DoD awards $624M for Guam radar, a significant investment in homeland defense capabilities

Contract Overview

Contract Amount: $624,445,312 ($624.4M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2022-08-29

End Date: 2027-09-30

Contract Duration: 1,858 days

Daily Burn Rate: $336.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: DEFENSE OF GUAM UCA AWARD - PERSISTENT DISCRIMINATION RADAR UNDER THE HOMELAND DEFENSE RADAR (HDR) MULTI-AWARD INDEFINITE-DELIVERY/INDEFINITE-QUANTITY CONTRACT (MAIDIQ)

Place of Performance

Location: MOORESTOWN, BURLINGTON County, NEW JERSEY, 08057

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $624.4 million to LOCKHEED MARTIN CORPORATION for work described as: DEFENSE OF GUAM UCA AWARD - PERSISTENT DISCRIMINATION RADAR UNDER THE HOMELAND DEFENSE RADAR (HDR) MULTI-AWARD INDEFINITE-DELIVERY/INDEFINITE-QUANTITY CONTRACT (MAIDIQ) Key points: 1. The contract supports the Homeland Defense Radar (HDR) program, crucial for persistent surveillance. 2. Awarded to Lockheed Martin, a major defense contractor with extensive experience in radar systems. 3. The fixed-price incentive contract structure aims to balance cost control with performance incentives. 4. This award represents a substantial commitment to enhancing early warning and threat detection. 5. The duration of the contract extends through September 2027, indicating a long-term strategic need. 6. The contract is part of a larger multi-award IDIQ, suggesting a broader strategy for radar development.

Value Assessment

Rating: good

The $624.4 million award for the Guam radar system appears reasonable given the strategic importance and complexity of the technology involved. Benchmarking against similar large-scale radar development and deployment contracts within the defense sector suggests that the pricing is within expected ranges for advanced systems. The fixed-price incentive (FPI) contract type allows for shared risk between the government and contractor, potentially driving efficiency while ensuring performance standards are met. Further analysis would require detailed cost breakdowns and comparisons to specific system capabilities.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple qualified bidders had the opportunity to submit proposals. The specific number of bidders is not provided, but the 'full and open' designation suggests a competitive process was utilized. This approach is generally favored for ensuring the government receives the best value through a wide range of technical solutions and pricing options.

Taxpayer Impact: Full and open competition typically leads to more favorable pricing for taxpayers by fostering a competitive environment that drives down costs and encourages innovation.

Public Impact

Enhances homeland defense capabilities for Guam and surrounding territories. Provides persistent surveillance and early warning against potential threats. Supports the development and deployment of advanced radar technology. Contributes to the operational readiness of U.S. military forces in the Indo-Pacific region. Potentially creates or sustains high-skilled jobs in the aerospace and defense industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long-term contract duration could lead to cost overruns if not managed effectively.
Reliance on a single prime contractor for a critical system warrants close oversight.
Potential for scope creep or changes in requirements over the contract's lifespan.
Complexity of advanced radar systems can introduce unforeseen technical challenges and delays.

Positive Signals

Award to a reputable contractor with a proven track record in radar systems.
Fixed-price incentive contract structure aligns contractor and government interests.
Strategic importance of the system for national security is a strong positive driver.
Part of a larger IDIQ contract, suggesting a well-defined program strategy.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on advanced radar systems for homeland defense. The market for such sophisticated surveillance technology is dominated by a few large, specialized defense contractors. Spending in this area is driven by evolving geopolitical threats and the need for continuous technological advancement in detection and tracking capabilities. Comparable spending benchmarks would likely involve other major radar programs or significant upgrades to existing defense infrastructure.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). While the prime contractor is Lockheed Martin Corporation, a large entity, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting will depend on Lockheed Martin's procurement practices and the specific components or services required for the radar system.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of Defense, specifically the Missile Defense Agency, given its role in homeland defense systems. Accountability measures are typically embedded within the contract's fixed-price incentive structure, performance metrics, and delivery schedules. Transparency is facilitated through contract award databases and reporting requirements, though detailed technical specifications and cost breakdowns may be sensitive. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Homeland Defense Radar (HDR) Program
Missile Defense Systems
Indefinite-Delivery/Indefinite-Quantity (IDIQ) Contracts
Radar and Detection Systems Manufacturing
Department of Defense Procurement

Risk Flags

Potential for cost overruns due to contract complexity and duration.
Technical challenges in developing and integrating cutting-edge radar technology.
Environmental factors in Guam may impact system performance and maintenance.
Geopolitical sensitivities in the Indo-Pacific region could affect program execution.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $624.4 million to LOCKHEED MARTIN CORPORATION. DEFENSE OF GUAM UCA AWARD - PERSISTENT DISCRIMINATION RADAR UNDER THE HOMELAND DEFENSE RADAR (HDR) MULTI-AWARD INDEFINITE-DELIVERY/INDEFINITE-QUANTITY CONTRACT (MAIDIQ)

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Missile Defense Agency).

What is the total obligated amount?

The obligated amount is $624.4 million.

What is the period of performance?

Start: 2022-08-29. End: 2027-09-30.

What is the specific capability enhancement this radar system provides for Guam's defense?

This radar system, part of the Homeland Defense Radar (HDR) program, is designed to provide persistent, long-range surveillance and early warning capabilities. Its primary function is to detect, track, and identify a wide range of airborne threats, including ballistic missiles, cruise missiles, and other advanced aerial vehicles. For Guam, a strategically vital U.S. territory in the Indo-Pacific, this enhanced detection capability is crucial for providing sufficient reaction time to potential adversaries, thereby bolstering regional security and protecting critical assets and personnel.

How does the fixed-price incentive (FPI) contract structure work in this context?

A Fixed-Price Incentive (FPI) contract establishes a target cost, target profit, and target price. The final price is adjusted based on the contractor's actual costs, with a ceiling price that the government will not exceed. If the contractor's final costs are lower than the target cost, both the government and the contractor share in the savings according to a pre-negotiated formula. Conversely, if costs exceed the target, the contractor bears a larger portion of the overrun up to the ceiling price. This structure incentivizes the contractor to control costs while ensuring the government benefits from cost reductions and is protected from excessive overruns.

What is Lockheed Martin's track record with similar large-scale radar systems?

Lockheed Martin Corporation has a substantial and well-established track record in developing, manufacturing, and integrating complex radar systems for military applications. They are known for producing advanced radar technologies used in various platforms, including fighter jets (e.g., APG-81 for the F-35), naval vessels, and ground-based air defense systems. Their experience spans decades and includes delivering systems for early warning, surveillance, fire control, and electronic warfare. This extensive background suggests a high level of technical expertise and program management capability relevant to the Guam HDR contract.

Are there any known risks associated with deploying advanced radar systems in Guam's environment?

Deploying advanced radar systems in Guam presents several environmental and operational risks. The tropical climate, characterized by high humidity, heavy rainfall, and typhoons, can pose challenges for equipment durability and maintenance, requiring robust environmental hardening. Geographically, the terrain of Guam might necessitate careful siting of radar installations to ensure optimal coverage and minimize signal interference. Furthermore, the strategic location of Guam in the Indo-Pacific theater means the radar system could be a high-priority target, requiring robust security measures and resilience planning against potential adversary actions.

How does this award compare to historical spending on similar homeland defense radar initiatives?

The $624.4 million award for the Guam HDR radar is a significant but not unprecedented figure for major defense radar programs. Historically, large-scale radar development and deployment projects, especially those involving advanced missile defense capabilities, often run into hundreds of millions, and sometimes billions, of dollars. For instance, upgrades to existing radar networks or the development of new generations of early warning systems have historically commanded similar or greater investments. This award aligns with the trend of substantial government investment in maintaining and enhancing critical defense infrastructure in response to evolving global security challenges.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: HQ014718R0010

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Address: 199 BORTON LANDING RD, MOORESTOWN, NJ, 08057

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: $673,946,440

Exercised Options: $673,946,440

Current Obligation: $624,445,312

Actual Outlays: $138,072,001

Subaward Activity

Number of Subawards: 18

Total Subaward Amount: $3,509,148

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HQ014718D0011

IDV Type: IDC

Timeline