DoD awards $142M for aircraft engine support, with Lockheed Martin as prime contractor

Contract Overview

Contract Amount: $142,096,502 ($142.1M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2022-03-14

End Date: 2023-03-31

Contract Duration: 382 days

Daily Burn Rate: $372.0K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 8508940181!AF GEN III SUPPORT

Place of Performance

Location: MIDDLE RIVER, BALTIMORE County, MARYLAND, 21220

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $142.1 million to LOCKHEED MARTIN CORPORATION for work described as: 8508940181!AF GEN III SUPPORT Key points: 1. Contract value represents a significant investment in maintaining critical defense assets. 2. The award was made under full and open competition, suggesting a competitive bidding process. 3. Fixed-price contract type aims to control costs and transfer risk to the contractor. 4. The duration of the contract is over a year, indicating ongoing support needs. 5. The specific product service code (PSC) is not detailed, limiting granular analysis of the services. 6. The contract is managed by the Defense Logistics Agency, a key procurement arm for the DoD.

Value Assessment

Rating: good

The contract value of $142 million for aircraft engine support appears reasonable given the critical nature of defense equipment. Benchmarking against similar contracts for engine maintenance and parts would provide a clearer picture of value for money. The firm fixed-price structure suggests an effort to establish predictable costs, but actual value depends on the efficiency and effectiveness of the services delivered by Lockheed Martin.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit a bid. The number of bidders is not specified, but this method generally fosters a competitive environment, which can lead to better pricing and innovation. The agency's decision to use full and open competition suggests confidence in the market's ability to provide suitable solutions.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it is expected to drive down costs through market forces and encourage a wider range of suppliers to offer their best pricing and capabilities.

Public Impact

The primary beneficiaries are the U.S. Department of Defense, ensuring the operational readiness of its aircraft fleet. Services delivered include support for aircraft engines, likely encompassing maintenance, repair, and provision of parts. The geographic impact is likely nationwide, supporting air bases and operational units across the United States. Workforce implications may include employment opportunities for skilled technicians and support staff within Lockheed Martin and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if the fixed-price contract does not adequately account for unforeseen technical challenges.
Dependence on a single prime contractor, Lockheed Martin, could limit flexibility in sourcing specialized support.
The long-term sustainment costs of aircraft engines can be substantial and require continuous monitoring.

Positive Signals

Award to a major defense contractor with a proven track record in aerospace and defense.
Firm fixed-price contract type provides cost certainty for the government.
Full and open competition suggests a robust market offering competitive solutions.

Sector Analysis

The aerospace and defense sector is characterized by high technological complexity, significant R&D investment, and long product lifecycles. Aircraft engine manufacturing and support is a specialized segment within this sector, dominated by a few large, established players. Government contracts are a primary revenue source for many companies in this industry. Spending in this area is critical for national security and maintaining a technological edge.

Small Business Impact

The contract data indicates that small business participation was not a primary set-aside consideration for this specific award (sb: false). While Lockheed Martin is the prime contractor, there may be opportunities for small businesses to participate as subcontractors, particularly in specialized component manufacturing or support services. The extent of small business subcontracting will depend on Lockheed Martin's procurement strategy and the specific requirements of the contract.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Logistics Agency (DLA) and the Department of Defense's contracting officers. Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified services within agreed-upon costs. Transparency is facilitated through contract award databases, though detailed performance metrics and internal oversight processes are typically not publicly disclosed. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Maintenance and Repair Services
Defense Logistics Agency Procurement
Lockheed Martin Defense Contracts
Aircraft Engine Parts Manufacturing
Department of Defense Aviation Support

Risk Flags

Contract Type Risk
Contractor Performance Uncertainty
Supply Chain Vulnerability

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $142.1 million to LOCKHEED MARTIN CORPORATION. 8508940181!AF GEN III SUPPORT

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 Logistics Agency).

What is the total obligated amount?

The obligated amount is $142.1 million.

What is the period of performance?

Start: 2022-03-14. End: 2023-03-31.

What is Lockheed Martin's track record with similar aircraft engine support contracts for the DoD?

Lockheed Martin Corporation has a long and extensive history of providing support services for various aircraft platforms and their associated systems, including engines, to the Department of Defense. Their experience spans decades, encompassing research, development, manufacturing, and sustainment. For aircraft engine support specifically, they have managed complex sustainment programs for a range of military aircraft, often involving integrated logistics support, maintenance, repair, and overhaul (MRO) services. Their track record generally indicates a capacity to handle large-scale, technically demanding contracts. However, like any major defense contractor, they have also faced scrutiny and performance reviews on specific contracts. A detailed analysis would require examining past performance evaluations and contract close-out reports for comparable contracts to assess their consistency in meeting cost, schedule, and performance objectives.

How does the $142 million award compare to historical spending on aircraft engine support by the DoD?

The $142 million awarded for this specific contract represents a significant, but not unprecedented, investment in aircraft engine support. The Department of Defense's annual spending on aircraft sustainment, which includes engine support, typically runs into billions of dollars across all branches and platforms. For instance, major engine programs like those for the F-35, F-16, or C-130 aircraft involve substantial, multi-year sustainment contracts that often exceed this single award's value. This $142 million contract likely pertains to a specific fleet, engine type, or a defined period of support. To provide a precise comparison, one would need to aggregate historical spending data for similar engine types or support categories managed by the Defense Logistics Agency or other DoD components over comparable timeframes. Without that granular historical data, it's challenging to definitively state if this award is higher or lower than average, but it falls within the expected range for critical defense aviation sustainment.

What are the primary risks associated with this firm fixed-price contract for aircraft engine support?

The primary risk associated with this firm fixed-price (FFP) contract for aircraft engine support is the potential for cost overruns if the contractor, Lockheed Martin, underestimates the complexity or resources required for the services. While FFP contracts are designed to transfer cost risk to the contractor, unforeseen technical issues, supply chain disruptions, or changes in labor costs could lead to the contractor incurring losses or seeking contract modifications. Another risk is that the contractor might be incentivized to cut corners on quality or service to maintain profitability, potentially impacting the long-term reliability and performance of the engines. Furthermore, if the government requires significant changes or additional services not covered by the original scope, the process of negotiating equitable adjustments can be complex and time-consuming, potentially leading to delays and increased costs. Effective government oversight is crucial to mitigate these risks.

How effective is the Defense Logistics Agency (DLA) in managing complex aircraft engine support contracts?

The Defense Logistics Agency (DLA) is a primary agency responsible for providing logistical support to the U.S. Armed Forces, including the procurement and management of a vast array of equipment and services, such as aircraft engine support. DLA has extensive experience and established processes for managing complex supply chains and contracting for high-value defense systems. Its effectiveness in managing aircraft engine support contracts is generally considered robust, leveraging specialized expertise and robust procurement systems. DLA's role often involves consolidating requirements, leveraging economies of scale, and ensuring the availability of critical parts and services. However, like any large organization, its effectiveness can vary depending on the specific contract, the complexity of the technology involved, and the performance of the contractors it engages. Continuous performance monitoring and feedback mechanisms are essential for DLA to maintain and improve its effectiveness in this domain.

What is the typical profit margin for contractors on firm fixed-price defense contracts of this nature?

Profit margins for contractors on firm fixed-price (FFP) defense contracts can vary significantly based on several factors, including the specific industry, the level of competition, the perceived risk of the contract, and the contractor's efficiency. For FFP contracts, which aim to provide cost certainty to the government, contractors typically build their profit margin into the initial price, anticipating efficient execution. Industry-wide, profit margins in the defense sector can range from low single digits to the mid-teens or higher for highly specialized or high-risk endeavors. For a contract involving established technologies like aircraft engine support, where the prime contractor is a major entity like Lockheed Martin, the profit margin might be on the moderate side, reflecting a balance between competitive pricing and the need for a reasonable return on investment. Specific profit rates are often subject to negotiation and are influenced by factors such as the contractor's overhead structure and anticipated return on assets.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Engine and Engine Parts Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 2323 EASTERN BLVD, BALTIMORE, MD, 21220

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: $142,096,502

Exercised Options: $142,096,502

Current Obligation: $142,096,502

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SPE4AX17D9006

IDV Type: IDC

Timeline