DoD's $82.5M Advanced High Frequency Capability Evolution contract awarded to Lockheed Martin

Contract Overview

Contract Amount: $82,508,931 ($82.5M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2022-04-08

End Date: 2024-05-24

Contract Duration: 777 days

Daily Burn Rate: $106.2K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ADVANCED EXTREMELY HIGH FREQUENCY CAPABILITY EVOLUTION PHASE I

Place of Performance

Location: LITTLETON, DOUGLAS County, COLORADO, 80125

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $82.5 million to LOCKHEED MARTIN CORP for work described as: ADVANCED EXTREMELY HIGH FREQUENCY CAPABILITY EVOLUTION PHASE I Key points: 1. Contract awarded on a sole-source basis, limiting competitive price discovery. 2. Significant duration of 777 days suggests a complex and long-term project. 3. Cost-plus-fixed-fee pricing structure may incentivize cost overruns. 4. Engineering services focus indicates a need for specialized technical expertise. 5. Awarded by the Department of the Air Force, aligning with strategic defense priorities. 6. No small business set-aside, potentially impacting opportunities for smaller firms.

Value Assessment

Rating: questionable

The contract's value of $82.5 million for engineering services is substantial. Without comparable sole-source contracts for similar advanced high frequency capability evolution, a precise value-for-money assessment is difficult. The cost-plus-fixed-fee (CPFF) structure, while allowing flexibility for evolving requirements, carries inherent risks of cost escalation compared to fixed-price contracts. Benchmarking against industry standards for similar R&D or engineering services in the defense sector would be necessary for a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of Defense did not conduct a competitive bidding process. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is deemed essential for national security reasons. The absence of competition means that potential cost savings that could arise from a bidding war among multiple vendors were not realized.

Taxpayer Impact: Taxpayers may not have received the best possible price due to the lack of competition. Sole-source awards can sometimes lead to higher costs than if multiple companies had vied for the contract.

Public Impact

Benefits the Department of Defense by advancing high-frequency communication capabilities. Services delivered include engineering and technical expertise for capability evolution. Geographic impact is primarily within the defense sector, supporting national security operations. Workforce implications include specialized engineering roles within Lockheed Martin and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Cost-plus-fixed-fee contract type can incentivize higher spending if not closely managed.
Lack of small business participation noted, potentially limiting broader economic impact.
Long contract duration (777 days) requires sustained oversight to ensure efficiency.

Positive Signals

Award to a major defense contractor (Lockheed Martin) suggests access to advanced technical expertise.
Focus on 'capability evolution' indicates investment in future technological advancements for defense.
Contract is for a specific, high-value defense need, aligning with agency mission.

Sector Analysis

This contract falls within the broader aerospace and defense sector, specifically focusing on advanced communication systems. The market for such specialized engineering services is often dominated by a few large, established defense contractors due to the high barriers to entry, including security clearances, specialized knowledge, and existing relationships with government agencies. Spending in this niche is driven by national security requirements and the continuous need for technological superiority.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. This means that opportunities for small businesses to participate in this specific contract are limited unless they are direct subcontractors to Lockheed Martin. The absence of a small business set-aside means that the direct economic benefits to the small business ecosystem from this particular award are likely minimal.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Accountability measures would be tied to the performance metrics outlined in the cost-plus-fixed-fee agreement and the delivery schedules. Transparency may be limited due to the sole-source nature and the sensitive defense-related aspects of the work. The Inspector General's office for the Department of Defense would have jurisdiction for audits and investigations if any irregularities were suspected.

Related Government Programs

Advanced Communications Systems
Defense Engineering Services
High Frequency Radio Technology
Aerospace and Defense R&D
Lockheed Martin Contracts

Risk Flags

Sole-source award
Cost-plus-fixed-fee pricing
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $82.5 million to LOCKHEED MARTIN CORP. ADVANCED EXTREMELY HIGH FREQUENCY CAPABILITY EVOLUTION PHASE I

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 $82.5 million.

What is the period of performance?

Start: 2022-04-08. End: 2024-05-24.

What is the specific technical objective of the 'Advanced Extremely High Frequency Capability Evolution Phase I'?

The specific technical objective of the 'Advanced Extremely High Frequency Capability Evolution Phase I' contract is to evolve and enhance the capabilities of the Advanced Extremely High Frequency (AEHF) satellite communications system. This system provides secure, global, high-volume communications for national security missions. Phase I likely focuses on research, design, and prototyping of next-generation features, potentially including increased bandwidth, improved anti-jamming capabilities, enhanced data rates, or integration with new platforms. The 'evolution' aspect suggests a continuous improvement process to maintain technological superiority and adapt to evolving threats and operational requirements in a highly specialized domain.

How does the cost-plus-fixed-fee (CPFF) pricing structure compare to other contract types for similar defense engineering projects?

The Cost-Plus-Fixed-Fee (CPFF) pricing structure is common for research and development or complex engineering projects where the scope of work is not fully defined at the outset, or where innovation is a primary goal. Unlike fixed-price contracts, CPFF reimburses the contractor for allowable costs plus a predetermined fixed fee representing profit. This offers flexibility but shifts cost risk to the government. Compared to Cost-Plus-Incentive-Fee (CPIF), CPFF offers less incentive for the contractor to control costs beyond the initial fee. Fixed-Price-Incentive (FPI) or Firm-Fixed-Price (FFP) contracts would place more cost risk on the contractor but might be less suitable for highly uncertain R&D efforts. For defense engineering, CPFF is often chosen when the government needs the contractor's specialized expertise to explore new technological frontiers, accepting the potential for higher costs in exchange for flexibility and access to innovation.

What are the potential risks associated with a sole-source award for advanced defense technology?

Sole-source awards for advanced defense technology carry several potential risks. Primarily, the lack of competition can lead to higher prices than might be achieved through a competitive bidding process, as the contractor faces less pressure to offer the most cost-effective solution. There's also a risk of reduced innovation or efficiency, as the contractor may not feel the same urgency to optimize processes or develop novel approaches without competitive pressure. Furthermore, sole-source awards can create vendor lock-in, making it difficult and costly to switch providers in the future. Dependence on a single supplier can also pose supply chain risks, especially if that supplier encounters financial difficulties or geopolitical challenges. Finally, without competitive benchmarking, it can be harder for the government to objectively assess whether it is receiving fair value for its investment.

What is Lockheed Martin's track record with the Advanced Extremely High Frequency (AEHF) program?

Lockheed Martin has a significant and established track record with the Advanced Extremely High Frequency (AEHF) program. They have served as the prime contractor for the AEHF satellite constellation, responsible for the design, development, manufacturing, and integration of the satellites themselves. This includes delivering multiple operational satellites to the U.S. Air Force. Their extensive experience encompasses the complex engineering, testing, and launch support required for such a critical national security asset. Therefore, awarding this follow-on 'capability evolution' contract to Lockheed Martin is logical, leveraging their deep institutional knowledge and proven performance on the foundational AEHF system.

How does this contract's value and duration compare to other recent engineering services contracts within the Department of Defense?

The $82.5 million value and 777-day duration for this sole-source engineering services contract are substantial but not entirely out of line for specialized defense technology development. Many major defense programs involve multi-year, multi-million dollar contracts for system development and sustainment. For instance, contracts for developing new aircraft, missile systems, or advanced communication networks often run into hundreds of millions or billions of dollars over several years. However, compared to more routine engineering support services or contracts competed broadly, this specific award's value and duration, especially given its sole-source nature, warrant scrutiny. It suggests a high degree of technical specialization and criticality, likely involving proprietary technology or unique expertise held by Lockheed Martin.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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: $83,707,761

Exercised Options: $83,707,761

Current Obligation: $82,508,931

Subaward Activity

Number of Subawards: 73

Total Subaward Amount: $7,798,358

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA882320D0001

IDV Type: IDC

Timeline