DoD's $19.6M GPS IIR/M Operations Contract Awarded to Lockheed Martin Amidst Limited Competition

Contract Overview

Contract Amount: $19,563,758 ($19.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2010-06-30

End Date: 2013-01-31

Contract Duration: 946 days

Daily Burn Rate: $20.7K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: GPS IIR/M ON-ORBIT OPERATIONS CONTRACT

Place of Performance

Location: LITTLETON, DOUGLAS County, COLORADO, 80125

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $19.6 million to LOCKHEED MARTIN CORPORATION for work described as: GPS IIR/M ON-ORBIT OPERATIONS CONTRACT Key points: 1. Contract value represents a significant investment in maintaining critical satellite navigation capabilities. 2. The award to a single, established prime contractor suggests a focus on specialized expertise. 3. Limited competition raises questions about potential price efficiencies and alternative solutions. 4. The contract duration of nearly three years indicates a sustained need for these operational services. 5. Performance context is crucial given the strategic importance of GPS for military and civilian use. 6. Sector positioning highlights the dominance of large aerospace and defense firms in space operations.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without detailed cost breakdowns. The $19.6 million over approximately three years for on-orbit operations of GPS satellites suggests a substantial per-satellite operational cost. Comparing this to industry averages for satellite operations, which can range from hundreds of thousands to millions annually per satellite depending on complexity and services, indicates this contract is within a plausible, albeit high-end, range for sophisticated defense systems. However, the lack of competitive bidding limits the ability to definitively assess if the price represents optimal value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' which implies that while a competition was held, certain sources were excluded, leading to a limited pool of bidders. This specific designation suggests that initial broad solicitations may have occurred, but ultimately, only a select few were deemed eligible or capable of performing the specialized services required for GPS IIR/M on-orbit operations. The limited nature of the competition means that the government may not have benefited from the full spectrum of potential bidders, potentially impacting price discovery and the range of innovative solutions considered.

Taxpayer Impact: Taxpayers may have paid a premium due to the restricted competition. The exclusion of potential bidders could have led to higher prices than might have been achieved in a truly open market, as the primary contractor faced less pressure to offer the most competitive bid.

Public Impact

The primary beneficiaries are the U.S. military, which relies on GPS for navigation, targeting, and situational awareness. Civilian users, including commercial aviation, maritime operations, and emergency services, also benefit from the continuous availability of GPS signals. The contract ensures the ongoing functionality of the GPS IIR/M satellite constellation, a critical component of national infrastructure. Workforce implications include continued employment for specialized engineers, technicians, and support staff at Lockheed Martin and its subcontractors involved in satellite operations and maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may have resulted in higher costs for taxpayers.
The 'exclusion of sources' clause warrants further investigation into the rationale and impact on market access.
Lack of transparency in the competitive process could obscure potential inefficiencies.

Positive Signals

Award to a single, experienced contractor ensures continuity of critical GPS operations.
The contract addresses the ongoing need for sophisticated satellite maintenance and control.
The use of a definitive contract provides a clear framework for service delivery.

Sector Analysis

The space operations sector, particularly for defense applications, is characterized by high barriers to entry, significant technological complexity, and a limited number of highly specialized contractors. Companies like Lockheed Martin are dominant players, often holding long-term contracts for the development, manufacturing, and sustainment of critical space assets. Spending in this area is driven by national security requirements and the need to maintain a technological edge. Comparable spending benchmarks are difficult to establish publicly due to the classified nature of some operations, but contracts for satellite operations and sustainment typically represent substantial, multi-year investments.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, Lockheed Martin, is a large aerospace and defense corporation. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan and its impact on the small business ecosystem are not detailed in the provided data. Without this information, it's difficult to assess the extent to which this contract supports or hinders small business participation in the defense space sector.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractors meet performance and cost requirements. The contract type (Cost Plus Fixed Fee) necessitates close monitoring of costs to ensure they remain within the agreed-upon fixed fee. Transparency is generally limited for defense contracts of this nature, but reporting requirements and audits would be in place to ensure accountability. The Inspector General for the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

GPS Control Segment Modernization
Space-Based PNT (Positioning, Navigation, and Timing) Programs
Satellite Operations and Maintenance Contracts
DoD Space Systems Command Contracts

Risk Flags

Limited competition may lead to higher costs.
Contractor dependency risk.
Potential for cost overruns in CPFF structure without stringent oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.6 million to LOCKHEED MARTIN CORPORATION. GPS IIR/M ON-ORBIT OPERATIONS CONTRACT

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 $19.6 million.

What is the period of performance?

Start: 2010-06-30. End: 2013-01-31.

What is the specific rationale behind the 'exclusion of sources' in the competition for this GPS operations contract?

The 'exclusion of sources' designation indicates that while a competitive process was intended, certain potential bidders were not considered. This could be due to several factors, including highly specialized technical requirements that only a limited number of companies possess, proprietary technology involved in the GPS IIR/M system that restricts access, or previous performance issues with other potential contractors. Without further documentation from the contracting agency, the precise reasons remain unclear. However, such exclusions typically aim to ensure that only technically capable and secure entities are awarded contracts for critical national security assets like the GPS constellation. This approach prioritizes system integrity and operational reliability over broad market competition, potentially at the expense of cost savings.

How does the Cost Plus Fixed Fee (CPFF) contract structure impact cost control and contractor incentive for this GPS operations contract?

A Cost Plus Fixed Fee (CPFF) contract structure means the contractor (Lockheed Martin) is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used when the scope of work is well-defined but there's uncertainty in the exact costs, such as in ongoing operations. For cost control, the government's oversight is critical to ensure that only reasonable and allocable costs are reimbursed. The fixed fee provides some incentive for the contractor to manage costs efficiently, as any savings below the estimated cost do not increase their fee, and cost overruns do not increase their fee either. However, the primary incentive for efficiency might be weaker compared to fixed-price contracts, as the contractor is guaranteed to cover their costs and receive a set profit regardless of minor cost fluctuations.

What are the key performance indicators (KPIs) used to measure the success of Lockheed Martin's on-orbit operations for the GPS IIR/M satellites under this contract?

While specific KPIs are not detailed in the provided data, typical performance indicators for satellite operations contracts include satellite availability (uptime), signal accuracy and integrity, anomaly resolution time, adherence to mission schedules, and compliance with operational procedures. For a critical system like GPS, maintaining a high level of continuous service availability and signal precision is paramount. The contract likely specifies acceptable thresholds for these metrics, with potential penalties or incentives tied to performance. The Defense Contract Management Agency (DCMA) would be responsible for monitoring Lockheed Martin's adherence to these KPIs throughout the contract duration.

What is the historical spending trend for GPS IIR/M on-orbit operations, and how does this $19.6 million contract compare?

The provided data only details this specific contract award from June 2010 to January 2013 for $19.6 million. To establish a historical spending trend, data from previous contracts for the operation and maintenance of the GPS IIR/M constellation would be required. This would involve analyzing spending patterns over multiple years and potentially across different contractors if the operations were previously managed by other entities. Without this broader historical context, it's difficult to definitively state whether this $19.6 million award represents an increase, decrease, or stable level of spending compared to prior periods. However, the consistent need for such operations suggests ongoing, significant budgetary allocation for GPS sustainment.

What are the potential risks associated with relying on a single contractor, Lockheed Martin, for the critical on-orbit operations of the GPS IIR/M constellation?

Relying on a single contractor like Lockheed Martin for critical on-orbit operations presents several potential risks. Firstly, there's a risk of vendor lock-in, where the government becomes heavily dependent on the contractor's expertise and infrastructure, making it difficult and costly to switch providers if performance issues arise or better alternatives emerge. Secondly, reduced competition can lead to complacency and potentially higher costs over time, as the contractor may face less pressure to innovate or optimize operations. Thirdly, a single point of failure exists; any significant operational issues, financial instability, or security breaches within the contractor's organization could directly impact the availability and reliability of the GPS constellation, with severe national security and economic consequences.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 100 CAMPUS DR, NEWTOWN, PA, 18940

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $21,316,813

Exercised Options: $21,316,813

Current Obligation: $19,563,758

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline