DoD awards $484M for long-range radar systems to Lockheed Martin, with 2501 days duration

Contract Overview

Contract Amount: $484,097,889 ($484.1M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2021-03-26

End Date: 2028-01-30

Contract Duration: 2,501 days

Daily Burn Rate: $193.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: THREE-DIMENSIONAL EXPEDITIONARY LONG-RANGE RADAR SYSTEM

Place of Performance

Location: LIVERPOOL, ONONDAGA County, NEW YORK, 13088

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $484.1 million to LOCKHEED MARTIN CORPORATION for work described as: THREE-DIMENSIONAL EXPEDITIONARY LONG-RANGE RADAR SYSTEM Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract type is Cost Plus Fixed Fee, which can incentivize cost overruns if not managed carefully. 3. The duration of 2501 days (nearly 7 years) indicates a long-term strategic investment. 4. The North American Industry Classification System (NAICS) code 334511 points to a specialized manufacturing sector. 5. The contract's value of $484M positions it as a significant procurement within its category. 6. The awardee, Lockheed Martin Corporation, is a major defense contractor with extensive experience.

Value Assessment

Rating: good

The contract value of $484 million for a long-range radar system over nearly seven years appears reasonable given the specialized nature of the technology and the prime contractor's established capabilities. Benchmarking against similar advanced radar system procurements would provide a more precise value-for-money assessment. The Cost Plus Fixed Fee (CPFF) contract type, while common for R&D and complex systems, carries inherent risks of cost escalation if not rigorously monitored by the agency. However, the fixed fee component provides some predictability for the contractor's profit.

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 bids. The presence of two bids suggests a moderate level of competition for this specialized system. While two bidders are better than one, a higher number of bids would typically lead to more robust price discovery and potentially lower costs for the government.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it aims to secure the best value through a wide range of offers, potentially driving down prices and ensuring innovation.

Public Impact

The Department of the Air Force benefits from advanced radar capabilities for search, detection, and navigation. This system is crucial for enhancing the operational effectiveness and situational awareness of military assets. The contract supports high-tech manufacturing jobs, likely within Lockheed Martin's facilities and its supply chain. The geographic impact is primarily associated with the contractor's operational locations, with potential for broader national security implications.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can lead to cost overruns if not closely managed.
Limited competition (2 bidders) may not have yielded the lowest possible price.
The long duration of the contract increases the risk of technological obsolescence or changing requirements.

Positive Signals

Awarded through full and open competition, maximizing potential sources.
Contractor (Lockheed Martin) has a strong track record in defense systems.
The system addresses critical defense needs for advanced radar capabilities.

Sector Analysis

The contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector (NAICS 334511). This is a highly specialized segment of the aerospace and defense industry, characterized by high R&D investment, long product development cycles, and significant barriers to entry. Spending in this sector is often driven by national security requirements and technological advancements. Comparable spending benchmarks would likely be found within other major defense procurements for advanced sensor and electronic warfare systems.

Small Business Impact

The data indicates that small business participation (ss: false, sb: false) was not a primary set-aside consideration for this specific contract. While the prime contractor, Lockheed Martin, is a large entity, there may be opportunities for small businesses to participate as subcontractors within the supply chain. However, without specific subcontracting plans or goals detailed in the award data, the direct impact on the small business ecosystem is unclear.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. The Cost Plus Fixed Fee structure necessitates rigorous financial oversight to monitor costs and ensure the fixed fee remains appropriate. Transparency is typically managed through contract reporting requirements and potential audits. The Inspector General of the Department of Defense would have jurisdiction for investigating fraud, waste, or abuse related to this contract.

Related Government Programs

Advanced Radar Systems Procurement
Defense Electronic Warfare Systems
Aerospace and Defense Manufacturing
Long-Range Surveillance Technology
DoD Major Weapon Systems Acquisition

Risk Flags

Cost Overrun Risk (CPFF)
Technological Obsolescence (Long Duration)
Limited Competition Impact on Price

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $484.1 million to LOCKHEED MARTIN CORPORATION. THREE-DIMENSIONAL EXPEDITIONARY LONG-RANGE RADAR SYSTEM

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 $484.1 million.

What is the period of performance?

Start: 2021-03-26. End: 2028-01-30.

What is Lockheed Martin's track record with similar Cost Plus Fixed Fee (CPFF) contracts for radar systems?

Lockheed Martin Corporation has a extensive history of executing complex, high-value contracts, including those utilizing Cost Plus Fixed Fee (CPFF) arrangements, particularly within the defense sector. Their portfolio includes numerous radar systems, electronic warfare suites, and other advanced technological platforms for various military branches. Analyzing past CPFF contracts for similar radar systems would reveal their performance in terms of cost control, schedule adherence, and final delivery quality. While CPFF contracts inherently carry a risk of cost overruns due to the government bearing most of the cost risk, Lockheed Martin's experience suggests they possess the program management capabilities to navigate these challenges. However, specific performance metrics like cost variances or schedule slippages on prior comparable contracts would be needed for a definitive assessment of their efficiency in this specific contract type.

How does the $484 million contract value compare to other long-range radar system procurements?

The $484 million contract value for the THREE-DIMENSIONAL EXPEDITIONARY LONG-RANGE RADAR SYSTEM, awarded over a period of approximately 2501 days (nearly 7 years), represents a significant investment. To benchmark this value, one would need to compare it against other procurements of similar scale, complexity, and technological sophistication. For instance, other major radar system acquisitions by the Department of Defense or allied nations for early warning, air defense, or surveillance could serve as comparators. Factors such as the specific technological capabilities (e.g., range, resolution, multi-functionality), the number of units procured, and the duration of the contract are critical for a fair comparison. Without access to a database of comparable radar system contracts, it is difficult to definitively state whether $484 million is high or low. However, given the 'long-range' and 'expeditionary' descriptors, it suggests a high-capability system likely commanding a substantial price.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for this type of system?

The primary risk associated with a Cost Plus Fixed Fee (CPFF) contract for advanced radar systems like the THREE-DIMENSIONAL EXPEDITIONARY LONG-RANGE RADAR SYSTEM is the potential for cost overruns. In a CPFF arrangement, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing their profit. This structure shifts a significant portion of the cost risk to the government. If the contractor's costs exceed initial estimates, the government still pays the actual costs, potentially leading to a final contract price much higher than anticipated. This risk is amplified in long-duration, technologically complex projects where unforeseen challenges or scope creep can significantly increase expenses. Effective oversight, stringent cost controls, and clear definition of allowable costs are crucial to mitigate these risks. The fixed fee itself can also become a point of contention if the contractor perceives it as insufficient relative to the effort and risk involved.

How does the competition level (2 bidders) impact the value for taxpayers?

A competition level involving only two bidders for a contract of this magnitude and technical specialization suggests a moderately competitive environment. While the 'full and open competition' designation means all eligible sources could bid, the outcome indicates that only two entities submitted proposals. Generally, a higher number of bidders leads to more robust price discovery and increased pressure on contractors to offer competitive pricing to win the award. With only two bidders, there is a greater risk that the government may not have received the lowest possible price achievable in a more crowded marketplace. Taxpayers could potentially be paying a premium compared to a scenario with, for example, four or five competing proposals. However, the specific nature of advanced defense systems often limits the number of qualified bidders, making two a potentially acceptable outcome if those bidders are highly capable and their proposals are well-evaluated.

What are the implications of the 2501-day contract duration for technological relevance and program management?

A contract duration of 2501 days (approximately 6.85 years) for the THREE-DIMENSIONAL EXPEDITIONARY LONG-RANGE RADAR SYSTEM presents both opportunities and challenges. On the positive side, it allows for a sustained development, production, and integration effort, which is often necessary for complex, cutting-edge technologies. This extended period can facilitate thorough testing, refinement, and adaptation to evolving operational requirements. However, a significant risk associated with such a long duration is technological obsolescence. The pace of technological advancement, particularly in areas like radar and sensor technology, is rapid. By the time the system is fully delivered and operational, its core components or capabilities might be nearing the end of their effective lifecycle, or newer, more advanced technologies may have emerged. Program management must actively address this by incorporating provisions for technology refresh, modular design, and continuous upgrades throughout the contract period to ensure the system remains relevant and effective.

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: FA873020R0023

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 497 ELECTRONICS PKWY BLDG 5, LIVERPOOL, NY, 13088

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: $947,330,579

Exercised Options: $553,057,429

Current Obligation: $484,097,889

Subaward Activity

Number of Subawards: 422

Total Subaward Amount: $124,419,191

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline