Lockheed Martin awarded $147.5M for Army aviation support, including repair parts and training

Contract Overview

Contract Amount: $147,503,397 ($147.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2014-09-26

End Date: 2017-04-16

Contract Duration: 933 days

Daily Burn Rate: $158.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF THIS TASK ORDER PROVIDES PTDS MATERIALS AND SUPPORT SERVICES TO INCLUDE PROGRAM MANAGEMENT; ENGINEERING SERVICES; SUB SYSTEM, COMPONENT, REPAIR PARTS, AND SPARES PROCUREMENT; ABOVE USER-LEVEL MAINTENANCE; TRAINING; TRAINER/TEST SYSTEM; TEST AND EVALUATION; LOGISTICS SUPPORT; TECHNICAL DATA; AND RESET, STORAGE, AND TRANSPORTATION. THE PERIOD OF PERFORMANCE FOR THIS TO IS NINE (9) MONTHS FROM THE EFFECTIVE DATE OF AWARD. ALL WORK BEGINNING IN FISCAL YEAR (FY)2014 WILL BE FULLY FUNDED AT THE TIME OF AWARD WITH FY 2014 MONEY. ALL WORK THAT BEGINS IN FY 2015 WILL BE FUNDED AT A LATER DATE.

Place of Performance

Location: AKRON, SUMMIT County, OHIO, 44315

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $147.5 million to LOCKHEED MARTIN CORPORATION for work described as: IGF::OT::IGF THIS TASK ORDER PROVIDES PTDS MATERIALS AND SUPPORT SERVICES TO INCLUDE PROGRAM MANAGEMENT; ENGINEERING SERVICES; SUB SYSTEM, COMPONENT, REPAIR PARTS, AND SPARES PROCUREMENT; ABOVE USER-LEVEL MAINTENANCE; TRAINING; TRAINER/TEST SYSTEM; TEST AND EVALUATION; LOGISTICS … Key points: 1. Contract provides comprehensive support for Army aviation systems, encompassing program management, engineering, and maintenance. 2. The award includes procurement of sub-systems, components, repair parts, and spares, crucial for operational readiness. 3. Above user-level maintenance and training services are key components, ensuring personnel proficiency and system upkeep. 4. The contract spans over 900 days, with initial funding from FY2014 and future funding contingent on FY2015 appropriations. 5. This is a delivery order under a larger indefinite-delivery/indefinite-quantity (IDIQ) contract, indicating ongoing support needs. 6. The contractor, Lockheed Martin, is a major defense industrial base participant with extensive experience in aviation systems.

Value Assessment

Rating: good

The total award amount of $147.5 million for a 933-day period suggests a significant investment in aviation support. While specific cost breakdowns for individual services are not provided, the nature of the services (program management, engineering, maintenance, parts procurement) indicates a complex and comprehensive support package. Benchmarking this against similar large-scale aviation support contracts would be necessary for a definitive value-for-money assessment. However, given the contractor's expertise and the critical nature of the services, the pricing is likely competitive within the defense sector.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source delivery order, meaning it was not competed among multiple vendors. This approach is often used when a specific contractor possesses unique capabilities, intellectual property, or is the incumbent provider of a system, making them the only viable option. The lack of competition means that price discovery through market forces was limited for this specific order.

Taxpayer Impact: For taxpayers, sole-source awards can potentially lead to higher costs compared to competitively bid contracts, as the government does not benefit from the price reductions that can arise from multiple bidders vying for the contract.

Public Impact

The U.S. Army's aviation fleet directly benefits from enhanced readiness and operational capability. Services delivered include critical maintenance, repair parts, and training for aviation personnel. The geographic impact is likely nationwide, supporting Army aviation units across various installations. Workforce implications include support for engineers, technicians, and logistics personnel involved in aviation maintenance and operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Contract duration and phased funding require careful financial oversight to ensure budget alignment.
Reliance on a single contractor for critical support services could pose a risk if performance issues arise.

Positive Signals

Contractor's established expertise in aviation systems ensures high-quality service delivery.
Comprehensive support package addresses multiple facets of aviation readiness, from parts to training.
Delivery order structure allows for flexible and responsive support tailored to evolving Army needs.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aviation systems support. The market for such services is dominated by large, established defense contractors like Lockheed Martin, who possess the specialized knowledge, facilities, and security clearances required. Spending in this area is driven by the U.S. military's continuous need to maintain and modernize its vast aviation fleet, ensuring operational readiness and technological superiority. Comparable spending benchmarks would involve analyzing other large support contracts for military aircraft and associated systems.

Small Business Impact

As a sole-source award to a large prime contractor, this contract does not appear to include specific small business set-asides. However, it is common for prime contractors of this magnitude to utilize small businesses for subcontracting opportunities, particularly for specialized components or services. The extent of small business participation would depend on the prime contractor's subcontracting plan and the specific requirements of the task order.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. The contract type (Cost Plus Fixed Fee) necessitates close monitoring of costs and performance to ensure adherence to the fixed fee and overall budget. Transparency is facilitated through contract reporting mechanisms, and the Inspector General's office would have jurisdiction to investigate any allegations of fraud, waste, or abuse.

Related Government Programs

Army Aviation Maintenance and Sustainment Programs
Defense Logistics Agency (DLA) Support Contracts
Aircraft Component Procurement
Military Training and Simulation Services
Aviation Systems Engineering Support

Risk Flags

Sole-source award
Phased funding (FY14/FY15)
Cost Plus Fixed Fee contract type

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $147.5 million to LOCKHEED MARTIN CORPORATION. IGF::OT::IGF THIS TASK ORDER PROVIDES PTDS MATERIALS AND SUPPORT SERVICES TO INCLUDE PROGRAM MANAGEMENT; ENGINEERING SERVICES; SUB SYSTEM, COMPONENT, REPAIR PARTS, AND SPARES PROCUREMENT; ABOVE USER-LEVEL MAINTENANCE; TRAINING; TRAINER/TEST SYSTEM; TEST AND EVALUATION; LOGISTICS SUPPORT; TECHNICAL DATA; AND RESET, STORAGE, AND TRANSPORTATION. THE PERIOD OF PERFORMANCE FOR THIS TO IS NINE (9) MONTHS FROM THE EFFECTIVE DATE OF AWARD. ALL WORK BEGINNING IN FISCAL YEAR (FY)2014 WILL BE FULLY FUNDED

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 Army).

What is the total obligated amount?

The obligated amount is $147.5 million.

What is the period of performance?

Start: 2014-09-26. End: 2017-04-16.

What is Lockheed Martin's track record with similar aviation support contracts for the U.S. Army?

Lockheed Martin has a long and extensive history of providing aviation support services to the U.S. Army and other military branches. They are a primary contractor for numerous aircraft platforms, including helicopters and fixed-wing aircraft, often holding sustainment, modernization, and upgrade contracts. Their track record typically involves managing complex supply chains, providing engineering expertise, conducting maintenance, and delivering training solutions. While specific performance metrics for past contracts are not detailed here, their continued selection for significant programs indicates a generally positive performance history and strong relationship with the Department of Defense. However, like any large contractor, they may have faced specific performance challenges or contract disputes on individual programs over their extensive history.

How does the cost of this contract compare to similar aviation support services provided to other branches of the military?

Directly comparing the cost of this $147.5 million contract to similar services across other military branches is challenging without detailed cost breakdowns and service scope. However, the services provided—program management, engineering, maintenance, parts procurement, and training—are standard requirements for military aviation sustainment. The cost is influenced by factors such as the specific aircraft platforms supported, the complexity of the systems, the duration of the contract, and the prevailing market rates for specialized labor and parts. Given Lockheed Martin's position as a major defense contractor and the critical nature of Army aviation, the pricing is likely aligned with industry standards for large-scale, sole-source support agreements. A comprehensive benchmark would require access to detailed cost data from comparable contracts across the DoD.

What are the primary risks associated with this sole-source contract for the Department of the Army?

The primary risk associated with this sole-source contract is the potential for reduced cost-effectiveness due to the lack of competition. Without multiple bidders, there is less inherent pressure on the contractor to offer the lowest possible price. Another risk is contractor dependency; the Army becomes reliant on Lockheed Martin's specific capabilities and performance. If Lockheed Martin experiences performance issues, supply chain disruptions, or financial instability, it could significantly impact Army aviation readiness. Furthermore, sole-source awards can sometimes lead to scope creep or less rigorous cost control compared to competitively bid contracts, requiring robust oversight from the Army to mitigate these risks.

How effective is the combination of parts procurement, repair, and training in ensuring Army aviation program effectiveness?

The combination of parts procurement, repair, and training is fundamental to ensuring Army aviation program effectiveness. Reliable access to necessary spare parts and components prevents aircraft downtime. Efficient and skilled repair services ensure that aircraft are maintained in optimal operational condition. Comprehensive training programs equip pilots, maintenance crews, and support staff with the knowledge and skills to operate and maintain complex aviation systems safely and effectively. This integrated approach, as provided under this contract, directly contributes to increased aircraft availability, mission readiness, and overall operational success for Army aviation units. The synergy between these elements is crucial for sustaining a high-performance aviation fleet.

What are the historical spending patterns for aviation support services by the Department of the Army, and how does this contract fit?

The Department of the Army historically spends billions of dollars annually on aviation support, encompassing maintenance, logistics, spare parts, upgrades, and training. This spending is driven by the continuous operational demands on its extensive helicopter and fixed-wing aircraft fleets. Contracts for aviation support are often long-term and can be structured as IDIQs with subsequent delivery orders, similar to the framework under which this contract was issued. This $147.5 million delivery order represents a specific, significant allocation within the broader Army aviation sustainment budget. It aligns with historical patterns of investing heavily in contractor support to maintain readiness and operational capability for its aviation assets, particularly for complex systems managed by major defense contractors.

What oversight mechanisms are in place to manage the Cost Plus Fixed Fee (CPFF) aspects of this contract?

For a Cost Plus Fixed Fee (CPFF) contract, the Department of the Army employs several oversight mechanisms. Contracting officers and program managers are responsible for closely monitoring the contractor's incurred costs to ensure they are reasonable, allocable, and allowable under the contract terms. Regular audits, both internal and potentially by the Defense Contract Audit Agency (DCAA), are conducted to verify cost submissions. Performance metrics and milestones are tracked to ensure the contractor is progressing towards the defined objectives. The fixed fee provides an incentive for the contractor to control costs, as it does not increase with higher expenditures, but the government must still ensure that the costs incurred are legitimate and necessary for contract completion.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 1210 MASSILLIN RD, AKRON, OH, 44315

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: $161,697,707

Exercised Options: $147,503,693

Current Obligation: $147,503,397

Subaward Activity

Number of Subawards: 26

Total Subaward Amount: $5,521,646

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W15P7T13DC111

IDV Type: IDC

Timeline