DoD's $193.7M Advanced Technology Support Program contract awarded to Lockheed Martin for microelectronics

Contract Overview

Contract Amount: $19,367,952 ($19.4M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2024-08-12

End Date: 2026-08-31

Contract Duration: 749 days

Daily Burn Rate: $25.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: THE ADVANCED TECHNOLOGY SUPPORT PROGRAM (ATSP) CONTRACT ACQUIRES PROGRESSIVE MICROELECTRONIC CAPABILITY SOLUTIONS FOR SYSTEM DEVELOPMENT, INTEGRATION AND TEST.

Place of Performance

Location: OWEGO, TIOGA County, NEW YORK, 13827

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $19.4 million to LOCKHEED MARTIN CORPORATION for work described as: THE ADVANCED TECHNOLOGY SUPPORT PROGRAM (ATSP) CONTRACT ACQUIRES PROGRESSIVE MICROELECTRONIC CAPABILITY SOLUTIONS FOR SYSTEM DEVELOPMENT, INTEGRATION AND TEST. Key points: 1. Contract aims to acquire progressive microelectronic capability solutions for system development, integration, and testing. 2. Awarded to Lockheed Martin Corporation, a major defense contractor. 3. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed carefully. 4. Duration of 749 days suggests a significant, multi-year effort. 5. The contract is for Engineering Services, aligning with the Defense Microelectronics Activity's mission. 6. This award represents a substantial investment in advanced microelectronics for defense applications.

Value Assessment

Rating: fair

The contract's Cost Plus Fixed Fee structure warrants careful monitoring to ensure value for money, as it incentivizes cost incurrence. Benchmarking this specific type of advanced microelectronics R&D against similar DoD contracts is challenging due to the specialized nature of the work. However, the fixed fee component provides some cost control, and the duration suggests a comprehensive scope that may justify the investment if successful.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. This competitive process is generally expected to yield fair pricing and innovative solutions. The number of bidders is not specified, but the full and open nature suggests a robust competition.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it promotes a competitive environment that can drive down costs and encourage efficiency.

Public Impact

The Department of Defense benefits from enhanced microelectronic capabilities for its systems. Services delivered include system development, integration, and testing of advanced technologies. The geographic impact is primarily within New York, where the contractor is located. Workforce implications include employment for engineers and technical specialists in the microelectronics sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can sometimes lead to higher costs than fixed-price contracts if not managed diligently.
The specialized nature of microelectronics research and development may present inherent technical risks.
Reliance on a single large prime contractor, Lockheed Martin, could limit broader industry engagement if not managed for subcontracting opportunities.

Positive Signals

Awarded through full and open competition, suggesting a competitive process that should yield good value.
The contract focuses on advanced technology, potentially leading to significant improvements in defense capabilities.
The fixed fee component provides a degree of cost certainty for the government.

Sector Analysis

The defense microelectronics sector is critical for national security, encompassing the design, development, and manufacturing of advanced semiconductor technologies. This contract fits within the broader landscape of DoD investments aimed at maintaining technological superiority. Comparable spending benchmarks are difficult to ascertain due to the highly specialized and often classified nature of microelectronics R&D, but significant government funding is consistently allocated to this area.

Small Business Impact

The contract indicates no specific small business set-aside (ss: false, sb: false). This suggests that small businesses may not be directly benefiting from this prime award. However, Lockheed Martin, as a large prime contractor, may engage small businesses as subcontractors, which could provide opportunities within the small business ecosystem. Further analysis of subcontracting plans would be needed to assess the full impact.

Oversight & Accountability

Oversight mechanisms for this Cost Plus Fixed Fee contract would typically involve rigorous financial and performance monitoring by the Defense Contract Management Agency (DCMA) and the contracting officer's representative (COR). Transparency is facilitated through reporting requirements outlined in the contract. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Advanced Research Projects Agency (DARPA) programs
Other Transaction Agreements for prototyping
Strategic Technology Maturation Programs

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight to manage potential cost overruns.
Advanced technology development inherently carries technical risks and uncertainties.
The specialized nature of the work may limit the pool of potential bidders and subcontractors.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.4 million to LOCKHEED MARTIN CORPORATION. THE ADVANCED TECHNOLOGY SUPPORT PROGRAM (ATSP) CONTRACT ACQUIRES PROGRESSIVE MICROELECTRONIC CAPABILITY SOLUTIONS FOR SYSTEM DEVELOPMENT, INTEGRATION AND TEST.

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 Microelectronics Activity).

What is the total obligated amount?

The obligated amount is $19.4 million.

What is the period of performance?

Start: 2024-08-12. End: 2026-08-31.

What is Lockheed Martin's track record with similar advanced technology development contracts for the DoD?

Lockheed Martin Corporation has a long and extensive track record of developing and delivering advanced technological solutions for the Department of Defense across numerous domains, including aerospace, defense systems, and information technology. They are a prime contractor on many large-scale, complex programs. Their experience with microelectronics, while perhaps less publicly visible than their aircraft programs, is substantial given their role in integrated defense systems. Analyzing their past performance on Cost Plus Fixed Fee contracts, specifically those involving R&D and advanced technology, would be crucial. This would involve reviewing contract close-out data, performance evaluations, and any documented issues related to cost overruns or schedule delays on similar projects to gauge their reliability and efficiency in managing such endeavors.

How does the pricing structure (Cost Plus Fixed Fee) compare to other microelectronics development contracts?

The Cost Plus Fixed Fee (CPFF) pricing structure is common for research and development (R&D) and complex system integration efforts where the final costs are difficult to predict at the outset. In CPFF contracts, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. Compared to fixed-price contracts, CPFF offers flexibility for evolving requirements but can be more susceptible to cost growth if not tightly managed. For advanced microelectronics development, where innovation and unforeseen technical challenges are inherent, CPFF is often chosen to incentivize the contractor to pursue solutions without being overly constrained by a rigid price. However, it places a greater burden on the government to meticulously track costs and ensure efficiency. Benchmarking against other DoD microelectronics R&D contracts would reveal if the fixed fee percentage and the overall cost projections are in line with industry norms for similar scope and risk.

What are the primary technical risks associated with developing progressive microelectronic capabilities?

Developing 'progressive microelectronic capabilities' entails significant technical risks inherent in cutting-edge semiconductor technology. These risks include challenges in achieving desired performance metrics (speed, power consumption, density), material science limitations, manufacturing yield issues, integration complexities with existing systems, and the rapid pace of technological obsolescence. For instance, achieving breakthroughs in areas like advanced lithography, novel transistor architectures, or specialized chip designs for defense applications often involves extensive R&D with uncertain outcomes. The contract's focus on system development, integration, and test suggests that risks extend beyond pure chip design to ensuring these advanced components function reliably within larger, complex defense platforms. Mitigation strategies would involve robust testing protocols, phased development, and close collaboration between the contractor and government engineers.

What is the expected impact of this contract on the future of defense microelectronics?

This contract is expected to significantly advance the Department of Defense's microelectronic capabilities, which are foundational to nearly all modern defense systems, from communication and intelligence to weapons platforms and cyber warfare. By acquiring 'progressive microelectronic capability solutions,' the DoD aims to stay ahead of adversaries in terms of technological performance, security, and resilience. Success in this program could lead to the development of next-generation processors, sensors, and specialized chips that offer enhanced speed, reduced power consumption, improved resistance to electronic warfare, and greater security against tampering. This investment is crucial for maintaining a technological edge and ensuring the effectiveness of future military operations in an increasingly complex threat environment.

How has spending on advanced microelectronics for defense evolved over the past five years?

Spending on advanced microelectronics for defense has been a consistent priority for the DoD, driven by the need to maintain technological superiority and address evolving threats. While specific figures for 'advanced microelectronics capability solutions' can be difficult to isolate due to categorization, overall DoD investment in R&D, electronics, and related systems has been substantial and generally increasing. Recent years have seen a heightened focus on securing the defense supply chain, particularly for semiconductors, due to global shortages and geopolitical concerns. This has led to increased funding for domestic production capabilities, research into next-generation materials and designs, and efforts to counter foreign technological advancements. The ATSP contract aligns with this trend of sustained and potentially growing investment in critical microelectronic technologies.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: HQ072715R0001

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 1801 STATE RT 17 C, OWEGO, NY, 13827

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: $19,367,952

Exercised Options: $19,367,952

Current Obligation: $19,367,952

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $102,541

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HQ072716D0001

IDV Type: IDC

Timeline