DoD's $20.6M delivery order for aircraft parts awarded to Lockheed Martin without competition

Contract Overview

Contract Amount: $20,634,600 ($20.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2014-09-25

End Date: 2015-09-24

Contract Duration: 364 days

Daily Burn Rate: $56.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THE PURPOSE OF THIS DELIVERY ORDER IS TO PROCURE 4 PARTS (SLIN 0004AA, 0004AB, 0004AQ, 0004AT) USING PREVIOUSLY NEGOTIATED PRICING.

Place of Performance

Location: AKRON, SUMMIT County, OHIO, 44315, UNITED STATES OF AMERICA

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $20.6 million to LOCKHEED MARTIN CORPORATION for work described as: THE PURPOSE OF THIS DELIVERY ORDER IS TO PROCURE 4 PARTS (SLIN 0004AA, 0004AB, 0004AQ, 0004AT) USING PREVIOUSLY NEGOTIATED PRICING. Key points: 1. Value for money is questionable due to lack of competition and reliance on previously negotiated pricing. 2. Competition dynamics indicate a sole-source award, potentially limiting price discovery and increasing costs. 3. Risk indicators include the absence of a competitive process and the use of legacy pricing. 4. Performance context is limited to the procurement of specific aircraft parts. 5. Sector positioning is within the defense manufacturing industry, specifically navigation and guidance systems.

Value Assessment

Rating: questionable

The contract's value is difficult to assess without a competitive benchmark. Awarding based on 'previously negotiated pricing' suggests a lack of current market validation. The total award amount of $20.6 million for four parts over 364 days raises questions about per-unit cost efficiency compared to potentially more competitive market rates. Without transparency into the original negotiation, it's hard to determine if this represents a fair price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This delivery order was not competed, indicating a sole-source award. This means only one vendor, Lockheed Martin Corporation, was considered for this procurement. The lack of competition prevents market forces from driving down prices and limits the government's ability to explore alternative solutions or suppliers.

Taxpayer Impact: Taxpayers may have paid a premium for these parts due to the absence of competitive bidding, potentially missing out on cost savings that a more open process could have yielded.

Public Impact

The Department of the Army benefits from the procurement of essential aircraft parts. Services delivered include the supply of four specific aircraft components. Geographic impact is primarily within the operational theater of the Department of the Army. Workforce implications are minimal, likely affecting logistics and maintenance personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher prices.
Reliance on 'previously negotiated pricing' could mean outdated cost structures.
Limited transparency into the justification for sole-source award.

Positive Signals

Procurement of necessary aircraft parts ensures operational readiness.
Award to a known entity (Lockheed Martin) may imply established supply chain reliability.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on navigation, guidance, and control systems for aircraft. The North American Industry Classification System (NAICS) code 334511 covers instruments for measuring, displaying, and controlling industrial process variables. Spending in this sector is substantial, driven by national security requirements and technological advancements. Comparable spending benchmarks would typically involve other sole-source or limited-competition awards for similar high-value, specialized components within defense contracts.

Small Business Impact

This contract does not appear to involve small business set-asides, as indicated by 'sb': false. There is no information provided regarding subcontracting plans or their impact on the small business ecosystem. The sole-source nature of the award further suggests that opportunities for small businesses to participate as prime contractors or through subcontracting were likely limited.

Oversight & Accountability

Oversight for this delivery order would typically fall under the Department of Defense's contracting and financial management regulations. Accountability measures are inherent in firm-fixed-price contracts, which place the cost risk on the contractor. Transparency is limited due to the sole-source nature and the reliance on pre-negotiated pricing, with no public justification readily available for the lack of competition.

Related Government Programs

Department of Defense Aircraft Procurement
Navigation and Guidance Systems Manufacturing
Lockheed Martin Corporation Contracts
Sole-Source Defense Contracts

Risk Flags

Lack of Competition
Potential for Inflated Pricing
Limited Transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.6 million to LOCKHEED MARTIN CORPORATION. THE PURPOSE OF THIS DELIVERY ORDER IS TO PROCURE 4 PARTS (SLIN 0004AA, 0004AB, 0004AQ, 0004AT) USING PREVIOUSLY NEGOTIATED PRICING.

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 $20.6 million.

What is the period of performance?

Start: 2014-09-25. End: 2015-09-24.

What was the original justification for the sole-source award of this delivery order?

The provided data indicates the contract was 'NOT COMPETED' and is a 'DELIVERY ORDER' using 'PREVIOUSLY NEGOTIATED PRICING'. Without further documentation, the specific justification for the sole-source award remains unclear. Typically, sole-source awards require a formal justification, such as the existence of only one responsible source, urgent and compelling needs, or specific national security requirements that preclude competition. The reliance on 'previously negotiated pricing' might suggest that the original contract under which these prices were established was competed, or that the parts are highly specialized and proprietary to Lockheed Martin, making competition impractical or impossible for this specific delivery order.

How does the 'previously negotiated pricing' compare to current market rates for similar aircraft parts?

The data does not provide current market rates for comparison. 'Previously negotiated pricing' implies that the rates used for this $20.6 million delivery order were established at an earlier time, potentially under a different contract. Without access to that original contract's pricing details or current market analysis for these specific parts (SLIN 0004AA, 0004AB, 0004AQ, 0004AT), it is impossible to definitively state how they compare to current market rates. This lack of current benchmarking is a key limitation in assessing the value for money achieved in this transaction. It is possible these prices are favorable due to bulk purchasing or long-term agreements, or they could be inflated if market conditions have changed significantly.

What is the track record of Lockheed Martin Corporation in fulfilling similar Department of Defense contracts?

Lockheed Martin Corporation is a major defense contractor with an extensive history of fulfilling numerous contracts for the Department of Defense across various platforms and systems. They are known for producing advanced military aircraft, missiles, and defense technologies. Their track record generally includes large-scale, complex programs, often involving sole-source or limited-competition awards due to the specialized nature of their products and the significant R&D investment required. While specific performance metrics for individual contracts vary, Lockheed Martin is a well-established entity within the defense industrial base, accustomed to meeting stringent government requirements, though like any large contractor, they have faced scrutiny over pricing and program execution on occasion.

What are the potential risks associated with awarding aircraft parts contracts on a sole-source basis?

Awarding aircraft parts contracts on a sole-source basis carries several potential risks. Primarily, it eliminates competitive pressure, which can lead to higher prices than might be achieved in an open market. This lack of competition can also reduce the incentive for the contractor to innovate or improve efficiency. Furthermore, it can create a dependency on a single supplier, making the government vulnerable to supply chain disruptions, price increases, or changes in the supplier's business strategy. Without competitive benchmarking, it is also more challenging to ensure the government is receiving fair market value. Lastly, sole-source awards can sometimes raise concerns about transparency and fairness in the procurement process.

How does the duration and value of this contract align with typical procurements for specialized aircraft components?

This delivery order has a duration of 364 days and a value of $20.6 million for four specific parts. The value per part averages $5.15 million. Specialized aircraft components, particularly those for advanced military systems like navigation and guidance instruments, are often high-cost items due to complex engineering, materials, and manufacturing processes. A one-year duration is common for delivery orders to manage inventory and operational needs. The value, while substantial, is not necessarily outside the norm for critical, specialized components from a major defense manufacturer like Lockheed Martin. However, the lack of competition makes it difficult to ascertain if this represents optimal value compared to alternative sourcing or pricing structures.

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: COMM/DETECT/COHERENT RADIATION

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: 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: $20,634,600

Exercised Options: $20,634,600

Current Obligation: $20,634,600

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $9,487,480

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W15P7T13DC111

IDV Type: IDC

Timeline