operations?

The provided data identifies the contract under NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' and the awardee as Lockheed Martin Corporation. However, it does not specify the exact types or quantities of parts. These could range from structural components to engine parts, avionics, or specialized systems. The criticality would depend on the specific aircraft platforms these parts support. Without this detailed information, it's impossible to assess the direct impact on military operations or the necessity of procuring from a single source, even if competitively awarded. Further investigation into contract line item numbers (CLINs) and technical specifications would be required.

How does the average annual spending of approximately $13.7 million compare to industry benchmarks for similar aircraft parts?

Determining industry benchmarks for 'Other Aircraft Parts and Auxiliary Equipment' is complex due to the vast diversity within this category. The average annual spending of $13.7 million for this contract (totaling $68.5M over 5 years) needs to be contextualized by the specific nature, complexity, and volume of parts supplied. For highly specialized, low-volume, or technologically advanced components, this figure might be reasonable. Conversely, for more common or mass-produced parts, it could indicate premium pricing or a limited scope of supply. A thorough benchmark analysis would require access to proprietary industry cost data, market research reports on aircraft component pricing, and comparisons with other government contracts for similar items, considering factors like material costs, labor, overhead, and profit margins.

What was the rationale behind the 'Exclusion of Sources' in an otherwise 'Full and Open Competition' award?

The 'Full and Open Competition After Exclusion of Sources' designation suggests that while the initial solicitation was broadly advertised, specific sources were intentionally excluded from consideration. This exclusion is typically based on stringent technical requirements, unique capabilities, proprietary technology, or past performance issues with certain potential bidders. The rationale is often to ensure that only vendors capable of meeting highly specific and demanding criteria can participate, thereby streamlining the evaluation process and ensuring the selection of a contractor with the precise expertise needed. The specific reasons for excluding other sources would be detailed in the contract award documentation, which is not fully available here.

What is Lockheed Martin's track record with similar DoD contracts, particularly concerning delivery timeliness and quality?

Lockheed Martin Corporation is a major defense contractor with an extensive history of fulfilling large-scale contracts for the Department of Defense. Their track record with similar contracts for aircraft parts and systems is generally characterized by significant experience and capability. However, like any large contractor, they may have faced instances of delivery delays or quality issues on specific programs. A comprehensive assessment of their track record for this particular contract would involve reviewing historical performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), any past disputes or contract modifications, and on-time delivery rates for comparable procurements. Without access to these specific performance metrics, it's assumed they met the requirements given the contract's successful completion.

Were there any significant cost overruns or underruns associated with this contract, and how were they managed?

The contract type is 'FIRM FIXED PRICE' (pt: "FIRM FIXED PRICE"), which means the price was set at the outset, and the contractor assumes the risk of cost overruns. If Lockheed Martin incurred costs exceeding the agreed-upon price, they would absorb those additional expenses. Conversely, if their costs were lower than anticipated, they would retain the profit margin. Significant cost overruns or underruns are typically managed through contract modifications, change orders (if scope changes), or detailed financial reporting required by the government. Given the contract's completion status, any major financial deviations would likely be documented in contract close-out files. The provided data does not indicate specific overruns or underruns, suggesting the contract likely concluded within its established financial parameters or any deviations were formally addressed.

How does the total contract value of $68.5 million compare to the overall spending on aircraft parts by the DoD during the contract period (2006-2012)?

The total contract value of $68.5 million represents a specific procurement for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing.' To compare this to the DoD's overall spending on aircraft parts during the 2006-2012 period, one would need access to comprehensive DoD budget and expenditure data for aircraft sustainment and procurement. The DoD's annual budget runs into hundreds of billions of dollars, with a significant portion allocated to maintaining its vast fleet of aircraft. This $68.5 million contract, while substantial for a single award, is likely a small fraction of the total DoD spending on all types of aircraft parts, engines, and related services during those years. It highlights a specific need met by a particular supplier rather than reflecting the entirety of the DoD's aircraft parts expenditure.

Industry Classification

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

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 1300 S LITCHFIELD RD STE 9, GOODYEAR, AZ, 85338

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

Financial Breakdown

Contract Ceiling: $68,544,165

Exercised Options: $68,544,165

Current Obligation: $68,544,165

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline