DoD's $124M GPS satellite contract awarded to Lockheed Martin without competition
Contract Overview
Contract Amount: $124,295,850 ($124.3M)
Contractor: Lockheed Martin Corp
Awarding Agency: Department of Defense
Start Date: 2018-03-01
End Date: 2023-10-31
Contract Duration: 2,070 days
Daily Burn Rate: $60.0K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: IGF::OT::IGF GLOBAL POSITIONING SYSTEM IIR/IIR-M/III
Place of Performance
Location: LITTLETON, DOUGLAS County, COLORADO, 80125
State: Colorado Government Spending
Plain-Language Summary
Department of Defense obligated $124.3 million to LOCKHEED MARTIN CORP for work described as: IGF::OT::IGF GLOBAL POSITIONING SYSTEM IIR/IIR-M/III Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, indicating potential for cost overruns. 2. Sole-source award limits price discovery and potentially increases costs for taxpayers. 3. Long contract duration of 2070 days suggests a significant, ongoing program requirement. 4. The contract falls under 'All Other Telecommunications' NAICS code, lacking specific sector detail. 5. No small business set-aside was applied, potentially limiting opportunities for smaller firms.
Value Assessment
Rating: questionable
This contract's value is difficult to benchmark due to its sole-source nature and the specific nature of GPS satellite technology. The cost-plus-fixed-fee structure inherently carries more risk for the government compared to fixed-price contracts, as the contractor is reimbursed for allowable costs plus a fixed fee. Without competitive bids, it's challenging to ascertain if the pricing reflects fair market value or if there were opportunities for cost savings through negotiation.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only one bidder, Lockheed Martin Corp, was solicited. This approach is typically used when only one responsible source is available or when a compelling justification exists for not seeking competition. The lack of multiple bidders means there was no direct price comparison or negotiation leverage derived from a competitive environment, which can lead to higher prices.
Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as the government does not benefit from the price reductions typically driven by competitive bidding processes.
Public Impact
The Department of the Air Force benefits from the continued operation and enhancement of GPS satellites. Services delivered include the development, production, and sustainment of GPS satellites. The geographic impact is global, as GPS technology supports a wide range of civilian and military applications worldwide. Workforce implications include highly skilled engineers, technicians, and program managers within Lockheed Martin and its subcontractors.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pressure on pricing.
- Cost-plus-fixed-fee contract type introduces potential for cost overruns.
- Lack of small business participation noted.
- Long contract duration may obscure performance issues over time.
Positive Signals
- Awarded to a known prime contractor with extensive experience in aerospace and defense.
- Contract supports a critical national security and civilian infrastructure program (GPS).
- Definitive contract type provides a framework for ongoing work.
Sector Analysis
The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product development cycles. Contracts for satellite systems, like this one for GPS, represent a substantial portion of government spending within this sector. Benchmarking is difficult due to the specialized nature of the technology and the limited number of prime contractors capable of undertaking such complex projects. The market is heavily influenced by government procurement policies and national security requirements.
Small Business Impact
This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses indicated in the provided data. The prime contractor, Lockheed Martin, is a large aerospace and defense company. While large prime contractors often engage small businesses as subcontractors, the absence of a specific set-aside or explicit subcontracting goals in this data suggests that direct opportunities for small businesses through this specific award may be limited, though they could still be involved further down the supply chain.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices, with potential involvement from the Air Force's Inspector General. The cost-plus-fixed-fee nature necessitates robust financial oversight to ensure costs are allowable and reasonable. Transparency is often limited for sole-source defense contracts due to national security considerations, but reporting requirements on cost and performance are usually mandated.
Related Government Programs
- GPS Modernization Program
- Space-Based Positioning, Navigation, and Timing (PNT) Systems
- National Security Space Launch Program
- Defense Satellite Communications Systems
Risk Flags
- Sole-source award
- Cost-plus-fixed-fee contract type
- Lack of competition
- Potential for cost overruns
Tags
defense, department-of-defense, department-of-the-air-force, lockheed-martin-corp, sole-source, definitive-contract, cost-plus-fixed-fee, telecommunications, satellite-technology, national-security, colorado, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $124.3 million to LOCKHEED MARTIN CORP. IGF::OT::IGF GLOBAL POSITIONING SYSTEM IIR/IIR-M/III
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 $124.3 million.
What is the period of performance?
Start: 2018-03-01. End: 2023-10-31.
What is Lockheed Martin's track record with similar GPS satellite contracts?
Lockheed Martin has a long and established history as a prime contractor for the Global Positioning System (GPS) program. They have been involved in the development and production of various GPS satellite generations, including GPS IIR, IIR-M, and the current GPS III program. Their extensive experience includes designing, manufacturing, testing, and integrating complex satellite systems. This deep institutional knowledge and past performance are likely key factors contributing to their selection as the sole-source provider for this contract, as they possess the specialized expertise and infrastructure required for such critical national security assets. Their historical performance on previous GPS contracts would have been a significant consideration in the decision to award this contract without further competition.
How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for satellite development?
The Cost-Plus-Fixed-Fee (CPFF) contract type is common for research and development or complex projects where the scope is not fully defined at the outset, or where innovation is a primary driver. In a CPFF contract, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This contrasts with fixed-price contracts, where the price is set upfront, and the contractor assumes more risk for cost overruns. While CPFF offers flexibility and encourages innovation by reducing contractor risk, it places a greater burden on the government to monitor costs and ensure they are reasonable and allocable. For satellite development, especially for advanced systems like GPS, CPFF can be advantageous if the technical challenges are significant and unpredictable, but it requires stringent oversight to prevent cost escalation.
What are the primary risks associated with sole-source awards for major defense systems?
Sole-source awards for major defense systems carry several inherent risks. The most significant is the lack of price competition, which can lead to inflated costs for the government and taxpayers, as there is no market pressure to drive down prices. Without competing bids, the government may not achieve the best possible value. Another risk is reduced innovation; without the incentive of winning a competitive contract, contractors may be less motivated to develop novel or cost-saving approaches. Furthermore, sole-source awards can create vendor lock-in, making it difficult and costly to switch providers in the future. There's also a potential for complacency on the part of the awarded contractor, as they face no direct threat of losing future business to competitors for that specific program.
What is the typical lifecycle cost for a GPS satellite program, and how does this contract fit?
The lifecycle cost for a GPS satellite program is substantial, encompassing research and development, procurement of multiple satellites, launch services, and decades of sustainment and operations. The total program cost can easily run into tens of billions of dollars over its lifespan. This specific contract, valued at approximately $124 million, likely represents a portion of the overall GPS program, potentially for the development, production, or sustainment of a specific set of satellites (e.g., GPS IIR/IIR-M/III). It is not the total program cost but rather a component contract. Understanding its place within the larger program is crucial for assessing its true value and impact on overall government spending for GPS capabilities.
Are there any specific performance metrics or Key Performance Indicators (KPIs) associated with this contract?
The provided data does not explicitly detail the specific performance metrics or Key Performance Indicators (KPIs) for this contract. However, for a critical system like GPS, performance is paramount. Typical KPIs would likely include satellite reliability, orbital accuracy, signal availability and strength, operational lifespan, and adherence to program milestones. Given the sole-source and CPFF nature, the contract would still mandate rigorous testing, quality assurance, and reporting to ensure the satellites meet stringent military and civilian requirements. The Air Force would have oversight mechanisms to track progress against these unstated but critical performance standards.
Industry Classification
NAICS: Information › Other Telecommunications › All Other Telecommunications
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
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
Address: 12257 S WADSWORTH BLVD, LITTLETON, CO, 80125
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $191,779,012
Exercised Options: $124,295,850
Current Obligation: $124,295,850
Actual Outlays: $6,047,650
Subaward Activity
Number of Subawards: 78
Total Subaward Amount: $431,280,527
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2018-03-01
Current End Date: 2023-10-31
Potential End Date: 2023-10-31 00:00:00
Last Modified: 2025-04-22
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