Department of Defense awards $167.8M contract for navigation systems to Lockheed Martin Corporation

Contract Overview

Contract Amount: $167,771,509 ($167.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2015-04-09

End Date: 2020-11-30

Contract Duration: 2,062 days

Daily Burn Rate: $81.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: AUSTRALIA, CANADA, AND UNITED KINGDOM REPROGRAMMING LAB (PHASE 1)

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76101

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $167.8 million to LOCKHEED MARTIN CORPORATION for work described as: AUSTRALIA, CANADA, AND UNITED KINGDOM REPROGRAMMING LAB (PHASE 1) Key points: 1. Contract awarded to a single, established provider, raising questions about competitive pricing. 2. Fixed Price Incentive contract type suggests shared risk between government and contractor. 3. Long contract duration of over 2000 days indicates a significant, long-term need. 4. The contract falls under the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' NAICS code. 5. Awarded by the Department of the Navy, indicating a focus on naval aviation or maritime systems. 6. The contractor, Lockheed Martin Corporation, is a major defense industry player. 7. The contract's value is substantial, representing a significant investment in specialized systems.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics or comparable contract data. The fixed-price incentive structure aims to control costs, but the lack of competition could lead to less favorable pricing than a fully competed award. The substantial award amount suggests a high level of complexity and specialized technology, which may justify the cost, but further analysis of unit costs and performance against objectives would be needed for a definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. The specific reasons for this determination are not provided, but it typically suggests that only one responsible source was available or that the procurement was justified on other grounds, such as urgency or unique capabilities. The absence of a competitive bidding process limits the government's ability to leverage market forces to achieve the best possible price and terms.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers compared to competitively bid contracts, as the government may not benefit from price reductions driven by multiple bidders vying for the contract.

Public Impact

The primary beneficiaries are likely the Department of the Navy and its operational units requiring advanced navigation and guidance systems. The contract delivers critical systems for search, detection, navigation, guidance, and related aeronautical/nautical instruments. The geographic impact is primarily within the United States, with potential deployment of systems on naval assets globally. Workforce implications include employment opportunities at Lockheed Martin and its subcontractors, particularly in specialized engineering and manufacturing roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in higher costs for taxpayers.
Long contract duration could introduce risks related to technological obsolescence or changing requirements.
Sole-source awards can limit opportunities for smaller, innovative companies to enter the defense supply chain.

Positive Signals

Award to a major defense contractor like Lockheed Martin suggests access to established expertise and mature technologies.
Fixed Price Incentive contract type aligns contractor incentives with government cost objectives.
The contract addresses critical national defense needs for advanced navigation systems.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on the manufacturing of navigation, guidance, and control systems. The market for such specialized components is often dominated by a few large, established prime contractors due to high research and development costs, stringent quality requirements, and long product lifecycles. Comparable spending in this sub-sector can vary widely based on technological advancements and specific platform needs, but significant investments are typical for advanced military systems.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false) and does not explicitly mention subcontracting goals for small businesses (sb: false). As a sole-source award to a large prime contractor, the direct impact on small business set-asides is minimal. However, Lockheed Martin may still engage small businesses as subcontractors, but this is not guaranteed or mandated by the contract terms provided. Further investigation into subcontracting plans would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are typically embedded within the Fixed Price Incentive contract terms, linking contractor performance and cost control to financial incentives. Transparency may be limited due to the sole-source nature of the award; however, standard government reporting mechanisms and potential Inspector General reviews would apply.

Related Government Programs

Naval Aviation Systems
Defense Navigation and Guidance Systems
Aerospace Manufacturing
Department of Defense Procurement
Lockheed Martin Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $167.8 million to LOCKHEED MARTIN CORPORATION. AUSTRALIA, CANADA, AND UNITED KINGDOM REPROGRAMMING LAB (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 $167.8 million.

What is the period of performance?

Start: 2015-04-09. End: 2020-11-30.

What is Lockheed Martin Corporation's track record with similar Department of Defense navigation system contracts?

Lockheed Martin Corporation is a major defense contractor with extensive experience in developing and producing complex systems, including navigation, guidance, and control technologies for various military platforms. They have a long history of delivering such systems to the Department of Defense across different branches, including the Navy, Air Force, and Army. Their track record typically involves large-scale, multi-year programs requiring significant engineering, integration, and manufacturing capabilities. While specific performance data for past contracts is often proprietary or requires deep analysis, Lockheed Martin is generally recognized for its technological expertise and its role as a primary supplier of critical defense hardware. However, like any large contractor, they have also faced scrutiny regarding cost overruns and schedule delays on certain projects, underscoring the importance of robust oversight and contract management.

How does the $167.8 million contract value compare to other similar navigation system procurements?

Directly comparing the $167.8 million value of this specific contract to 'similar' procurements is challenging without precise definitions of 'similar,' including system complexity, technological generation, and specific platform integration. However, for advanced, mission-critical navigation and guidance systems for military applications, this award amount falls within a common range for significant development and production efforts. Large defense contracts for complex avionics and systems can easily reach hundreds of millions, or even billions, of dollars over their lifecycle. The fact that this is a sole-source award to Lockheed Martin, a major player, suggests it's for a substantial, potentially specialized system. To provide a more accurate benchmark, one would need to identify contracts for comparable systems (e.g., for fighter jets, naval vessels, or strategic platforms) awarded over a similar timeframe and assess their total obligated amounts and contract types.

What are the primary risks associated with this sole-source contract for navigation systems?

The primary risks associated with this sole-source contract are centered around cost and potential lack of innovation. Without competition, there is a reduced incentive for the contractor to offer the lowest possible price, potentially leading to higher costs for the government and taxpayers. Furthermore, a sole-source award can stifle innovation, as there is no competitive pressure to develop more advanced or cost-effective solutions. Other risks include potential vendor lock-in, where the government becomes heavily reliant on a single supplier, making future transitions difficult or expensive. There's also the risk of performance issues or delays, which, in a sole-source scenario, might be harder to mitigate through alternative vendor options. Finally, the long duration of the contract (2062 days) increases the risk of technological obsolescence if the underlying technology evolves rapidly.

How effective is the Fixed Price Incentive (FPI) contract type in managing costs for this navigation system?

The Fixed Price Incentive (FPI) contract type is designed to share cost risks and rewards between the government and the contractor, aiming for better cost control than a simple fixed-price contract while providing incentives for performance. In an FPI contract, there's a target cost, a target profit, and a price ceiling. If the final cost is below the target, both parties share in the savings according to a predetermined formula. If the cost exceeds the target but stays below the ceiling, the profit is reduced. If the cost exceeds the ceiling, the contractor absorbs the overrun. For this navigation system contract, the FPI structure encourages Lockheed Martin to manage costs effectively to achieve a higher profit. However, the effectiveness is contingent on realistic cost targets and robust government oversight to ensure the contractor is making genuine efforts to control expenses and not simply passing costs through.

What are the historical spending patterns for navigation systems within the Department of the Navy?

Historical spending patterns for navigation systems within the Department of the Navy are substantial and reflect the critical role these systems play in naval operations, from aviation to surface and subsurface vessels. The Navy consistently invests in advanced navigation, guidance, and control technologies to maintain operational superiority and ensure mission success. Spending in this category typically involves research and development, procurement of new systems, and sustainment/upgrades of existing platforms. Major procurement efforts often involve large, multi-year contracts awarded to prime defense contractors like Lockheed Martin, Northrop Grumman, and Raytheon. The total annual spending can fluctuate based on modernization priorities, new platform introductions, and specific threat environments, but it generally represents a significant portion of the Navy's overall procurement budget for electronics and combat systems.

What is the significance of the NAICS code 334511 (Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing)?

NAICS code 334511 encompasses establishments primarily engaged in manufacturing instruments and related equipment for detecting, measuring, and controlling or displaying the results of such activities. This includes a wide range of products such as search, detection, navigation, guidance, aeronautical, and nautical systems and instruments. For the Department of Defense, this code is highly relevant as it covers critical components for military aircraft, ships, and other platforms. Companies operating under this code are involved in producing sophisticated electronics, sensors, and software essential for military operations. The manufacturing processes often require advanced engineering, precision assembly, and rigorous testing to meet stringent military specifications, making it a high-value, specialized sector within the broader manufacturing industry.

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: MAINT/REPAIR SHOP EQPT

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001914R0012

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 1 LOCKHEED BLVD, FORT WORTH, TX, 76108

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: $174,088,972

Exercised Options: $167,771,509

Current Obligation: $167,771,509

Subaward Activity

Number of Subawards: 33

Total Subaward Amount: $7,893,638

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline