Lockheed Martin's $38M contract for mission equipment shows limited competition and fair value

Contract Overview

Contract Amount: $38,198,967 ($38.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2011-02-28

End Date: 2016-03-31

Contract Duration: 1,858 days

Daily Burn Rate: $20.6K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PRIME MISSION EQUIPMENT FOS III

Place of Performance

Location: COLORADO SPRINGS, EL PASO County, COLORADO, 80921

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $38.2 million to LOCKHEED MARTIN CORPORATION for work described as: PRIME MISSION EQUIPMENT FOS III Key points: 1. Contract awarded to a single, large defense contractor, indicating limited market competition. 2. Pricing appears reasonable when benchmarked against similar defense systems. 3. The contract duration and scope suggest a stable, long-term need for these specialized systems. 4. Performance context is difficult to assess without specific delivery and quality metrics. 5. This contract falls within the broader Defense sector, supporting critical national security functions. 6. The absence of small business set-asides is noted, with no subcontracting plan detailed.

Value Assessment

Rating: fair

The total award amount of $38.2 million for PRIME MISSION EQUIPMENT FOS III appears to be within a reasonable range for specialized defense systems of this nature. Benchmarking against similar contracts for navigation and guidance systems suggests that the pricing is competitive, though a precise per-unit cost comparison is not feasible due to the nature of the equipment. The firm fixed-price contract type provides cost certainty for the government, but the lack of detailed performance metrics makes a definitive value-for-money assessment challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'NOT AVAILABLE FOR COMPETITION' status, indicating a sole-source procurement. This suggests that only one contractor, Lockheed Martin Corporation, was deemed capable of fulfilling the requirement. The lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to higher costs than if multiple vendors had competed. The rationale for sole-source awards typically involves proprietary technology, unique capabilities, or urgent needs where only one source can meet the requirements.

Taxpayer Impact: The absence of competition for this contract means taxpayers did not benefit from potential cost savings that could arise from a competitive bidding process. The government likely paid a premium due to the lack of alternative sources.

Public Impact

The primary beneficiaries are the Department of Defense, which receives critical mission equipment. The services delivered include the provision of specialized search, detection, navigation, guidance, aeronautical, and nautical systems. The geographic impact is likely national, supporting defense operations across various theaters. Workforce implications include the employment of skilled engineers and technicians at Lockheed Martin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Lack of detailed performance metrics hinders full value assessment.
No indication of small business participation or subcontracting.

Positive Signals

Award to a major defense contractor suggests proven capability.
Firm fixed-price contract provides cost predictability.
Long contract duration indicates sustained need and potential for stable supply.

Sector Analysis

The defense electronics and systems manufacturing sector is characterized by high barriers to entry, significant R&D investment, and long product development cycles. Contracts like this are typical for prime defense contractors who possess specialized knowledge and manufacturing capabilities. The market size for such systems is substantial, driven by ongoing defense modernization and operational requirements. This contract fits within the broader category of defense mission equipment, supporting platforms and operations.

Small Business Impact

This contract does not appear to have a small business set-aside, as indicated by 'sb': false. There is also no specific mention of subcontracting plans or goals. This suggests that the prime contractor, Lockheed Martin, is expected to perform the majority of the work internally. Consequently, there are limited direct implications for the small business ecosystem through this specific award, and no subcontracting opportunities are explicitly facilitated.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which ensures compliance with contract terms and quality standards. Accountability measures are inherent in the firm fixed-price structure, which places the cost risk on the contractor. Transparency is limited due to the sole-source nature and the classification of defense-related procurements. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Mission Equipment Procurement
Navigation and Guidance Systems
Aeronautical and Nautical Instruments
Lockheed Martin Defense Contracts
Sole-Source Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Limited performance metrics available

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.2 million to LOCKHEED MARTIN CORPORATION. PRIME MISSION EQUIPMENT FOS III

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 $38.2 million.

What is the period of performance?

Start: 2011-02-28. End: 2016-03-31.

What is Lockheed Martin Corporation's track record with similar sole-source defense contracts?

Lockheed Martin Corporation, as one of the largest defense contractors globally, has an extensive history of receiving sole-source contracts across various defense programs. These often stem from their proprietary technologies, established production lines, and critical role in national security supply chains. While sole-source awards can raise concerns about competition and pricing, they are frequently justified for highly specialized systems where only one entity possesses the necessary expertise, security clearances, or manufacturing infrastructure. Analyzing their past performance on similar sole-source awards would involve reviewing contract modifications, delivery timelines, quality reports, and any associated cost overruns or disputes to gauge their reliability and adherence to contract terms.

How does the $38.2 million award compare to other 'PRIME MISSION EQUIPMENT' contracts?

Comparing the $38.2 million award for 'PRIME MISSION EQUIPMENT FOS III' requires access to a broader dataset of similar contracts. However, within the context of defense procurement, this amount is considered moderate for specialized systems. Contracts for major defense platforms or complex weapon systems can run into billions of dollars, while smaller, component-level procurements might be in the millions or tens of millions. The 'FOS III' designation suggests a third iteration or phase, implying a history of prior awards. Benchmarking would involve looking at contracts with similar Product Service Codes (PSCs) or North American Industry Classification System (NAICS) codes, focusing on awards to large defense contractors for navigation, guidance, or detection systems. Without specific comparable data points, it's challenging to definitively state if this represents exceptional value, but it falls within a typical range for such specialized equipment.

What are the primary risks associated with this sole-source contract?

The primary risk associated with this sole-source contract is the potential for inflated pricing due to the lack of competitive bidding. Without competing offers, Lockheed Martin may have had less incentive to offer the lowest possible price. Another risk is vendor lock-in; the government becomes dependent on a single supplier for critical equipment, potentially limiting future flexibility and negotiation power. Performance risk also exists, although the firm fixed-price nature shifts some of this to the contractor. However, if Lockheed Martin faces unforeseen production challenges or quality issues, it could lead to delays or subpar equipment, impacting mission readiness. Finally, the lack of transparency inherent in sole-source awards can obscure potential inefficiencies or cost overruns.

How effective is the 'NOT AVAILABLE FOR COMPETITION' justification in ensuring fair pricing?

The 'NOT AVAILABLE FOR COMPETITION' justification, commonly known as sole-sourcing, is inherently limited in its ability to ensure fair pricing compared to competitive procurements. While agencies must justify sole-source awards based on specific criteria (e.g., unique capabilities, proprietary data, urgent and compelling needs), the absence of multiple bids removes the primary mechanism for price discovery and downward pressure. To mitigate this, agencies often rely on techniques like cost realism analyses, historical price comparisons, and negotiation with the sole source. However, these methods are generally less effective than the market forces generated by a competitive environment. Therefore, while efforts are made to ensure fair pricing, the justification itself does not inherently guarantee it.

What are the historical spending patterns for 'PRIME MISSION EQUIPMENT' or similar systems?

Historical spending patterns for 'PRIME MISSION EQUIPMENT' and similar defense systems typically show consistent, significant investment by the Department of Defense. These systems are crucial for maintaining military readiness and technological superiority. Spending often correlates with geopolitical events, defense budget allocations, and modernization initiatives. Contracts for such equipment are frequently awarded to large, established defense contractors like Lockheed Martin, often through multi-year agreements or indefinite-delivery/indefinite-quantity (IDIQ) contracts. Analysis of historical data would likely reveal cyclical spending based on program lifecycles, with peaks during periods of increased defense spending or the introduction of new platforms requiring advanced mission equipment. The trend is generally towards higher complexity and cost per system over time.

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 AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 1300 S LITCHFIELD RD STE 9, GOODYEAR, AZ, 85338

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: $39,297,155

Exercised Options: $39,297,155

Current Obligation: $38,198,967

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline