Lockheed Martin awarded $171M for Common Reprogramming Tools design, a sole-source contract

Contract Overview

Contract Amount: $171,042,559 ($171.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2019-12-19

End Date: 2026-03-31

Contract Duration: 2,294 days

Daily Burn Rate: $74.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: FY20 LEVEL OF EFFORT HOURS FOR THE INITIAL DESIGN OF THE COMMON REPROGRAMMING TOOLS

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $171.0 million to LOCKHEED MARTIN CORPORATION for work described as: FY20 LEVEL OF EFFORT HOURS FOR THE INITIAL DESIGN OF THE COMMON REPROGRAMMING TOOLS Key points: 1. Contract awarded to a single, established prime contractor, raising questions about competitive pricing. 2. The contract spans over 6 years, indicating a long-term commitment to the developed tools. 3. Focus on design phase suggests potential for future development and sustainment contracts. 4. The use of Cost Plus Fixed Fee (CPFF) pricing can lead to cost overruns if not closely managed. 5. Geographic location in Texas may offer insights into regional defense contracting activity. 6. The specific NAICS code points to a specialized segment of the defense industrial base.

Value Assessment

Rating: questionable

The contract's value of $171 million for the design phase of reprogramming tools is substantial. Without comparable sole-source contracts for similar design efforts, it is difficult to benchmark the value for money. The CPFF contract type introduces inherent risk for cost control, as the contractor is reimbursed for allowable costs plus a fixed fee. This necessitates robust oversight to ensure costs remain reasonable and aligned with the project's scope. The absence of competition further limits the ability to assess if this price represents a fair market value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, Lockheed Martin Corporation, was solicited. The justification for sole-source procurement is not provided in the data, but typically it involves reasons such as urgency, unique capabilities, or lack of competition. The limited competition means there was no opportunity for other companies to bid, potentially leading to a higher price than if multiple bids were received. This approach bypasses the price discovery mechanisms inherent in a competitive bidding process.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competitive pressure. Without competing offers, there is less incentive for the contractor to offer the lowest possible price, and the government has fewer options to negotiate from a strong position.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially other Department of Defense branches that will utilize the Common Reprogramming Tools. The services delivered include the initial design phase for these critical software tools. The geographic impact is primarily within Texas, where the contractor is located, potentially supporting local jobs and the regional economy. Workforce implications include specialized engineering and software development roles within Lockheed Martin and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
CPFF contract type requires diligent oversight to manage cost growth.
Long contract duration (over 6 years) increases exposure to potential scope creep or changing requirements.
Lack of transparency regarding the sole-source justification.
Potential for contractor to leverage sole-source position for future contract phases.

Positive Signals

Award to a large, established defense contractor like Lockheed Martin suggests access to significant technical expertise.
Focus on 'Common Reprogramming Tools' indicates an effort to standardize and improve efficiency across systems.
Long-term contract provides stability for program development and execution.
The contract is for the design phase, which is a critical foundational step.

Sector Analysis

The defense industrial base, particularly the segment focused on software and systems integration for military platforms, is characterized by large, established prime contractors. This contract falls within the "Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing" sector (NAICS 334511). Spending in this area is driven by the need for advanced technological capabilities to maintain military superiority. Comparable spending benchmarks are difficult to ascertain without more specific details on the tools' functionalities, but large-scale software development contracts for defense systems often run into hundreds of millions of dollars.

Small Business Impact

The data indicates that small business participation (sb) is false, and there is no indication of a small business set-aside (ss). This suggests that the prime contract was not specifically targeted towards small businesses. While Lockheed Martin is the prime contractor, there may be subcontracting opportunities for small businesses, but this is not detailed in the provided information. The absence of set-aside provisions means that the primary contract award did not prioritize small business inclusion.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Given the Cost Plus Fixed Fee (CPFF) structure, rigorous financial oversight is crucial to monitor allowable costs and ensure the fixed fee remains appropriate. Accountability measures would involve performance reviews against contract milestones and deliverables. Transparency regarding the sole-source justification and ongoing cost reporting would be key aspects of oversight. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Defense Software Development Contracts
Naval Systems Modernization Programs
Aerospace and Defense Manufacturing
Information Technology for Military Applications
Government Contract Design Services

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competition
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $171.0 million to LOCKHEED MARTIN CORPORATION. FY20 LEVEL OF EFFORT HOURS FOR THE INITIAL DESIGN OF THE COMMON REPROGRAMMING TOOLS

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 $171.0 million.

What is the period of performance?

Start: 2019-12-19. End: 2026-03-31.

What is the specific justification for awarding this contract on a sole-source basis to Lockheed Martin Corporation?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source procurements are justified under circumstances such as the urgency of the need, the unavailability of comparable products or services from other sources, or when only one responsible source is capable of providing the required product or service. For a contract of this magnitude and duration, the government would have had to formally document and approve the rationale for not competing the requirement. Without this documentation, it is impossible to assess the validity of the sole-source determination and its potential impact on cost and innovation.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other contract types in terms of risk and potential cost overruns for this type of project?

The Cost Plus Fixed Fee (CPFF) contract type is often used for research and development or complex projects where the scope is not fully defined at the outset. It reimburses the contractor for allowable costs incurred plus a predetermined fixed fee, representing profit. While it allows flexibility for evolving requirements, it carries a higher risk of cost overruns compared to fixed-price contracts, as the government bears the risk of cost increases. Effective oversight is critical to control costs and ensure the fixed fee remains reasonable. Other contract types, like Firm-Fixed-Price (FFP), shift more risk to the contractor but may be less suitable for early-stage design where uncertainties are high. Incentive contracts could offer a middle ground by linking profit to performance.

What are the potential implications of a sole-source award on the innovation and technological advancement of Common Reprogramming Tools?

Sole-source awards can potentially stifle innovation by removing the competitive pressure that often drives contractors to develop novel solutions and efficiencies. When a single contractor is guaranteed the work, there may be less incentive to explore cutting-edge technologies or alternative approaches that could lead to superior or more cost-effective tools. Competition typically fosters a more dynamic environment where multiple companies vie to offer the best value, pushing the boundaries of what is possible. While Lockheed Martin is a capable contractor, the absence of competing ideas means the government may not benefit from the full spectrum of potential technological advancements available in the market.

What is the historical spending pattern for 'Common Reprogramming Tools' or similar systems within the Department of the Navy or DoD?

The provided data focuses on a single contract award and does not offer historical spending patterns for 'Common Reprogramming Tools' or analogous systems. To assess historical spending, one would need to analyze previous contracts related to reprogramming tools, software development for navigation and guidance systems, or similar functionalities across the Department of the Navy and the broader Department of Defense. This would involve examining contract databases for trends in award values, contract types, and contractor performance over multiple fiscal years. Understanding past investments can provide context for the current $171 million award, helping to determine if it represents an increase, decrease, or consistent level of funding for such capabilities.

What are the key performance indicators (KPIs) or milestones expected for the initial design phase of these Common Reprogramming Tools?

The provided data does not specify the key performance indicators (KPIs) or milestones for the initial design phase of the Common Reprogramming Tools. Typically, for a design contract, milestones might include the delivery of preliminary design documents, system architecture specifications, user interface mockups, detailed design blueprints, and a comprehensive design review. KPIs would likely focus on adherence to schedule, quality of deliverables, and potentially early-stage cost control metrics. The effectiveness of the design phase would ultimately be measured by how well it sets the foundation for successful subsequent development, testing, and deployment phases of the reprogramming tools.

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: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001919R0006

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 1 LOCKHEED BLVD BLDG 10, 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: $175,270,591

Exercised Options: $175,270,591

Current Obligation: $171,042,559

Actual Outlays: $222,903

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $1,698,820

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline