DoD's $61.4M radar system contract to Lockheed Martin shows significant cost overruns and extended performance period

Contract Overview

Contract Amount: $61,371,648 ($61.4M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 1999-12-29

End Date: 2016-10-18

Contract Duration: 6,138 days

Daily Burn Rate: $10.0K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200011!1700!000102!F9999 !MARINE CORPS SYSTEMS COMMAND !M6785400C2049 !A!*!* !19991229!20030331!130956345!787662220!834951691!N!D3538!LOCKHEED MARTIN CORPORATION !ELECTRONICS PARKWAY BLDG 7!SYRACUSE !NY!13221!73000!067!36!SYRACUSE !ONONDAGA !NEW YORK !0001!+000005280000!Y!N!000000000000!5840!RADAR EQUIPMENT, EXCEPT AIRBORNE !A2 !MISSILE AND SPACE SYSTEMS !2GQD!AN/TPS-59 RADAR SYS !3669!1!*!*!*!B!N!Z!B !N!J!1!001!N!4A!A!N!A!* !* !N!C!*!A!A!A!A!A!A!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: LIVERPOOL, ONONDAGA County, NEW YORK, 13088

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $61.4 million to LOCKHEED MARTIN CORPORATION for work described as: 200011!1700!000102!F9999 !MARINE CORPS SYSTEMS COMMAND !M6785400C2049 !A!*!* !19991229!20030331!130956345!787662220!834951691!N!D3538!LOCKHEED MARTIN CORPORATION !ELECTRONICS PARKWAY BLDG 7!SYRACUSE !NY!13221!73000!067!36!SYRACUSE !ONO… Key points: 1. The contract's final value of $61.4 million significantly exceeded initial estimates, indicating potential cost control issues. 2. The contract experienced a substantial extension in its performance period, from an initial duration to over 18 years, suggesting scope creep or unforeseen challenges. 3. The sole-source nature of this award raises questions about the government's ability to secure competitive pricing and explore alternative solutions. 4. While the specific performance metrics are not detailed, the extended duration and cost increases may imply challenges in meeting initial program objectives. 5. This contract falls within the Defense sector, specifically related to radar and electronic systems, a critical area for military operations. 6. The lack of small business participation is noted, with no indication of set-asides or subcontracting goals.

Value Assessment

Rating: questionable

The final award amount of $61.4 million for the AN/TPS-59 Radar System is difficult to benchmark without comparable sole-source contracts for similar advanced radar systems. However, the significant increase from an unspecified initial estimate to the final value, coupled with an extended performance period, suggests potential inefficiencies or unforeseen complexities that impacted the overall value proposition. The government may not have achieved the best possible price due to the limited competition.

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. This typically occurs when only one responsible source can provide the required goods or services. The lack of competition limits the government's ability to leverage market forces to drive down prices and ensure the most cost-effective solution.

Taxpayer Impact: For taxpayers, a sole-source award means there is a higher risk of paying a premium compared to a competitively bid contract. Without competing offers, the government relies heavily on the contractor's proposed pricing and negotiation skills.

Public Impact

The primary beneficiary of this contract is the U.S. Department of the Navy, which utilizes the AN/TPS-59 radar system for its operational needs. The contract delivered advanced radar equipment, specifically the AN/TPS-59 Radar System, crucial for surveillance and defense. The geographic impact is primarily within the United States, with Lockheed Martin's operations in New York contributing to the contract's fulfillment. The contract supported a segment of the aerospace and defense manufacturing workforce involved in the production and maintenance of sophisticated electronic systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant cost growth from initial estimates to final award value.
Extended contract performance period suggests potential scope creep or execution challenges.
Sole-source award limits price discovery and potential for competitive savings.
Lack of transparency regarding specific performance metrics and their achievement over the extended period.

Positive Signals

Delivery of a critical radar system (AN/TPS-59) to the Department of the Navy.
Contract awarded to a major defense contractor with established capabilities in electronics and systems.
Contract was a definitive contract, implying a commitment to a specific scope of work.

Sector Analysis

This contract falls within the Defense Electronics and Communication Equipment Manufacturing sector, a specialized segment of the broader aerospace and defense industry. The market for advanced radar systems is characterized by high barriers to entry due to technological complexity and significant R&D investment. Spending in this sector is driven by national security requirements, with major players like Lockheed Martin dominating the landscape. Comparable spending benchmarks would involve other large-scale radar system procurements for military applications.

Small Business Impact

There is no indication that this contract included small business set-asides or subcontracting goals. The nature of the specialized radar equipment and the sole-source award likely meant that the prime contractor was the primary entity responsible for fulfillment, with limited opportunities for small business participation in the prime contract itself.

Oversight & Accountability

Oversight for this contract would have been managed by the Department of the Navy's contracting and program management offices. Accountability measures would typically involve contract performance reviews, milestone tracking, and financial audits. Transparency is often limited in sole-source defense contracts, but reporting requirements would have been stipulated in the contract terms. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

AN/TPS Radar Systems
Defense Electronics Procurement
Naval Systems Command Contracts
Lockheed Martin Defense Contracts
Sole-Source Defense Procurements

Risk Flags

Cost Overrun
Extended Performance Period
Sole-Source Award
Lack of Competition
Potential for Scope Creep

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $61.4 million to LOCKHEED MARTIN CORPORATION. 200011!1700!000102!F9999 !MARINE CORPS SYSTEMS COMMAND !M6785400C2049 !A!*!* !19991229!20030331!130956345!787662220!834951691!N!D3538!LOCKHEED MARTIN CORPORATION !ELECTRONICS PARKWAY BLDG 7!SYRACUSE !NY!13221!73000!067!36!SYRACUSE !ONONDAGA !NEW YORK !0001!+000005280000!Y!N!000000000000!5840!RADAR EQUIPMENT, EXCEPT AIRBORNE !A2 !MISSILE AND SPACE SYSTEMS !2GQD!AN/TPS-59 RADAR SYS !3669!1!*!*!*!B!N!Z!B !N!J!

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $61.4 million.

What is the period of performance?

Start: 1999-12-29. End: 2016-10-18.

What was the original estimated cost of the AN/TPS-59 Radar System contract, and how did it compare to the final award value?

The provided data indicates a final award value of $61,371,648.07. However, the original estimated cost is not explicitly stated in the data. The significant difference between an initial estimate and the final award, especially for a sole-source contract, often points to potential issues such as scope creep, unforeseen technical challenges, or less aggressive negotiation on the government's part. Without the initial estimate, a precise comparison of cost growth cannot be made, but the substantial final value suggests a considerable investment.

What factors led to this contract being awarded on a sole-source basis, and what are the implications for price competition?

Sole-source awards are typically justified when only one responsible contractor can provide the unique capabilities required, or in cases of urgent and compelling need where competition is not feasible. For advanced systems like the AN/TPS-59 radar, it's possible that Lockheed Martin held proprietary technology or unique manufacturing expertise. The implication for price competition is significant: without competing bids, the government loses the leverage to negotiate the lowest possible price, potentially leading to higher costs for taxpayers. The government must rely on robust negotiation and cost analysis to mitigate this.

How did the contract's performance period evolve from its initial duration to its final completion date?

The contract's data shows an initial award date of 1999-12-29 and a final completion date of 2016-10-18. This indicates a performance period of approximately 17 years. The initial duration is not explicitly provided, but the extensive timeframe suggests either a very long-term initial requirement or, more likely, multiple modifications, extensions, or scope changes that significantly lengthened the contract's life. Such extended periods can sometimes indicate challenges in meeting original objectives or evolving requirements.

What is the significance of the PSC code '5840' and the NAICS code '334290' in understanding this contract's scope?

The Product and Service Code (PSC) '5840' signifies 'Radar Equipment, Except Airborne,' clearly indicating the primary nature of the goods procured. The North American Industry Classification System (NAICS) code '334290' refers to 'Other Communications Equipment Manufacturing.' Together, these codes confirm that the contract was for the production or supply of ground-based radar systems and related communication equipment, placing it within the defense electronics manufacturing industry.

What does the 'N' value in the 'A2' field signify regarding the contract type or status?

The 'A2' field in the provided data likely relates to contract action types or modifications. The value 'N' within this context typically signifies 'Not Available' or 'Not Applicable' for specific sub-fields related to that action. Without a detailed data dictionary for this specific database, its precise meaning is speculative. However, it suggests that certain details or classifications associated with this contract action were not recorded or are not relevant for this particular entry.

Can we assess the contractor's track record with this specific contract based on the provided data?

The data identifies Lockheed Martin Corporation as the contractor. While the data shows the final award amount and dates, it does not provide specific performance metrics, quality ratings, or past performance evaluations directly within this record. To assess Lockheed Martin's track record on this specific contract, one would need to consult additional sources such as contract performance reports, CPARS (Contractor Performance Assessment Reporting System) data, or program office evaluations. The extended duration and significant final value might indirectly suggest a long-standing relationship and successful, albeit costly, delivery.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Other Communications Equipment Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: ELECTRONICS PARKWAY BLDG 7, SYRACUSE, NY, 13221

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline