Pentagon Bypasses Bidding to Grant Lockheed Martin $1.2 Billion Despite 55% Readiness Rate

On the authority of the Naval Air Systems Command (NAVAIR), the Department of Defense (DoD) recently finalized contract N0001923C0003, a $1.2 billion sole-source agreement with Lockheed Martin Corporation. By invoking the 'Urgent and Compelling' exception (FAR 6.302-2), the Pentagon successfully bypassed the Competition in Contracting Act, a law designed to ensure taxpayers get the best value through open bidding.

[Sole-Source Contract] is a non-competitive procurement process where the government enters into a contract with a single provider without allowing others to submit bids.

While the Pentagon justifies the bypass as a matter of national security urgency, the performance metrics of the F-35 program suggest a different reality. According to GAO report GAO-23-105341, the F-35 fleet's mission-capable rate—the percentage of time an aircraft can fly and perform at least one of its missions—was only 55% as of March 2023. This figure falls catastrophically short of the DoD’s own performance targets. Essentially, the Navy has awarded a billion-dollar 'emergency' contract to a vendor whose product is unavailable for use 45% of the time.

This lack of competition is not an accident; it is a feature of the program's design. Internal GAO audits reveal that the DoD lacks the technical data rights to allow any company other than Lockheed Martin to perform high-level maintenance on the aircraft.

[Vendor Lock-in] is a situation where a customer becomes dependent on a vendor for products and services, unable to use another vendor without substantial switching costs or legal barriers.

Because Lockheed Martin owns the proprietary blueprints and software codes for the F-35, the Pentagon has effectively signed a perpetual monopoly. This 'proprietary trap' forces the government to pay premium rates for maintenance because there is no one else legally allowed to turn a wrench on the airframe. Lockheed Martin’s 2023 SEC 10-K filing confirms the financial importance of this arrangement: the F-35 program alone accounts for 27% of the company's $67.6 billion in total consolidated net sales.

The flow of money is greased by a well-documented revolving door between the Pentagon and Lockheed’s boardrooms. Critics have identified a group known as the 'Lockheed 14'—a collection of high-ranking former military and civilian leaders who now hold senior roles within the corporation. These individuals provide the connective tissue between the agencies writing the contracts and the company receiving them. This transition of personnel often leads to [Regulatory Capture], which is a form of corruption where a government agency, created to act in the public interest, instead advances the commercial or political concerns of the industry it is charged with overseeing.

While mainstream outlets frequently frame these funding injections as necessary responses to 'rising global tensions,' they rarely mention the lobbying effort behind the scenes. According to OpenSecrets data and Lockheed's own disclosures, the company spent $13 million on federal lobbying in 2023. Much of this focused on ensuring that sustainment pipelines—the lucrative tail of military contracts—remain uninterrupted regardless of aircraft performance.

For the average American taxpayer, this $1.2 billion represents a 'monopoly tax' on national defense. When the government allows a single contractor to dictate terms through proprietary lockdowns and 'urgent' bypasses, public funds are diverted from domestic priorities into a system that rewards inefficiency. The F-35 program is currently projected to cost over $1.7 trillion over its lifespan, much of which will be spent on these non-competitive sustainment agreements for a fleet that struggles to stay in the air.

To see how your representative voted on the latest defense appropriations bill or to see which members of the House Armed Services Committee received donations from Lockheed Martin, visit the Gen Us Politician Tracker. You can also explore our deep dive into the 'Lockheed 14' and the revolving door of defense procurement in our Corporate Influence database.