DoD awards $28.3M contract to Lockheed Martin for wireless communications equipment, with 10 years of performance

Contract Overview

Contract Amount: $28,265,546 ($28.3M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2014-09-30

End Date: 2024-02-29

Contract Duration: 3,439 days

Daily Burn Rate: $8.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: DRACO

Place of Performance

Location: KING OF PRUSSIA, MONTGOMERY County, PENNSYLVANIA, 19406

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $28.3 million to LOCKHEED MARTIN CORPORATION for work described as: DRACO Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to higher costs if not managed effectively. 2. The contract has a long duration of 3,439 days, suggesting a need for sustained support or development. 3. No small business set-aside was utilized, indicating potential missed opportunities for smaller enterprises. 4. The contract was not competed, raising questions about potential cost savings and best value. 5. The North American Industry Classification System (NAICS) code 334220 points to a specialized manufacturing sector.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure requires close monitoring to ensure value for money. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates. The long duration suggests significant investment, and the lack of competition makes it challenging to assess if the fixed fee is reasonable. Further analysis of the contractor's performance and cost reporting would be necessary to fully evaluate value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, or in cases of urgent need. The lack of competition means that taxpayers did not benefit from the price discovery that typically occurs in a competitive bidding environment.

Taxpayer Impact: Sole-source awards can potentially lead to higher prices for taxpayers as there is no competitive pressure to drive down costs. This necessitates robust oversight to ensure fair pricing.

Public Impact

The Department of Defense is the primary beneficiary, receiving essential wireless communications equipment. This contract supports the manufacturing sector, specifically in radio and television broadcasting and wireless communications equipment. The contract's duration implies ongoing support and potential for technological advancements in military communications. The geographic impact is primarily linked to the contractor's facilities in Pennsylvania, where the contract is managed.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in suboptimal pricing.
Cost-plus-fixed-fee contracts require diligent oversight to control costs.
Long contract duration increases exposure to potential cost overruns or scope creep.

Positive Signals

Award to a large, established defense contractor suggests potential for reliable delivery.
The contract is managed by the Defense Contract Management Agency, indicating established oversight processes.

Sector Analysis

This contract falls within the 'Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing' sector (NAICS 334220). This industry is characterized by rapid technological advancements and significant R&D investment. Spending in this sector for defense applications is crucial for maintaining communication superiority. Comparable spending benchmarks are difficult to ascertain without more specific details on the equipment procured, but the overall defense electronics market is substantial.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting plans for small businesses. This suggests that the primary contractor, Lockheed Martin, will be performing the majority of the work. This may limit opportunities for small businesses to participate in this specific contract, although they may be involved in the broader defense supply chain.

Oversight & Accountability

The contract is managed by the Defense Contract Management Agency (DCMA), which provides contract administration and oversight. The cost-plus-fixed-fee nature of the award necessitates close monitoring of costs and performance to ensure accountability and prevent overspending. Transparency regarding cost reporting and performance metrics would be key to assessing the effectiveness of oversight.

Related Government Programs

Department of Defense Communications Systems
Wireless Technology Development
Defense Manufacturing Contracts

Risk Flags

Sole-source award
Cost-plus-fixed-fee pricing
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.3 million to LOCKHEED MARTIN CORPORATION. DRACO

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 $28.3 million.

What is the period of performance?

Start: 2014-09-30. End: 2024-02-29.

What is the specific nature of the wireless communications equipment being procured under this contract?

The provided data indicates the contract is for 'Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing' under NAICS code 334220. However, the specific type of wireless communications equipment is not detailed. Given the contractor and agency, it is likely related to advanced military communication systems, potentially including secure tactical radios, satellite communication components, or specialized network infrastructure. Further details would be required to ascertain the exact nature of the equipment and its intended application within the Department of Defense.

How does the $28.3 million contract value compare to similar procurements for wireless communications equipment by the DoD?

Without specific details on the exact type of wireless communications equipment, a direct comparison of the $28.3 million contract value to similar procurements is challenging. However, the duration of the contract (over 9 years) suggests a significant scope, potentially involving research, development, and sustainment. Large-scale defense communication system procurements can range from tens of millions to billions of dollars. The cost-plus-fixed-fee structure also means the final cost could deviate from the initial estimate. Benchmarking would require identifying contracts with similar technical specifications and performance periods.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract of this duration?

The primary risks associated with this contract include potential cost overruns due to the cost-plus-fixed-fee structure, where the government bears the cost of performance plus a fixed fee. The lack of competition (sole-source) removes the incentive for the contractor to minimize costs. The long duration (over 9 years) increases the risk of scope creep, technological obsolescence, and contractor performance issues going unaddressed for an extended period. Effective risk mitigation requires stringent oversight, detailed cost tracking, and clear performance metrics.

What is Lockheed Martin's track record with similar sole-source, cost-plus-fixed-fee contracts for the Department of Defense?

Lockheed Martin is a major defense contractor with extensive experience in sole-source and cost-plus-fixed-fee contracts across various defense programs. While specific details on their performance for this exact type of equipment are not provided, their history includes large, complex sole-source awards for critical defense systems. Historically, cost-plus contracts with large contractors can be subject to scrutiny regarding cost efficiency and oversight effectiveness. A review of their past performance on similar contracts, including any audits or cost reviews, would provide further insight into their reliability and cost management.

How does the contract's performance period of over 9 years impact the assessment of its value for money?

The extended performance period of over 9 years (3439 days) for this $28.3 million contract significantly impacts the assessment of value for money. While a longer period can indicate a need for sustained support, development, or a complex system lifecycle, it also increases the potential for cost escalation and technological obsolescence. For value to be realized, the fixed fee must be justified over the entire duration, and the contractor must demonstrate continuous innovation and cost control. Without competitive pressure, ensuring that the government is not overpaying for services rendered over such a long period is a critical oversight challenge.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing

Product/Service Code: ELECTRICAL/ELECTRONIC EQPT COMPNTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

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, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $28,407,966

Exercised Options: $28,388,610

Current Obligation: $28,265,546

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline