DoD's $27.1M Lockheed Martin delivery order for 12 aircraft parts, awarded without competition

Contract Overview

Contract Amount: $27,165,657 ($27.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2015-06-30

End Date: 2017-10-29

Contract Duration: 852 days

Daily Burn Rate: $31.9K/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 12 PARTS (SLINS 0004AD, 0004AG, 0004AJ, 0004AM, 0004AN, 0004AP, 0004AQ, 0004BC, 0004BD, 0004BL, 0004BN, AND 0004BP) USING PREVIOUSLY NEGOTIATED PRICING.

Place of Performance

Location: AKRON, SUMMIT County, OHIO, 44315

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $27.2 million to LOCKHEED MARTIN CORPORATION for work described as: THE PURPOSE OF THIS DELIVERY ORDER IS TO PROCURE 12 PARTS (SLINS 0004AD, 0004AG, 0004AJ, 0004AM, 0004AN, 0004AP, 0004AQ, 0004BC, 0004BD, 0004BL, 0004BN, AND 0004BP) USING PREVIOUSLY NEGOTIATED PRICING. Key points: 1. This delivery order represents a significant expenditure for specialized aircraft components. 2. The contract was awarded using previously negotiated pricing, suggesting a continuation of an existing relationship. 3. The lack of competition raises questions about potential price optimization and market exploration. 4. The duration of the contract (852 days) indicates a need for sustained supply of these parts. 5. The specific parts procured are critical for navigation, guidance, and detection systems. 6. The awardee, Lockheed Martin Corporation, is a major defense contractor with extensive experience in this sector.

Value Assessment

Rating: questionable

The total award amount of $27.1 million for 12 parts over 852 days warrants scrutiny. Without competitive bidding, it is difficult to benchmark the value for money. The reliance on 'previously negotiated pricing' suggests a lack of recent market checks, which could lead to suboptimal pricing compared to current market rates. Further analysis would require understanding the unit cost of each part and comparing it to similar components procured competitively.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This delivery order was not competed, indicating a sole-source award. This approach is often used when a specific part is proprietary to a manufacturer or when existing contracts provide favorable terms. However, the absence of competition limits the government's ability to explore alternative suppliers or negotiate more aggressive pricing based on current market conditions.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competitive pressure to drive down costs. Without a competitive process, there is less assurance that the government is securing the best possible price for these critical aircraft components.

Public Impact

The Department of the Army benefits from the continued supply of essential aircraft parts. The services delivered include the provision of 12 specific aircraft components vital for system functionality. The geographic impact is primarily within the Department of Defense's operational theaters, supporting military readiness. Workforce implications are likely within Lockheed Martin's manufacturing and supply chain operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in higher costs for taxpayers.
Reliance on historical pricing without current market validation.
Potential for price escalation over the contract duration if not actively managed.

Positive Signals

Awardee is a well-established defense contractor with proven capabilities.
Utilizes previously negotiated pricing, potentially offering some level of cost predictability.
Parts are critical for existing defense systems, ensuring operational continuity.

Sector Analysis

This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, a critical component of the aerospace and defense industry. The market for such specialized parts is often dominated by a few key manufacturers due to high barriers to entry, including intellectual property, specialized manufacturing capabilities, and stringent quality requirements. Comparable spending benchmarks would typically involve analyzing other sole-source or limited-competition awards for similar high-value, low-volume aerospace components.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the nature of the parts and the prime contractor, it is unlikely that significant subcontracting opportunities for small businesses would be mandated or readily available within this specific delivery order, though Lockheed Martin may have broader small business subcontracting programs.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and procurement regulations. Accountability measures are tied to the firm fixed-price nature of the award, meaning the contractor is responsible for delivering the specified parts at the agreed-upon price. Transparency is limited by the sole-source nature of the award, but contract award data is publicly available through federal procurement databases.

Related Government Programs

Aircraft Parts Procurement
Aeronautical and Nautical System Manufacturing
Defense Logistics and Supply Chain Management
Lockheed Martin Contracts
Sole-Source Defense Contracts

Risk Flags

Sole-source award
Lack of recent competition
Potential for unbenchmarked pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.2 million to LOCKHEED MARTIN CORPORATION. THE PURPOSE OF THIS DELIVERY ORDER IS TO PROCURE 12 PARTS (SLINS 0004AD, 0004AG, 0004AJ, 0004AM, 0004AN, 0004AP, 0004AQ, 0004BC, 0004BD, 0004BL, 0004BN, AND 0004BP) 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 $27.2 million.

What is the period of performance?

Start: 2015-06-30. End: 2017-10-29.

What is the historical spending pattern for these specific 12 parts with Lockheed Martin?

Analyzing historical spending for these specific parts requires access to detailed contract data beyond this single delivery order. However, the fact that this order uses 'previously negotiated pricing' strongly suggests a history of procurement with Lockheed Martin for these or similar components. Without access to prior contract awards, delivery orders, and their associated pricing, it's impossible to determine the exact historical spending trend. A comprehensive review would involve examining all awards to Lockheed Martin for these part numbers (SLINS 0004AD, 0004AG, etc.) over several fiscal years to identify patterns in volume, pricing, and any escalation. This would help ascertain if the current pricing is consistent with past agreements or if there have been significant changes.

How does the unit cost of these parts compare to similar components procured competitively by the DoD?

Directly comparing the unit cost of these 12 parts is challenging without knowing the individual price of each part within the $27.1 million total. Furthermore, the 'previously negotiated pricing' implies a lack of recent competitive benchmarking. To assess value, one would need to identify the specific function and technical specifications of each part and then search for competitively awarded contracts for comparable items. If these are highly specialized, proprietary components, finding direct comparables might be difficult. However, a general benchmark could be established by looking at the average cost per pound or per unit for complex aerospace components procured under full and open competition, adjusting for complexity and material. The absence of competition here makes a precise comparison difficult and suggests potential overpayment if market alternatives exist.

What are the specific risks associated with a sole-source award for critical aircraft parts?

Sole-source awards for critical aircraft parts carry several risks. Firstly, there's a significant risk of paying inflated prices due to the lack of competitive pressure, as the government has limited negotiation leverage. Secondly, it creates a dependency on a single supplier, which can lead to supply chain vulnerabilities. If the sole-source provider experiences production issues, financial instability, or decides to discontinue the part, the government could face critical shortages. Thirdly, without competition, there's less incentive for the supplier to innovate or improve efficiency, potentially leading to stagnation in product quality or delivery timelines. Finally, it limits the government's ability to leverage market dynamics and explore potentially more cost-effective or technologically advanced alternatives.

What is the track record of Lockheed Martin Corporation in delivering similar aircraft components under defense contracts?

Lockheed Martin Corporation has an extensive and generally strong track record in delivering complex aircraft components and systems for defense contracts. As one of the largest defense contractors globally, they possess significant manufacturing capabilities, advanced technologies, and deep experience in meeting stringent military specifications. Their history includes the production of critical parts for numerous fighter jets, transport aircraft, and other military platforms. While specific performance metrics for this particular delivery order are not detailed here, Lockheed Martin is typically held to high standards of quality, reliability, and on-time delivery. However, like any large contractor, they may have faced past performance issues on specific contracts, which would be documented in government performance databases (e.g., Contractor Performance Assessment Reporting System - CPARS).

How does the duration of this contract (852 days) align with typical procurement cycles for such parts?

A contract duration of 852 days (approximately 28 months) for the procurement of 12 specific aircraft parts suggests a long-term supply requirement. This duration is not unusual for critical components within the defense sector, especially when considering the lead times for manufacturing complex aerospace parts, potential testing and certification processes, and the need for sustained operational readiness. Many defense contracts, particularly those involving specialized systems or platforms with extended service lives, are structured with longer performance periods to ensure continuity of supply. The 852-day timeframe likely reflects the anticipated demand and production schedule for these parts over a significant portion of the aircraft's operational life or a major maintenance cycle.

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: $27,165,657

Exercised Options: $27,165,657

Current Obligation: $27,165,657

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $7,568,299

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W15P7T13DC111

IDV Type: IDC

Timeline