DoD's $34.5M DREX EDM contract to Lockheed Martin awarded without competition

Contract Overview

Contract Amount: $34,489,792 ($34.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2017-08-24

End Date: 2022-01-02

Contract Duration: 1,592 days

Daily Burn Rate: $21.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: DREX EDM DEVELOPMENT

Place of Performance

Location: LIVERPOOL, ONONDAGA County, NEW YORK, 13088

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $34.5 million to LOCKHEED MARTIN CORPORATION for work described as: DREX EDM DEVELOPMENT Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can incentivize cost overruns. 2. The contract was not competed, raising questions about potential price efficiencies. 3. A single award suggests limited market engagement and potentially higher costs. 4. The duration of the contract (1,592 days) indicates a long-term commitment. 5. The contract's value is moderate within the context of major defense procurements. 6. The absence of small business participation warrants further investigation.

Value Assessment

Rating: questionable

This contract's value of $34.5 million is difficult to benchmark without more specific details on the 'DREX EDM DEVELOPMENT' services. However, the 'cost plus fixed fee' pricing structure, combined with a lack of competition, raises concerns about whether the government achieved the best possible value. Without comparative bids or a clear justification for the sole-source award, it's challenging to definitively assess its cost-effectiveness. The fixed fee component provides some cost control, but the 'cost plus' element leaves significant room for expenditure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not open to competitive bidding. This typically occurs when only one vendor possesses the necessary capabilities or when urgency dictates a direct award. The lack of competition means that the government did not benefit from the price discovery mechanisms inherent in a competitive bidding process, potentially leading to higher costs than if multiple vendors had vied for the contract.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure to lower prices. The government missed an opportunity to leverage market forces for cost savings.

Public Impact

The primary beneficiary is the Department of Defense, which receives the developed DREX EDM system. The contract supports the development of a system likely crucial for defense operations, potentially impacting search, detection, navigation, guidance, and related systems. The geographic impact is centered around Lockheed Martin's operations in New York. The contract supports specialized technical roles within Lockheed Martin, contributing to the defense technology workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Cost-plus-fixed-fee contract type can incentivize higher spending if not closely managed.
Lack of small business participation or set-aside indicates missed opportunities for smaller firms.
Absence of detailed performance metrics makes it difficult to assess the true value delivered.

Positive Signals

Award to a major defense contractor like Lockheed Martin suggests access to established expertise.
The fixed fee component provides a degree of cost certainty compared to pure cost-plus contracts.
The long contract duration implies a significant and potentially critical development effort.

Sector Analysis

The defense sector is characterized by complex, high-value contracts often involving specialized technologies. Lockheed Martin is a major player in this industry. This contract for 'DREX EDM DEVELOPMENT' likely falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' NAICS code (334511). Spending in this area is substantial, driven by national security requirements. Benchmarking this specific development effort against similar projects is challenging without more granular data on the system's scope and complexity.

Small Business Impact

This contract was not awarded as a small business set-aside, and there is no indication of significant subcontracting opportunities for small businesses. The sole-source nature of the award further limits the potential for small business involvement. This suggests that the primary focus was on leveraging the capabilities of the large prime contractor, potentially overlooking opportunities to foster growth and innovation within the small business defense ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), responsible for ensuring contractor compliance and performance. The specific oversight mechanisms for a sole-source, cost-plus-fixed-fee contract would involve detailed monitoring of costs, progress, and adherence to the contract's technical requirements. Transparency is often limited in sole-source procurements, but contract award data is publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Research and Development
Navigation and Guidance Systems
Search and Detection Equipment
Aeronautical and Nautical Instruments
Lockheed Martin Corporation Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.5 million to LOCKHEED MARTIN CORPORATION. DREX EDM DEVELOPMENT

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 Contract Management Agency).

What is the total obligated amount?

The obligated amount is $34.5 million.

What is the period of performance?

Start: 2017-08-24. End: 2022-01-02.

What specific capabilities does the DREX EDM system provide, and how critical are they to Department of Defense operations?

The DREX EDM system's specific capabilities are not detailed in the provided data. However, based on the NAICS code (334511 - Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing), it likely pertains to advanced systems for locating targets, navigating aircraft or vessels, and providing guidance. These capabilities are fundamental to modern military operations, supporting intelligence gathering, reconnaissance, targeting, and mission execution across various domains (air, sea, land). The criticality would depend on the specific application, but systems in this category often underpin core warfighting functions and situational awareness.

What was the justification for awarding this contract on a sole-source basis instead of competing it?

The provided data indicates the contract was 'NOT COMPETED' and awarded as a 'SOLE SOURCE'. While the specific justification is not included, common reasons for sole-source awards in defense contracting include: 1) Unique capabilities possessed by only one contractor (e.g., proprietary technology, specialized expertise). 2) Urgent and compelling need where competition would cause unacceptable delays. 3) Follow-on work to a previously competed contract where only the original contractor can perform the subsequent phase. Without further documentation from the Department of Defense, the precise rationale remains unknown, but it implies a belief that competition was either not feasible or not in the government's best interest at the time of award.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other contract types in terms of risk and potential value for the government?

The Cost Plus Fixed Fee (CPFF) structure is a hybrid type. The government agrees to pay the contractor's actual costs plus a predetermined fixed fee. This structure shares risk: the contractor is incentivized to control costs to protect their fixed profit margin, while the government bears the risk of cost overruns if actual costs exceed estimates. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers more flexibility for complex projects where cost estimation is difficult, but it generally provides less cost certainty for the government. Compared to Cost Plus Incentive Fee (CPIF) or Cost Plus Award Fee (CPAF), the fixed fee in CPFF does not directly link profit to performance targets, potentially offering less incentive for exceptional performance beyond meeting baseline requirements.

What is Lockheed Martin's track record with similar 'Search, Detection, Navigation, Guidance' contracts within the Department of Defense?

Lockheed Martin Corporation is a major defense contractor with extensive experience across numerous defense programs, including those related to search, detection, navigation, and guidance systems. They are known for developing and producing advanced platforms and systems such as fighter jets (F-35, F-16), surveillance aircraft (U-2), radar systems, and various missile technologies. While specific details on their past performance for contracts precisely matching 'DREX EDM DEVELOPMENT' are not provided here, their historical involvement in large-scale, technologically sophisticated defense projects suggests a strong capability in this domain. Analyzing their past performance on similar, large-value contracts would require a deeper dive into contract databases and performance reports.

How does the $34.5 million contract value compare to the total annual spending on 'Search, Detection, Navigation, Guidance...' systems by the DoD?

The $34.5 million value of this specific DREX EDM DEVELOPMENT contract is relatively modest when considered against the Department of Defense's overall annual spending on systems within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector (NAICS 334511). The DoD's budget encompasses vast expenditures on aircraft, ships, ground vehicles, advanced weaponry, and associated support systems. Major platform procurements and research and development initiatives often run into hundreds of millions or even billions of dollars. Therefore, while $34.5 million is a significant sum for a single development contract, it represents a small fraction of the total defense budget allocated to this broad technological category.

Are there any publicly available performance reports or audits related to this specific Lockheed Martin contract?

Based solely on the provided data snippet, there is no direct information regarding publicly available performance reports or audits specifically for this 'DREX EDM DEVELOPMENT' contract (Award ID not specified). Publicly accessible contract data often includes basic award details like contractor, value, dates, and type, but detailed performance metrics, quality assurance reviews, or Inspector General audits are typically found in more specialized government databases (like FPDS-NG or SAM.gov, depending on the era) or through specific Freedom of Information Act (FOIA) requests. For sole-source, CPFF contracts, rigorous oversight is expected, but the public dissemination of such detailed performance information can be limited.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: M6785417R6002

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 497 ELECTRONICS PKWY BLDG 5, LIVERPOOL, NY, 13088

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: $41,816,699

Exercised Options: $36,896,074

Current Obligation: $34,489,792

Subaward Activity

Number of Subawards: 51

Total Subaward Amount: $10,796,932

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline