DoD's $103M Software Design Contract Awarded to Lockheed Martin for Navigation Systems

Contract Overview

Contract Amount: $102,874,115 ($102.9M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2012-09-27

End Date: 2022-02-28

Contract Duration: 3,441 days

Daily Burn Rate: $29.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: SOFTWARE DESIGN&INTEGRATION PHASE 1

Place of Performance

Location: OWEGO, TIOGA County, NEW YORK, 13827

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $102.9 million to LOCKHEED MARTIN CORPORATION for work described as: SOFTWARE DESIGN&INTEGRATION PHASE 1 Key points: 1. Contract value represents a significant investment in advanced navigation technology. 2. Full and open competition suggests a potentially competitive bidding process. 3. Cost-plus incentive fee structure aims to balance contractor performance with cost control. 4. Long contract duration (3441 days) indicates a complex, multi-year development effort. 5. The contract falls within the manufacturing of search, detection, and navigation systems. 6. Awarded by the Department of the Navy, highlighting a key defense sector focus.

Value Assessment

Rating: fair

The contract's total value of approximately $103 million over nearly 9.5 years suggests a substantial investment. Benchmarking this against similar large-scale software design and integration contracts for complex defense systems is challenging without more specific performance data. The cost-plus incentive fee (CPIF) structure implies that the final cost could vary based on performance against targets, making a direct value-for-money assessment difficult at this stage. However, the significant duration and scope point to a critical need for the developed systems.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. While the number of bidders is not specified, this approach generally fosters a competitive environment, which can lead to better pricing and innovation. The Department of the Navy's decision to use full and open competition suggests confidence in the market's ability to provide suitable solutions for this complex software design and integration requirement.

Taxpayer Impact: Taxpayers benefit from the potential for competitive pricing and the assurance that the government sought the best available solution through an open process.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially other branches of the Department of Defense requiring advanced navigation and guidance systems. The contract will deliver sophisticated software design and integration services for critical defense applications. The geographic impact is primarily within the contractor's operational areas, with potential for deployment across naval assets globally. Workforce implications include specialized roles for software engineers, systems integrators, and project managers within Lockheed Martin and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus incentive fee contracts can sometimes lead to cost overruns if not managed diligently.
The long duration of the contract increases the risk of scope creep or obsolescence of technology over time.
Lack of specific performance metrics makes it difficult to assess the true value delivered for the investment.

Positive Signals

Awarded through full and open competition, suggesting a robust market evaluation.
Lockheed Martin is a major defense contractor with extensive experience in complex systems integration.
The contract addresses a critical need for advanced navigation and guidance systems within the DoD.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on the development of advanced navigation, guidance, and control systems. The market for such specialized software is dominated by large defense contractors capable of handling complex, long-term projects. Spending in this area is driven by national security requirements and the continuous need for technological superiority in military operations. Comparable spending benchmarks would typically involve other large-scale system integration contracts for defense platforms.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss=false, sb=false). As a large prime contract awarded to Lockheed Martin, there may be opportunities for small businesses to participate as subcontractors. However, the extent of small business subcontracting is not detailed in this summary. The focus on a major defense prime suggests that the primary contract value is unlikely to directly benefit the small business ecosystem unless significant subcontracting plans are mandated and executed.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Accountability measures are embedded within the Cost Plus Incentive Fee (CPIF) structure, which links contractor profit to performance against cost, schedule, and technical targets. Transparency is generally maintained through contract reporting requirements, though specific details of performance and cost may be subject to security classifications. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Naval Navigation Systems Development
Defense Software Integration Programs
Aerospace Guidance and Control Systems
DoD Research and Development Contracts
Advanced Military Technology Acquisition

Risk Flags

Long contract duration may lead to technological obsolescence.
Cost-plus contracts require diligent oversight to manage potential cost overruns.
Lack of specific performance metrics makes value assessment challenging.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $102.9 million to LOCKHEED MARTIN CORPORATION. SOFTWARE DESIGN&INTEGRATION PHASE 1

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 $102.9 million.

What is the period of performance?

Start: 2012-09-27. End: 2022-02-28.

What is Lockheed Martin's track record with similar large-scale software integration contracts for the Department of Defense?

Lockheed Martin Corporation is a major defense contractor with a long history of delivering complex systems, including software design and integration, for various branches of the U.S. military. They have extensive experience with large, multi-year programs involving navigation, communication, and weapon systems. Their track record includes numerous successful, albeit sometimes challenging, large-scale projects. However, like any major contractor, they have also faced scrutiny and performance issues on specific contracts. A detailed review of their past performance on CPIF contracts of similar scope and complexity would be necessary to fully assess their suitability and reliability for this specific program.

How does the $103 million contract value compare to similar software design and integration contracts for navigation systems?

The $103 million contract value for software design and integration over nearly 9.5 years is substantial, reflecting the complexity and criticality of advanced navigation systems for defense applications. Benchmarking this figure requires careful consideration of the specific scope, technology maturity, and duration. Contracts for developing and integrating software for platforms like naval vessels, aircraft, or satellite systems can range from tens to hundreds of millions of dollars. Given the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' NAICS code, this contract appears to be in the mid-to-high range for its category, especially considering its long performance period. Without specific details on the system's capabilities and the number of bidders, a precise value comparison is difficult, but it signifies a significant investment.

What are the primary risks associated with a Cost Plus Incentive Fee (CPIF) contract of this magnitude and duration?

The primary risks with a CPIF contract of this scale ($103M over ~9.5 years) revolve around cost control and performance management. While the incentive structure aims to align contractor and government interests, there's a risk that the 'cost plus' element could lead to cost growth if the baseline targets are not well-defined or if unforeseen technical challenges arise. The 'incentive' portion requires clear, measurable metrics for success, which can be difficult to establish for complex software development. Furthermore, the long duration increases the risk of scope creep, technological obsolescence, and potential contractor performance degradation over time. Effective government oversight is crucial to mitigate these risks by ensuring rigorous monitoring of costs, progress, and adherence to performance incentives.

How effective is the 'full and open competition' approach likely to be in ensuring optimal value for this specific contract?

The 'full and open competition' approach is generally considered the most effective method for ensuring optimal value, as it allows the widest possible pool of qualified contractors to bid, fostering price competition and innovation. For a complex software design and integration contract like this, it suggests the Department of the Navy believed multiple capable firms could meet the requirements. This competitive pressure should theoretically drive down costs and encourage higher quality solutions. However, the ultimate effectiveness depends on the clarity of the solicitation, the evaluation criteria, and the number and capability of the actual bidders. If only a few highly specialized firms could realistically compete, the price discovery might be less robust than in a market with broader competition.

What are the potential implications of the contract's long duration (3441 days) on technological relevance and program management?

A contract duration of 3441 days (approximately 9.5 years) for software design and integration presents significant challenges. Technologically, software development cycles are rapid; by the end of such a long period, the initial requirements or the developed technology could be outdated or superseded by newer advancements. This necessitates robust change management processes and potentially requires the contractor to incorporate future-proofing strategies. Programmatically, managing such a long-term effort requires sustained government oversight, consistent funding, and adaptability to evolving threats and requirements. It increases the risk of scope creep, personnel turnover within the contractor team, and potential disconnects between the initial objectives and the final delivered product. Careful planning and agile methodologies, where applicable, are essential to navigate these long durations.

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: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0001910R0080

Offers Received: 3

Pricing Type: COST PLUS INCENTIVE FEE (V)

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: $104,064,162

Exercised Options: $102,874,115

Current Obligation: $102,874,115

Actual Outlays: $2,097,737

Subaward Activity

Number of Subawards: 79

Total Subaward Amount: $340,218,872

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline