Coast Guard awards $31.17M for Segment 2 Spiral 2 suites to Lockheed Martin, a sole-source contract

Contract Overview

Contract Amount: $25,538,782 ($25.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Homeland Security

Start Date: 2014-08-21

End Date: 2016-10-31

Contract Duration: 802 days

Daily Burn Rate: $31.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF MODIFICATION FOR AMEND 1 THE PURPOSE OF THIS MODIFICATION IS TO ADD FUNDING IN ACCORDANCE WITH A MODIFIED STRATEGY PER THE PWS OF PURCHASING TWO SEGMENT 2 SPIRAL 2 (S2S2) SUITES DURING THE BASE YR AND TWO SEGMENT 2 SPIRAL 2 (S2S2) SUITES DURING THE OPTION YEAR. VENDOR: LOCKHEED MARTIN BASE YEAR: POP- 24 MONTHS FROM DATE OF AWARD AMOUNT: $17,847,238 FY14 FUNDING: LOA 2 P 8F 098 00 0 48C100 70372 2512 OPTION 1: POP: 20 MONTHS FROM DATE OF EXERCISE OF OPTION AMOUNT: $13,321,712 NEW COR: MOHAMMED NOROUZIEH, (856) 359-3978, MOHAMMED.R.NOROUZIEH@USCG.MIL FINANCIAL MANAGER: ANNETTE BERG, CG-9283, E-MAIL: ANNETTE.C.BERG@USCG.MIL, 202-475-3211 CIP: FR1072 TREASURY SYMBOL: 7014/180613 TOTAL OF CONTRACT BASE AND OPY1 : $31,168,950.00 THERE ARE NO OPY2 AND OPY3 ********************************** BASE PR: THIS $0 PR IS SUBJECT TO AVAILABILITY OF FUNDS DUE TO CONTINUING RESOLUTION, TO BE FUNDED WITH FY14 FUNDS. THIS PR FUNDS LOCKHEED MARTIN S2S2 RETROFIT SOLE SOURCE CONTRACT IN ACCORDANCE WITH APPROVED J&A SIGNED OCTOBER 31,2013. 1) TOTAL ESTIMATED CONTRACT VALUE: $46,089,129.90 BASE AWARD: $11,088,682.89 FUNDED WITH FY 14 FUNDS, LOA: 2 P 8F 098 00 0 48C100 OPTION 1: $11,294,902.90 OPTION 2: $11,576,172.45 OPTION 3: $11,876,505.94 OPTION 4: $252,865.21 2) TREASURY SYMBOL: 7014/180613 3) COTR: LCDR TREIB, E-MAIL: CHRISTOPHER A.TREIB@USCG.MIL, (609) 326-4878 FINANCIAL MANAGER: ANNETTE BERG, CG-9283, E-MAIL: ANNETTE.C.BERG@USCG.MIL, 202-475-3211 4) CIP: FR1072

Place of Performance

Location: MOORESTOWN, BURLINGTON County, NEW JERSEY, 08057

State: New Jersey Government Spending

Plain-Language Summary

Department of Homeland Security obligated $25.5 million to LOCKHEED MARTIN CORPORATION for work described as: IGF::OT::IGF MODIFICATION FOR AMEND 1 THE PURPOSE OF THIS MODIFICATION IS TO ADD FUNDING IN ACCORDANCE WITH A MODIFIED STRATEGY PER THE PWS OF PURCHASING TWO SEGMENT 2 SPIRAL 2 (S2S2) SUITES DURING THE BASE YR AND TWO SEGMENT 2 SPIRAL 2 (S2S2) SUITES DURING THE OPTION YEAR. … Key points: 1. The contract modification adds funding for additional suites, indicating an evolving program requirement. 2. The sole-source nature of this award warrants scrutiny regarding potential cost efficiencies and market alternatives. 3. The contract's duration and phased delivery suggest a complex, multi-year project. 4. Performance context is limited without specific delivery milestones or quality metrics. 5. This contract falls within the engineering services sector, supporting specialized defense or maritime technology.

Value Assessment

Rating: fair

The total contract value of $31.17 million for 4 Segment 2 Spiral 2 suites over approximately 44 months (24 base + 20 option) suggests a significant per-unit investment. Benchmarking against similar specialized defense systems is challenging without more detailed technical specifications. However, the cost-plus-fixed-fee structure implies that while the contractor's fee is fixed, the total cost can fluctuate, potentially leading to higher overall expenditures than a firm-fixed-price contract if costs escalate.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically justified when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. The lack of competition means that the government did not benefit from a bidding process that could drive down prices through market forces.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive bidding, as the government could not leverage market dynamics to secure the best possible price.

Public Impact

The U.S. Coast Guard is the primary beneficiary, receiving advanced Segment 2 Spiral 2 suites. These suites are likely critical for enhancing operational capabilities, potentially in areas like surveillance, communication, or command and control. The geographic impact is primarily within the operational areas of the U.S. Coast Guard, which could be domestic or international. The contract supports specialized engineering and technology roles, potentially impacting a skilled workforce within Lockheed Martin and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases cost to taxpayers.
Cost-plus-fixed-fee contract structure carries inherent risk of cost overruns.
Limited public information on specific technical requirements and performance metrics makes value assessment difficult.

Positive Signals

Award to a major defense contractor like Lockheed Martin suggests access to advanced, proven technology.
Contract modification indicates ongoing program support and potential for future development.
Clear identification of contract personnel facilitates communication and oversight.

Sector Analysis

This contract falls within the broader defense and aerospace sector, specifically focusing on specialized engineering services and technology integration. The market for such advanced systems is often characterized by high barriers to entry, proprietary technology, and a limited number of qualified suppliers, which can lead to sole-source or limited-competition awards. Comparable spending benchmarks are difficult to establish without detailed technical specifications, but contracts for complex defense systems can range from millions to billions of dollars.

Small Business Impact

There is no indication of a small business set-aside for this contract. As a sole-source award to a large prime contractor, the primary subcontracting opportunities would likely be managed by Lockheed Martin. The impact on the small business ecosystem depends on Lockheed Martin's subcontracting strategy, which is not detailed in the provided data.

Oversight & Accountability

Oversight for this contract would primarily reside with the U.S. Coast Guard contracting and program management offices. The contract's cost-plus-fixed-fee nature necessitates robust financial oversight to monitor expenditures and ensure compliance with the contract terms. Transparency is limited by the sole-source nature and the proprietary aspects of the technology involved. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

U.S. Coast Guard Acquisition Programs
Defense Advanced Systems Procurement
Homeland Security Technology Modernization
Lockheed Martin Defense Contracts

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of detailed technical specifications in public data
Potential for cost escalation

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $25.5 million to LOCKHEED MARTIN CORPORATION. IGF::OT::IGF MODIFICATION FOR AMEND 1 THE PURPOSE OF THIS MODIFICATION IS TO ADD FUNDING IN ACCORDANCE WITH A MODIFIED STRATEGY PER THE PWS OF PURCHASING TWO SEGMENT 2 SPIRAL 2 (S2S2) SUITES DURING THE BASE YR AND TWO SEGMENT 2 SPIRAL 2 (S2S2) SUITES DURING THE OPTION YEAR. VENDOR: LOCKHEED MARTIN BASE YEAR: POP- 24 MONTHS FROM DATE OF AWARD AMOUNT: $17,847,238 FY14 FUNDING: LOA 2 P 8F 098 00 0 48C100 70372 2512 OPTION 1: POP: 20 MONTHS FROM DATE OF EXERCISE OF OPTION AMOUNT: $13,321

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Coast Guard).

What is the total obligated amount?

The obligated amount is $25.5 million.

What is the period of performance?

Start: 2014-08-21. End: 2016-10-31.

What is the specific technical capability or system being procured as 'Segment 2 Spiral 2 Suites'?

The provided data does not specify the exact technical capabilities of the 'Segment 2 Spiral 2 Suites.' However, given the context of a U.S. Coast Guard contract with Lockheed Martin, these suites are likely advanced technological systems related to maritime surveillance, command and control, communication, or navigation. The 'Spiral' designation often implies a phased development approach, where capabilities are delivered incrementally. Further details would be found in the Performance Work Statement (PWS) referenced in the modification.

How does the per-unit cost of these suites compare to similar systems in the defense market?

A direct per-unit cost comparison is not feasible with the provided data. The total contract value of $31.17 million covers two suites in the base year and two in the option year, totaling four suites. This yields an average cost of approximately $7.79 million per suite. However, this is an average over different contract periods and does not account for potential variations in configuration, technology, or support services included. Benchmarking requires detailed technical specifications and market analysis of comparable systems, which are not available here. The sole-source nature also complicates direct price comparisons.

What are the primary risks associated with this sole-source, cost-plus-fixed-fee contract?

The primary risks are twofold. First, the sole-source award means the government did not benefit from competitive pricing, potentially leading to a higher cost than if multiple vendors had bid. Second, the Cost Plus Fixed Fee (CPFF) contract type means the contractor is reimbursed for allowable costs plus a fixed fee representing profit. While the fee is fixed, the total cost can escalate if actual costs exceed estimates, placing the financial risk of cost overruns primarily on the government. Robust oversight is crucial to manage these risks.

What is Lockheed Martin's track record with the U.S. Coast Guard and similar defense contracts?

Lockheed Martin is a major defense contractor with extensive experience across various U.S. military and homeland security branches, including the U.S. Coast Guard. They have a long history of delivering complex systems, including C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance) capabilities, aircraft, and other specialized platforms. While specific past performance on this exact 'Segment 2 Spiral 2' program isn't detailed here, their general track record suggests they possess the technical and manufacturing capacity for such endeavors. However, like any large contractor, past performance can vary across different programs and agencies.

What is the historical spending trend for this specific program or similar systems within the Coast Guard?

The provided data only covers this specific contract modification and its base/option values, totaling $31.17 million. It does not provide historical spending data for this program prior to this award or for similar systems. To assess historical spending trends, one would need access to prior contract awards, modifications, and potentially budget documents related to the U.S. Coast Guard's acquisition of C4ISR or related technological suites. Without that broader context, it's impossible to determine if this award represents an increase, decrease, or stable level of spending.

What are the implications of the contract modification adding funding for additional suites?

The modification indicates a change or expansion in the program's scope or requirements. Adding funding for two more suites (two in base, two in option) suggests that the initial plan may have been adjusted, or that the program is progressing and requires additional units. This could stem from evolving operational needs, a successful initial phase leading to increased demand, or a strategic shift in the Coast Guard's technological roadmap. It highlights the dynamic nature of defense procurement and the need for contract flexibility.

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

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $25,538,782

Exercised Options: $25,538,782

Current Obligation: $25,538,782

Subaward Activity

Number of Subawards: 16

Total Subaward Amount: $1,540,641

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline