DoD Awards $5.8B LRIP IV Contract to Lockheed Martin for Aircraft Manufacturing
Contract Overview
Contract Amount: $5,812,245,402 ($5.8B)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2009-03-11
End Date: 2021-08-11
Contract Duration: 4,536 days
Daily Burn Rate: $1.3M/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Defense
Official Description: AWARD AAC LRIP IV CONTRACT
Place of Performance
Location: FORT WORTH, TARRANT County, TEXAS, 76101
State: Texas Government Spending
Plain-Language Summary
Department of Defense obligated $5.81 billion to LOCKHEED MARTIN CORPORATION for work described as: AWARD AAC LRIP IV CONTRACT Key points: 1. Significant award value of over $5.8 billion. 2. Sole-source contract awarded to Lockheed Martin Corporation. 3. Contract duration spans over 12 years. 4. Focus on Aircraft Manufacturing sector.
Value Assessment
Rating: questionable
The contract type is Cost Plus Incentive Fee, which can lead to cost overruns if not managed carefully. The long duration and lack of initial competition raise concerns about potential inefficiencies and inflated pricing over time.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers compared to a competitive process.
Taxpayer Impact: The lack of competition in this sole-source award may result in taxpayers paying a premium for the aircraft manufacturing services.
Public Impact
Long-term commitment of taxpayer funds for aircraft production. Potential for significant economic impact in Texas where the contractor is located. Impact on national defense capabilities through advanced aircraft.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost-plus contract type
- Long contract duration
- Lack of initial competition
Positive Signals
- Supports critical defense manufacturing
- Potential for technological advancement
Sector Analysis
This contract falls within the Aircraft Manufacturing sector, a critical component of the defense industry. Spending in this sector is often characterized by high R&D costs, long production cycles, and significant government oversight.
Small Business Impact
The data indicates that small business participation was not a stated factor in this award (ss: false, sb: false). Further analysis would be needed to determine if subcontracting opportunities were pursued.
Oversight & Accountability
The long duration and sole-source nature of this contract necessitate robust oversight from the Defense Contract Management Agency to ensure cost control, performance, and adherence to contract terms.
Related Government Programs
- Aircraft Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Potential for cost overruns due to CPIF structure
- Lack of competitive pricing pressure
- Long-term commitment of significant funds
- Limited transparency due to sole-source award
Tags
aircraft-manufacturing, department-of-defense, tx, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $5.81 billion to LOCKHEED MARTIN CORPORATION. AWARD AAC LRIP IV CONTRACT
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 $5.81 billion.
What is the period of performance?
Start: 2009-03-11. End: 2021-08-11.
What was the justification for awarding this contract on a sole-source basis rather than through full and open competition?
Sole-source awards are typically justified when only one responsible source can provide the required supplies or services, or when there's a compelling urgency. For complex defense systems like aircraft, this could be due to proprietary technology, unique manufacturing capabilities, or the need for continuity with existing platforms. The specific justification would need to be documented by the Department of Defense.
How will the Cost Plus Incentive Fee structure be managed to prevent cost overruns over the 12-year period?
Effective management of a CPIF contract involves establishing clear performance targets and incentive criteria tied to cost, schedule, and performance. The contracting officer and program management team must diligently monitor expenditures, conduct regular reviews, and ensure that Lockheed Martin is meeting its obligations. Robust auditing and reporting mechanisms are crucial to identify and address potential cost escalations early.
What are the key performance indicators (KPIs) for this contract, and how will their achievement be measured to ensure value for taxpayer money?
Key performance indicators would likely include aircraft delivery schedules, adherence to quality standards, system performance metrics (e.g., reliability, maintainability), and cost targets. Measurement would involve regular program reviews, flight testing, operational assessments, and audits of contractor performance data. The incentive fee structure would directly link contractor compensation to the achievement of these defined KPIs.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing
Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0001909R0010
Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE (V)
Evaluated Preference: NONE
Contractor Details
Parent Company: Lockheed Martin Corp
Address: LOCKHEED BLVD, FORT WORTH, TX, 76108
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $22,707,907,199
Exercised Options: $12,363,966,225
Current Obligation: $5,812,245,402
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2009-03-11
Current End Date: 2021-08-11
Potential End Date: 2022-03-17 00:00:00
Last Modified: 2022-04-14
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