DoD Awards $2B for AEHF SV5/6 Production to Lockheed Martin, Raising Concerns Over Competition
Contract Overview
Contract Amount: $2,011,989,207 ($2.0B)
Contractor: Lockheed Martin Corp
Awarding Agency: Department of Defense
Start Date: 2012-05-15
End Date: 2021-06-30
Contract Duration: 3,333 days
Daily Burn Rate: $603.7K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: IGF::CT::IGF AEHF SV5/6 PRODUCTION - UCA PARTS
Place of Performance
Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089
Plain-Language Summary
Department of Defense obligated $2.01 billion to LOCKHEED MARTIN CORP for work described as: IGF::CT::IGF AEHF SV5/6 PRODUCTION - UCA PARTS Key points: 1. Significant investment in advanced satellite technology. 2. Sole-source award to Lockheed Martin limits competitive pricing. 3. Long contract duration (2012-2021) may obscure current market value. 4. High value contract warrants close scrutiny of cost efficiency.
Value Assessment
Rating: questionable
The contract value of over $2 billion for AEHF SV5/6 production is substantial. Without competitive bidding, it's difficult to assess if this price reflects fair market value compared to similar advanced satellite manufacturing contracts.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only one vendor, Lockheed Martin, was considered. This significantly limits price discovery and competitive pressure, potentially leading to higher costs for taxpayers.
Taxpayer Impact: The lack of competition in this multi-billion dollar contract raises concerns about taxpayer value and the potential for inflated prices.
Public Impact
Taxpayers may be overpaying due to the absence of competitive bidding. The long-term nature of the contract could mean outdated technology or pricing by the end of its term. Dependence on a single contractor for critical defense assets poses a strategic risk.
Waste & Efficiency Indicators
Waste Risk Score: 75 / 10
Warning Flags
- Sole-source award
- High contract value
- Long contract duration
- Lack of transparency in pricing
Positive Signals
- Essential for national security communications
- Awarded to a known, experienced contractor
Sector Analysis
This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a high-tech and capital-intensive industry. Spending in this area is critical for national defense, but often involves complex, long-term projects with limited competition.
Small Business Impact
The data indicates no specific provisions or set-asides for small businesses in this sole-source award to a large prime contractor.
Oversight & Accountability
Given the sole-source nature and significant value, robust oversight is crucial to ensure cost control and performance. The contract's long duration necessitates continuous monitoring for potential cost overruns or performance issues.
Related Government Programs
- Guided Missile and Space Vehicle Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Sole-source award limits competition and price discovery.
- High contract value warrants scrutiny for cost efficiency.
- Long contract duration may lead to outdated technology or pricing.
- Potential for cost overruns without competitive pressure.
- Lack of small business participation noted.
Tags
guided-missile-and-space-vehicle-manufac, department-of-defense, ca, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $2.01 billion to LOCKHEED MARTIN CORP. IGF::CT::IGF AEHF SV5/6 PRODUCTION - UCA PARTS
Who is the contractor on this award?
The obligated recipient is LOCKHEED MARTIN CORP.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $2.01 billion.
What is the period of performance?
Start: 2012-05-15. End: 2021-06-30.
What was the justification for the sole-source award, and were alternative competitive strategies ever considered?
The justification for a sole-source award typically involves unique capabilities, urgent needs, or a lack of viable alternatives. For a contract of this magnitude and duration, a thorough review of competitive options should have been conducted. Without this information, it's difficult to ascertain if taxpayers received the best possible value or if alternative approaches could have yielded better pricing and innovation.
How does the per-unit cost of these satellites compare to industry benchmarks for similar systems, considering the lack of competition?
Benchmarking the per-unit cost is challenging due to the sole-source nature of this contract. Without competitive bids, there's no direct market comparison. However, an independent cost analysis by the agency or a review of historical pricing for comparable satellite programs could provide insights. The absence of competition inherently raises the risk that the price may be higher than what a competitive environment would yield.
What mechanisms are in place to ensure the effectiveness and continued relevance of the AEHF SV5/6 satellites throughout their operational life, given the long contract period?
The effectiveness and relevance of these satellites depend on robust program management, including provisions for upgrades, maintenance, and adaptation to evolving threats and technological advancements. The long contract duration (2012-2021) suggests a need for clear milestones and performance metrics to ensure the system remains effective. Oversight should focus on lifecycle support and ensuring the technology meets future mission requirements.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing
Product/Service Code: RESEARCH AND DEVELOPMENT › Space R&D Services
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE (L)
Evaluated Preference: NONE
Contractor Details
Address: 1111 LOCKHEED MARTIN WAY BLDG 157, SUNNYVALE, CA, 94089
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $2,089,822,204
Exercised Options: $2,076,322,204
Current Obligation: $2,011,989,207
Actual Outlays: $10,464,083
Subaward Activity
Number of Subawards: 107
Total Subaward Amount: $11,613,358,183
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2012-05-15
Current End Date: 2021-06-30
Potential End Date: 2021-06-30 00:00:00
Last Modified: 2025-05-14
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