DoD awards $210M to Lockheed Martin for advanced radar threat system variant-2, impacting US aircraft training

Contract Overview

Contract Amount: $210,000,000 ($210.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2017-06-16

End Date: 2022-10-25

Contract Duration: 1,957 days

Daily Burn Rate: $107.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: DEVELOPMENT AND FIELD THE ADVANCED RADAR THREAT SYSTEM VARIANT-2 A RADAR THREAT TRAINING PLATFORM FOR US AIRCRAFT.

Place of Performance

Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $210.0 million to LOCKHEED MARTIN CORPORATION for work described as: DEVELOPMENT AND FIELD THE ADVANCED RADAR THREAT SYSTEM VARIANT-2 A RADAR THREAT TRAINING PLATFORM FOR US AIRCRAFT. Key points: 1. The contract value of $210 million represents a significant investment in advanced training capabilities for US aircraft. 2. Lockheed Martin's selection suggests a reliance on established defense contractors for complex, high-value systems. 3. The fixed-price incentive contract type indicates a shared risk between the government and contractor to control costs while achieving performance. 4. The duration of the contract (over 5 years) points to a long-term need for this specific radar threat system. 5. The award was made under full and open competition, suggesting a robust process for selecting the best value provider. 6. The system's focus on radar threat simulation highlights its importance in preparing aircraft for modern electronic warfare environments.

Value Assessment

Rating: good

The contract's total value of $210 million for a specialized radar threat training system appears within a reasonable range for advanced defense technology. Benchmarking against similar complex simulation and training systems, the pricing is likely competitive given the technological sophistication and the contractor's expertise. The fixed-price incentive structure aims to ensure value by aligning contractor incentives with performance and cost control, though the ultimate value will depend on the achievement of performance targets and final costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. The presence of two bids suggests a reasonable level of competition for this specialized system. While not a large number of bidders, the open competition process generally promotes price discovery and encourages contractors to offer competitive terms to secure such a significant award.

Taxpayer Impact: The full and open competition process is beneficial for taxpayers as it increases the likelihood of obtaining the best possible price and value for this critical defense training capability.

Public Impact

US Air Force pilots and aircrews will benefit from enhanced training realism, improving combat readiness. The contract delivers a sophisticated radar threat training platform, crucial for simulating advanced adversary capabilities. The primary geographic impact is within the United States, supporting training operations for Air Force assets. This contract supports specialized engineering, manufacturing, and technical roles within Lockheed Martin and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if performance incentives are not met or if unforeseen technical challenges arise.
Reliance on a single contractor for a critical training system could create long-term dependency.
The complexity of the system may lead to extended sustainment and maintenance periods, impacting future budgets.

Positive Signals

The fixed-price incentive contract structure encourages cost efficiency and performance.
Awarded through full and open competition, suggesting a competitive selection process.
Lockheed Martin's established track record in defense systems provides a degree of confidence in execution.
The system directly addresses a critical need for advanced aircrew training in evolving threat environments.

Sector Analysis

The defense sector, particularly in electronic warfare and simulation, is characterized by high R&D investment and long product cycles. This contract fits within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sub-sector. Spending in this area is driven by the need to maintain technological superiority and prepare forces for complex, modern combat scenarios. Comparable spending benchmarks would involve other large-scale simulation, training, and advanced radar system procurements within the DoD.

Small Business Impact

The data indicates this contract was not set aside for small businesses, and there is no explicit mention of subcontracting goals for small businesses. Large defense contracts like this often involve extensive supply chains, and while prime contractors may engage small businesses, the primary awardee is a major corporation. Further analysis would be needed to determine the extent of small business participation through subcontracting opportunities.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices, with potential involvement from the Department of Defense's Inspector General. The fixed-price incentive contract type includes specific performance metrics and cost targets that are subject to review. Transparency is generally maintained through contract award announcements and reporting requirements, though detailed operational performance data may be sensitive.

Related Government Programs

Advanced Radar Systems
Aircraft Training Simulators
Electronic Warfare Systems
Defense Research and Development
Air Force Procurement

Risk Flags

Potential for cost growth due to contract type and system complexity.
Long-term sustainment and upgrade costs not fully detailed in award.
Dependency on a single contractor for critical training capability.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $210.0 million to LOCKHEED MARTIN CORPORATION. DEVELOPMENT AND FIELD THE ADVANCED RADAR THREAT SYSTEM VARIANT-2 A RADAR THREAT TRAINING PLATFORM FOR US AIRCRAFT.

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 Air Force).

What is the total obligated amount?

The obligated amount is $210.0 million.

What is the period of performance?

Start: 2017-06-16. End: 2022-10-25.

What is Lockheed Martin's track record with similar advanced radar or training systems for the US Air Force?

Lockheed Martin Corporation has a long and extensive history of developing and delivering complex defense systems, including advanced radar, electronic warfare, and simulation technologies for the U.S. Air Force and other military branches. They are a prime contractor on numerous programs involving aircraft avionics, missile systems, and command and control platforms. Their experience with large-scale, technologically sophisticated projects suggests a strong capability to execute contracts like the development of the Advanced Radar Threat System Variant-2. Past performance reviews and contract histories would provide more granular detail on their success rates, on-time delivery, and budget adherence for comparable systems.

How does the $210 million contract value compare to similar radar threat training systems?

The $210 million contract value for the Advanced Radar Threat System Variant-2 is substantial, reflecting the complexity and advanced nature of the technology. To benchmark this value, one would typically compare it against other procurements for sophisticated training simulators, electronic warfare systems, or advanced radar development programs within the Department of Defense. For instance, contracts for full-mission simulators for advanced fighter jets or complex radar system upgrades can range from tens to hundreds of millions of dollars. The specific capabilities of this system, its integration requirements, and the duration of development and fielding will heavily influence its cost relative to other systems. Without direct comparisons of systems with identical functionalities, this figure appears consistent with high-end defense training technology investments.

What are the primary risks associated with developing and fielding this advanced radar threat system?

Key risks associated with this contract include technological complexity, potential for schedule delays, and cost overruns, particularly given the fixed-price incentive (FPI) contract type. Developing a new variant of an advanced radar threat system requires cutting-edge technology, which can present unforeseen engineering challenges. Integration with existing U.S. aircraft training infrastructure also poses a risk. The FPI structure aims to mitigate cost risks by sharing them, but performance failures or significant cost increases beyond target could still impact the overall value. Furthermore, the system's effectiveness in accurately simulating evolving threats is critical; failure to keep pace with adversary advancements would diminish its training value and necessitate costly updates.

How effective is the fixed-price incentive (FPI) contract type in ensuring program effectiveness and value for money?

The Fixed-Price Incentive (FPI) contract type is designed to provide a middle ground between fixed-price and cost-reimbursement contracts, aiming to achieve better value for money and program effectiveness. In an FPI contract, the final price is determined by the formula that adjusts between a target cost and a price ceiling, based on the final negotiated cost. This structure incentivizes the contractor (Lockheed Martin, in this case) to control costs and meet performance targets, as they share in any cost savings below the target and in cost overruns above the target, up to the ceiling. This shared risk can drive efficiency and innovation. For program effectiveness, the contract likely includes specific performance requirements and delivery schedules that must be met. If these are achieved, and costs are managed, the FPI contract can be an effective tool for acquiring complex systems like the radar threat system.

What are the historical spending patterns for radar threat simulation systems by the Department of Defense?

Historical spending by the Department of Defense on radar threat simulation and training systems has been substantial and consistent, driven by the continuous need to prepare aircrews for sophisticated and evolving aerial threats. This spending encompasses a range of systems, from ground-based simulators to airborne electronic warfare pods and integrated training environments. Major defense contractors like Lockheed Martin, Northrop Grumman, and Raytheon have historically secured significant portions of this budget. Spending often escalates during periods of heightened geopolitical tension or when new adversarial capabilities emerge. The total annual expenditure can fluctuate based on specific program starts, upgrades, and the overall defense budget, but it consistently represents a critical investment area for maintaining air superiority and combat readiness.

What is the significance of the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' NAICS code for this contract?

The North American Industry Classification System (NAICS) code 334511, 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing,' is highly relevant to this contract. It signifies that the procured item falls under the manufacturing of sophisticated systems used for locating, tracking, and guiding aircraft and vessels, as well as related navigational instruments. This includes advanced radar systems, which are central to the contract's objective of developing a radar threat training platform. Companies operating under this NAICS code are typically involved in high-technology manufacturing, requiring significant expertise in electronics, software, and systems integration, aligning with the capabilities of a contractor like Lockheed Martin for this specialized defense procurement.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: FA821016R5000

Offers Received: 2

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Address: 1701 W MARSHALL DR, GRAND PRAIRIE, TX, 75051

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: $553,761,874

Exercised Options: $214,541,043

Current Obligation: $210,000,000

Actual Outlays: $4,322,740

Subaward Activity

Number of Subawards: 303

Total Subaward Amount: $433,127,181

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline