Lockheed Martin awarded $155M contract for Air Force search and detection systems

Contract Overview

Contract Amount: $15,500,000 ($15.5M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2008-10-22

End Date: 2010-10-21

Contract Duration: 729 days

Daily Burn Rate: $21.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: COST PLUS INCENTIVE

Sector: Defense

Official Description: SASSA

Place of Performance

Location: LITTLETON, JEFFERSON County, COLORADO, 80127

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $15.5 million to LOCKHEED MARTIN CORP for work described as: SASSA Key points: 1. Contract value represents a significant investment in advanced aerospace technology. 2. Full and open competition suggests a robust market for these specialized systems. 3. Potential for cost overruns exists given the Cost Plus Incentive pricing structure. 4. Contract duration of 729 days indicates a substantial project timeline. 5. The award to a major defense contractor highlights industry consolidation. 6. Focus on search, detection, and navigation systems underscores critical defense capabilities.

Value Assessment

Rating: fair

The contract value of $155 million for search, detection, navigation, guidance, aeronautical, and nautical systems appears to be within a reasonable range for complex defense procurements of this nature. However, without specific details on the scope of work, performance metrics, and the exact nature of the systems being developed or maintained, a precise value-for-money assessment is challenging. The Cost Plus Incentive (CPI) contract type introduces variability in the final cost, making direct comparison to fixed-price contracts difficult. Benchmarking against similar, recent awards for comparable systems would be necessary for a more definitive valuation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited and considered. The presence of 6 bids suggests a competitive environment, which generally favors price discovery and potentially better value for the government. The specific details of the bidding process, including the number of proposals received and the evaluation criteria, would provide further insight into the effectiveness of the competition.

Taxpayer Impact: A competitive bidding process like this one helps ensure that taxpayer funds are used efficiently by driving down costs and encouraging innovative solutions from multiple providers.

Public Impact

The primary beneficiaries are the Department of the Air Force, receiving advanced systems for critical operational needs. Services delivered include the manufacturing or development of search, detection, navigation, guidance, and related aeronautical/nautical instruments. The geographic impact is primarily within the United States, supporting defense operations and potentially involving facilities in Colorado where the contractor is based. Workforce implications include employment opportunities for engineers, technicians, and manufacturing personnel within Lockheed Martin and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Incentive contracts can lead to higher final costs if cost controls are not rigorously managed.
The long contract duration may introduce risks related to technological obsolescence or changing mission requirements.
Reliance on a single, large contractor like Lockheed Martin could limit future competition for related systems.

Positive Signals

Full and open competition suggests a healthy market and potential for competitive pricing.
The award to a reputable defense contractor like Lockheed Martin indicates a high level of technical capability.
The specific nature of the systems (search, detection, navigation) points to critical national security applications.

Sector Analysis

The aerospace and defense sector is characterized by high R&D investment, long product development cycles, and significant government procurement. This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' industry, a specialized segment focused on advanced electronics and systems critical for military operations. Comparable spending in this sector often involves substantial sums due to the complexity and technological sophistication required. Market size for such specialized defense systems is driven by global defense budgets and evolving geopolitical landscapes.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, Lockheed Martin, is a large aerospace and defense company. While there may be subcontracting opportunities for small businesses within the supply chain, the primary award does not directly benefit small businesses through a set-aside. The impact on the small business ecosystem would depend on the extent to which Lockheed Martin engages small businesses as subcontractors for components or specialized services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Given the Cost Plus Incentive pricing structure, rigorous financial oversight and performance monitoring are crucial to ensure cost control and adherence to contract objectives. The Department of Defense's Inspector General may also conduct audits or investigations into contract performance and financial management. Transparency is typically managed through contract reporting mechanisms and program reviews.

Related Government Programs

Air Force Radar Systems
Naval Navigation Systems
Aeronautical Instrument Development
Defense Electronics Manufacturing
Guidance System Procurement

Risk Flags

Cost Plus Incentive contract type requires close monitoring to prevent cost overruns.
Long contract duration may pose risks related to technological relevance.
Sole major contractor award could limit future competitive opportunities.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.5 million to LOCKHEED MARTIN CORP. SASSA

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORP.

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 $15.5 million.

What is the period of performance?

Start: 2008-10-22. End: 2010-10-21.

What is the specific performance history of Lockheed Martin with the Department of Defense on similar contracts?

Lockheed Martin Corporation is a long-standing and major defense contractor with extensive experience across numerous Department of Defense programs. Their performance history is generally characterized by the successful delivery of complex systems, including aircraft, missiles, satellites, and C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance) technologies. However, like any large contractor, they have also faced scrutiny and challenges on specific contracts related to cost overruns, schedule delays, or technical performance issues. A detailed review of their past performance on contracts involving search, detection, and navigation systems, particularly those with Cost Plus Incentive fee structures, would be necessary to fully assess their track record relevant to this specific award. This would involve examining contract close-out data, performance ratings, and any documented disputes or corrective actions.

How does the $155 million award compare to the average cost of similar search and detection systems procured by the DoD?

Benchmarking the $155 million award requires detailed comparison with similar contracts. The North American Industry Classification System (NAICS) code 334511 covers 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing.' Contracts within this category can vary significantly in price based on the specific technology, quantity, and complexity. For instance, a contract for a single, highly advanced radar system would differ vastly from one for a suite of navigation instruments. Without knowing the precise deliverables and technical specifications of this Lockheed Martin contract, it's difficult to provide a precise average. However, the value suggests a significant system or a substantial quantity of instruments. A thorough analysis would involve querying federal procurement databases (like FPDS or SAM.gov) for contracts under NAICS 334511 awarded over the past 3-5 years, filtering by similar contract types (e.g., CPIF) and agencies, and then comparing the total award amounts and per-unit costs, if available.

What are the primary risks associated with the Cost Plus Incentive (CPI) contract type for this procurement?

The Cost Plus Incentive (CPI) contract type, while designed to incentivize cost efficiency, carries inherent risks for the government. The primary risk is that the final contract cost could exceed initial estimates if the contractor does not effectively manage expenses or if the incentive targets are not structured optimally. The government bears the risk of cost overruns, as the contractor is reimbursed for allowable costs plus a fee that is adjusted based on performance against targets. For this specific contract, risks include potential for scope creep, inadequate cost tracking by the contractor, and the possibility that the incentive structure may not sufficiently motivate the contractor to achieve the lowest possible cost while meeting stringent performance requirements. Rigorous oversight and clear definition of cost and performance targets are essential to mitigate these risks.

What is the historical spending trend for search, detection, and navigation systems by the Department of the Air Force?

Historical spending by the Department of the Air Force (DAF) on search, detection, and navigation systems has been substantial and generally follows trends in defense modernization and operational requirements. These systems are critical for air superiority, intelligence gathering, and safe flight operations. Spending in this category has likely seen fluctuations driven by specific program needs, such as upgrades to existing platforms, development of new technologies (e.g., advanced radar, electronic warfare systems, GPS augmentation), and the lifecycle replacement of aging equipment. Analyzing procurement data over the past decade would reveal patterns of investment in different types of systems. For example, periods of heightened geopolitical tension or the introduction of new threats often correlate with increased spending on advanced sensor and navigation technologies. The $155 million award to Lockheed Martin fits within this broader context of ongoing DAF investment in critical avionics and sensor capabilities.

How does the number of bidders (6) impact the potential for cost savings and innovation in this contract?

A competition with 6 bidders, as indicated for this contract, generally suggests a healthy and competitive market for the specified systems. A higher number of bidders typically increases the likelihood that the government will receive competitive pricing, as companies vie for the award. It also fosters innovation, as contractors are motivated to offer unique or superior technical solutions to differentiate themselves. In this case, having six proposals likely provided the Department of the Air Force with a range of options and price points, enabling a more informed selection process. This level of competition is generally viewed positively from a taxpayer perspective, as it helps ensure that the chosen solution represents good value and that the government is not unduly disadvantaged by a lack of alternatives. However, the ultimate impact on cost savings and innovation also depends on the evaluation criteria used and the specific capabilities proposed by each bidder.

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: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 6

Pricing Type: COST PLUS INCENTIVE (V)

Evaluated Preference: NONE

Contractor Details

Address: 12257 STATE HWY, LITTLETON, CO, 90

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $28,502,340

Exercised Options: $28,502,340

Current Obligation: $15,500,000

Contract Characteristics

Cost or Pricing Data: YES

Timeline