DoD's $27.5M Lockheed Martin contract for navigation system support lacks competition, raising value concerns

Contract Overview

Contract Amount: $27,484,520 ($27.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2020-06-03

End Date: 2023-06-30

Contract Duration: 1,122 days

Daily Burn Rate: $24.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: THE MAINTENANCE, TECHNICAL REACH BACK, AND SUSTAINMENT SUPPORT OF THE NIRL.

Place of Performance

Location: EGLIN AFB, OKALOOSA County, FLORIDA, 32542

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $27.5 million to LOCKHEED MARTIN CORPORATION for work described as: THE MAINTENANCE, TECHNICAL REACH BACK, AND SUSTAINMENT SUPPORT OF THE NIRL. Key points: 1. Contract awarded without competition, limiting price discovery and potentially increasing costs. 2. The cost-plus-fixed-fee structure may incentivize higher spending without strict cost controls. 3. Limited transparency on performance metrics and comparison to similar contracts hinders value assessment. 4. The contract duration of nearly three years suggests a long-term reliance on this specific provider. 5. Focus on sustainment and technical support indicates a critical, ongoing need for this system. 6. Geographic concentration in Florida for support services.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of competitive bidding and limited public data on performance. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex R&D or sustainment, can lead to higher overall costs if not managed rigorously. Without comparable contract data or detailed cost breakdowns, it's difficult to definitively assess if the $27.5 million represents a fair price for the services rendered. The absence of competition suggests potential for inflated pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source, 'NOT COMPETED' action. This means that the Department of Defense did not solicit bids from multiple potential contractors. The lack of competition limits the government's ability to leverage market forces to secure the best possible price and terms. It raises questions about whether alternative solutions or more cost-effective providers were considered or available.

Taxpayer Impact: Taxpayers may be paying a premium for this service due to the absence of competitive pressure. Without a bidding process, there's less assurance that the price reflects true market value.

Public Impact

The primary beneficiaries are the Department of Defense, specifically units relying on the NIRL system for navigation, detection, and guidance. Services delivered include maintenance, technical reach-back, and sustainment support, ensuring the operational readiness of critical defense systems. The geographic impact is concentrated in Florida, where the support services are being provided. Workforce implications include the employment of personnel by Lockheed Martin to perform these specialized maintenance and support functions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Cost-plus-fixed-fee contract type can incentivize increased spending.
Limited public data makes independent value-for-money assessment difficult.
Sole-source award raises questions about market research and alternative solutions.

Positive Signals

Contract ensures sustainment of critical navigation systems, vital for defense operations.
Lockheed Martin is a well-established defense contractor with extensive experience.
Contract provides continuity of support for an essential defense capability.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on the manufacturing and support of navigation, guidance, and control systems. The market for such specialized defense systems is often characterized by high barriers to entry, significant R&D investment, and a limited number of prime contractors. Spending in this area is driven by national security requirements and technological advancements. Comparable spending benchmarks would likely involve other sustainment contracts for complex military hardware, often awarded to large, established defense firms.

Small Business Impact

This contract does not appear to involve a small business set-aside, as indicated by the prime contractor being Lockheed Martin Corporation. There is no explicit information provided regarding subcontracting plans for small businesses. Given the nature of the services (specialized maintenance and technical support for a complex system), it's possible that some subcontracting opportunities could exist, but this is not guaranteed or detailed in the provided data.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The specific accountability measures within a cost-plus-fixed-fee contract typically involve detailed reporting requirements, audits, and milestone tracking. Transparency is limited by the sole-source nature and the proprietary information often associated with defense systems, making a full public assessment of oversight challenging.

Related Government Programs

Defense Logistics Agency (DLA) Support Contracts
Naval Air Systems Command (NAVAIR) Sustainment Programs
Air Force Materiel Command (AFMC) Readiness Contracts
Department of Defense Research and Development (R&D) for Navigation Systems

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Limited public performance data
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.5 million to LOCKHEED MARTIN CORPORATION. THE MAINTENANCE, TECHNICAL REACH BACK, AND SUSTAINMENT SUPPORT OF THE NIRL.

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 $27.5 million.

What is the period of performance?

Start: 2020-06-03. End: 2023-06-30.

What is the specific system being supported by this contract, and what is its operational importance to the DoD?

The contract supports the 'MAINTENANCE, TECHNICAL REACH BACK, AND SUSTAINMENT SUPPORT OF THE NIRL.' While the acronym NIRL is not explicitly defined in the provided data, based on the North American Industry Classification System (NAICS) code 334511 (Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing), it is highly probable that NIRL refers to a critical navigation, detection, or guidance system. Such systems are fundamental to military operations, enabling aircraft, ships, and ground vehicles to determine their position, navigate complex environments, and achieve mission objectives. The sustainment and maintenance of these systems are crucial for ensuring the operational readiness and effectiveness of various defense platforms, directly impacting mission success and personnel safety.

How does the cost-plus-fixed-fee (CPFF) contract type compare to other pricing structures for similar sustainment services, and what are the implications for cost control?

The Cost-Plus-Fixed-Fee (CPFF) contract type is often used when the scope of work is not precisely defined, or when there is a high degree of uncertainty, such as in research and development or complex sustainment efforts. In a CPFF contract, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure can incentivize contractors to incur costs, as their profit is fixed regardless of the total cost. Compared to fixed-price contracts, where the contractor bears more risk for cost overruns, CPFF can lead to higher overall expenditures for the government if not managed with stringent oversight. For sustainment services, while it allows flexibility for unforeseen issues, it necessitates robust government monitoring of costs and performance to ensure value for money and prevent potential cost escalation.

What is Lockheed Martin Corporation's track record with similar sustainment contracts for defense systems, particularly those involving navigation and guidance technology?

Lockheed Martin Corporation is a major defense contractor with extensive experience in developing, manufacturing, and sustaining complex defense systems, including those related to navigation, guidance, and aeronautical technology. They have a long history of supporting various branches of the U.S. military across numerous platforms. While specific details on their track record for the NIRL system are not provided, their portfolio includes work on advanced radar systems, missile guidance, and aircraft navigation suites. Government contract databases often show a pattern of large, sole-source or competitively awarded sustainment contracts for major defense platforms awarded to Lockheed Martin. Their performance on these contracts is generally viewed as meeting technical requirements, though like many large contractors, they may face scrutiny regarding cost efficiency and pricing on specific awards.

Given the sole-source nature, what steps has the DoD taken to ensure this contract provides adequate value and avoids potential overpricing?

When a sole-source contract is awarded, the Department of Defense is expected to undertake specific steps to ensure fair and reasonable pricing and adequate value. This typically involves conducting a thorough price analysis, which may include reviewing historical pricing data for similar services, analyzing the contractor's cost estimates, and potentially negotiating the fee. The Defense Contract Management Agency (DCMA) often plays a role in overseeing contractor costs and performance. However, the effectiveness of these measures is inherently limited without the competitive pressure that multiple bids would provide. The government relies heavily on its negotiation capabilities and oversight mechanisms to mitigate the risks associated with sole-source awards, but the absence of competition remains a fundamental challenge to maximizing value.

What are the historical spending patterns for the NIRL system or similar navigation support services provided by the DoD over the past 5-10 years?

Analyzing historical spending patterns for the specific NIRL system is challenging without its precise identification and access to detailed historical contract databases. However, general trends in defense spending on sustainment for complex systems like navigation and guidance technology have remained significant over the past 5-10 years. The DoD consistently allocates substantial budgets towards maintaining the readiness and operational capability of its aging and evolving platforms. Contracts for sustainment, maintenance, and technical support of critical systems are often long-term and can represent a considerable portion of a system's total lifecycle cost. Spending in this area is influenced by factors such as the number of systems in operation, their age, technological upgrades, and geopolitical demands. It is common for such sustainment contracts to run into tens or hundreds of millions of dollars over their duration.

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: N0001919R0035

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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: $43,681,776

Exercised Options: $43,681,776

Current Obligation: $27,484,520

Subaward Activity

Number of Subawards: 36

Total Subaward Amount: $8,231,961

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline