DoD's GPS Control Segment II contract awarded to Lockheed Martin for $86.9M, with no competition

Contract Overview

Contract Amount: $86,899,749 ($86.9M)

Contractor: Lockheed Martin Services, LLC

Awarding Agency: Department of Defense

Start Date: 2019-01-01

End Date: 2019-12-31

Contract Duration: 364 days

Daily Burn Rate: $238.7K/day

Competition Type: NOT COMPETED

Pricing Type: COST NO FEE

Sector: Defense

Official Description: GLOBAL POSITIONING SYSTEM CONTROL SEGMENT II

Place of Performance

Location: COLORADO SPRINGS, EL PASO County, COLORADO, 80916

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $86.9 million to LOCKHEED MARTIN SERVICES, LLC for work described as: GLOBAL POSITIONING SYSTEM CONTROL SEGMENT II Key points: 1. Value for money is difficult to assess due to the lack of competition. 2. Competition dynamics show a sole-source award, raising concerns about price discovery. 3. Risk indicators include potential for cost overruns without competitive pressure. 4. Performance context is tied to the critical Global Positioning System. 5. Sector positioning is within the defense and telecommunications industry.

Value Assessment

Rating: questionable

Benchmarking the value for this contract is challenging given the sole-source nature. Without competitive bids, it's difficult to determine if the $86.9 million price reflects a fair market value. The contract type (COST NO FEE) suggests the government bears the risk of cost overruns, which is a significant factor when competition is absent. Further analysis would require comparing the scope of work and deliverables to similar, competitively awarded contracts in the defense telecommunications sector.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This typically occurs when a specific contractor possesses unique capabilities or when urgency dictates a rapid award. The lack of multiple bidders means that the government did not benefit from the price reductions and innovation that can arise from a competitive bidding process. This raises questions about whether the most cost-effective solution was secured.

Taxpayer Impact: Taxpayers may have paid a premium for this contract due to the absence of competitive pressure. Without competing offers, there is less incentive for the contractor to offer the lowest possible price.

Public Impact

The primary beneficiary is the Department of Defense, which relies on the Global Positioning System for critical operations. Services delivered include the operation and maintenance of the GPS Control Segment. Geographic impact is national, supporting a vital defense and civilian infrastructure. Workforce implications involve specialized technical roles within Lockheed Martin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Lack of competition may reduce incentives for contractor innovation and efficiency.
Contract type (COST NO FEE) shifts cost overrun risk to the government.

Positive Signals

Award to an incumbent contractor may ensure continuity of critical GPS operations.
Lockheed Martin's established expertise in defense systems suggests technical capability.

Sector Analysis

The Global Positioning System (GPS) is a cornerstone of modern navigation and timing, with significant implications for defense, civilian, and commercial sectors. The control segment is crucial for maintaining the accuracy and integrity of the GPS constellation. Spending in this area is typically concentrated among a few large defense contractors with specialized expertise. Benchmarking this contract's value is difficult without comparable sole-source awards, but the overall defense IT and telecommunications market is substantial.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by the 'sb' field being false. Furthermore, the 'ss' field is also false, suggesting no specific small business subcontracting goals were mandated. This means that opportunities for small businesses to participate in this specific contract are likely limited, and the primary benefits will accrue to the large prime contractor.

Oversight & Accountability

Oversight for this contract would fall under the Department of Defense's contracting and program management offices. Accountability measures would be defined in the contract terms and conditions. Transparency is limited by the sole-source nature of the award, making public scrutiny of the pricing and justification more difficult. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse.

Related Government Programs

Global Positioning System (GPS)
Defense Satellite Communications
Military Navigation Systems
Telecommunications Infrastructure

Risk Flags

Sole-source award
Lack of competition
Cost-reimbursable contract type (potential for cost growth)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $86.9 million to LOCKHEED MARTIN SERVICES, LLC. GLOBAL POSITIONING SYSTEM CONTROL SEGMENT II

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN SERVICES, LLC.

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 $86.9 million.

What is the period of performance?

Start: 2019-01-01. End: 2019-12-31.

What is the historical spending trend for the GPS Control Segment II contract with Lockheed Martin?

Historical spending data for the GPS Control Segment II contract with Lockheed Martin is not directly available in the provided snippet. However, the current award of $86.9 million for a 364-day duration (2019-01-01 to 2019-12-31) suggests a significant annual investment. To understand historical trends, one would need to access contract databases for previous awards to Lockheed Martin or other contractors for similar GPS control segment functions. Analyzing year-over-year spending, contract modifications, and the evolution of the scope of work would provide a clearer picture of the program's financial trajectory and the government's long-term commitment to this capability.

How does the cost per day for this contract compare to similar government contracts?

The provided data indicates a contract value of $86,899,749.28 over 364 days. This equates to a daily cost of approximately $238,736. Comparing this 'per-unit cost' (in this case, per day) to similar government contracts requires access to a broader dataset of defense telecommunications or satellite operations contracts. Without such comparative data, it is difficult to definitively state whether this daily rate is high, low, or average. Factors such as the complexity of the services, the criticality of the system, and the specific technologies involved would influence cost. The sole-source nature of this award also complicates direct cost comparisons, as competitive pressures are absent.

What are the specific risks associated with a sole-source award for critical defense infrastructure like the GPS Control Segment?

Sole-source awards for critical defense infrastructure like the GPS Control Segment carry several inherent risks. Firstly, the absence of competition can lead to inflated prices, as the contractor faces less pressure to offer the most cost-effective solution. Secondly, it can stifle innovation, as the contractor may have less incentive to develop more efficient or advanced methods without the threat of losing a future contract to a competitor. Thirdly, there's a risk of vendor lock-in, where the government becomes overly reliant on a single provider, making it difficult and costly to switch providers even if performance or pricing becomes unsatisfactory. Finally, without competitive benchmarking, it's harder to ensure the government is receiving optimal value for its investment, potentially impacting budget allocation for other defense priorities.

What is Lockheed Martin's track record with GPS contracts and related defense systems?

Lockheed Martin has a long and extensive track record with the Global Positioning System (GPS) and other critical defense systems. The company has been a key player in the development, manufacturing, and sustainment of GPS satellites and ground control systems for decades. Their involvement spans multiple generations of GPS technology, including the current GPS III program. This deep historical involvement suggests a high level of technical expertise and institutional knowledge regarding the complexities of the GPS architecture. Their consistent selection for major GPS-related contracts underscores their perceived capability and reliability within the Department of Defense and other government agencies for space-based and navigation systems.

How does the 'COST NO FEE' contract type impact government oversight and contractor incentives?

The 'COST NO FEE' (Cost Without Fee) contract type significantly alters the risk and incentive structure compared to fixed-price contracts. In this arrangement, the contractor is reimbursed for all allowable costs incurred in performing the contract, but receives no additional profit or fee. This places the financial risk of cost overruns squarely on the government. For the contractor, the primary incentive is to complete the work and be reimbursed for costs, rather than to minimize costs to maximize profit. This necessitates robust government oversight to scrutinize costs, ensure they are reasonable and allocable to the contract, and prevent potential inefficiencies or unnecessary expenditures. The government must actively manage the contract to control costs, as the contractor has limited financial incentive to do so.

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

Solicitation ID: FA882317R0006

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 480 WOOTEN RD STE 104, COLORADO SPRINGS, CO, 80916

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: $88,414,586

Exercised Options: $88,414,586

Current Obligation: $86,899,749

Actual Outlays: $-658

Subaward Activity

Number of Subawards: 243

Total Subaward Amount: $134,999,408

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA882319D0001

IDV Type: IDC

Timeline