DoD's $233M Next Gen EODAS contract awarded to Lockheed Martin faces scrutiny over sole-source nature

Contract Overview

Contract Amount: $233,353,316 ($233.4M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2019-12-30

End Date: 2026-03-31

Contract Duration: 2,283 days

Daily Burn Rate: $102.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: NEXT GEN EODAS NON-RECURRING

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $233.4 million to LOCKHEED MARTIN CORPORATION for work described as: NEXT GEN EODAS NON-RECURRING Key points: 1. The contract's sole-source award raises questions about potential overpayment and lack of competitive pressure. 2. Limited competition may have resulted in higher costs for taxpayers compared to a fully competed scenario. 3. The duration of the contract (2283 days) suggests a long-term commitment with ongoing financial implications. 4. Performance context is limited due to the non-recurring nature of the initial award, making long-term value assessment difficult. 5. The contract falls within the Aircraft Manufacturing sector, a high-value, specialized industry. 6. The absence of small business set-asides or subcontracting requirements warrants further investigation into broader economic impact.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging without comparable bids. The Cost Plus Fixed Fee (CPFF) pricing structure, while common for complex development, can lead to cost overruns if not meticulously managed. The total award value of $233 million over its period of performance suggests a significant investment. Without competitive bids, it's difficult to ascertain if this represents a fair market price or if taxpayers are bearing a premium due to the lack of competition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Lockheed Martin Corporation, was solicited. This approach is typically justified when only one responsible source is available or when urgent and compelling circumstances exist. However, the lack of a competitive bidding process means that the government did not benefit from the price discovery and innovation that typically arise from multiple proposals.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This limits the government's ability to secure the best possible value for its investment.

Public Impact

The primary beneficiary is the Department of the Navy, which will receive the Next Generation EODAS system. The contract aims to deliver advanced capabilities for Explosive Ordnance Disposal (EOD) operations. The geographic impact is primarily within Texas, where the contractor is located, but the system's deployment will be global. Workforce implications include specialized engineering and manufacturing roles within Lockheed Martin and its potential supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs.
Sole-source award limits transparency in pricing.
CPFF contract type carries inherent risk of cost overruns.
No indication of small business participation or subcontracting.

Positive Signals

Awarded to a known defense contractor with established capabilities.
Contract addresses a critical national security need (EOD).
Long-term contract provides stability for program development.

Sector Analysis

The Aircraft Manufacturing sector (NAICS 336411) is characterized by high barriers to entry, significant R&D investment, and long production cycles. Major defense contractors like Lockheed Martin dominate this space. Federal spending in this sector is substantial, driven by national security requirements. This contract for EODAS fits within the broader category of specialized aerospace and defense systems, where innovation and technological superiority are paramount.

Small Business Impact

The contract data indicates no specific small business set-aside or subcontracting requirements were included. This suggests that the prime contractor, Lockheed Martin, is expected to manage the entire scope of work internally or through its existing large-scale supply chains. Consequently, there is a missed opportunity to leverage the small business ecosystem for specialized components or services, potentially limiting broader economic impact and innovation.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The Cost Plus Fixed Fee structure necessitates rigorous financial oversight to monitor expenditures and ensure adherence to the fixed fee. Transparency is limited due to the sole-source nature. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract.

Related Government Programs

Defense Procurement
Aerospace Manufacturing
Explosive Ordnance Disposal Equipment
Sole-Source Contracts
Cost-Plus Contracts

Risk Flags

Sole-source award
Lack of competition
Cost Plus Fixed Fee pricing
No small business subcontracting

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $233.4 million to LOCKHEED MARTIN CORPORATION. NEXT GEN EODAS NON-RECURRING

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 $233.4 million.

What is the period of performance?

Start: 2019-12-30. End: 2026-03-31.

What is the specific capability gap that the Next Generation EODAS system is intended to address?

The Next Generation EODAS (Explosive Ordnance Disposal Automated System) is designed to enhance the capabilities of military personnel in detecting, identifying, and neutralizing explosive threats. While specific details are often classified, such systems typically aim to provide improved situational awareness, advanced sensor integration, robotic assistance, and enhanced data processing for EOD teams. This could involve replacing or upgrading legacy systems that may be outdated, less effective against modern threats, or pose increased risks to operators.

Why was this contract awarded on a sole-source basis instead of being competed?

Sole-source awards are typically justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source can provide the required supplies or services, or when there is an urgent and compelling need that precludes full and open competition. For defense contracts, this can sometimes be due to unique technological requirements, proprietary information, or the need to leverage a specific contractor's specialized expertise and existing infrastructure. The Department of the Navy would have had to document the justification for not competing this award.

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

The CPFF contract type is often used for research and development or complex projects where the scope is not fully defined at the outset. It allows the contractor to recover all allowable costs plus a fixed fee representing profit. While it provides flexibility for evolving requirements, it carries a higher risk of cost overruns for the government compared to fixed-price contracts, as the government bears the risk of cost increases. The fixed fee, however, provides some predictability in profit. Value is maximized when the government exercises strong oversight and the contractor manages costs efficiently.

What is Lockheed Martin Corporation's track record with similar defense contracts, particularly in the EOD or aerospace manufacturing domain?

Lockheed Martin Corporation is a major defense contractor with extensive experience in aerospace, defense systems, and advanced technologies. They have a long history of developing and producing complex military platforms, including aircraft, missiles, and surveillance systems. While specific details on their EOD-related automated systems might be less public, their overall track record involves managing large, complex, and often sole-source or highly specialized contracts for the U.S. military and allied nations. Their experience suggests a capability to handle the technical demands of the Next Gen EODAS program.

What are the potential implications of awarding a $233 million contract without small business subcontracting requirements?

The absence of small business subcontracting requirements on a contract of this magnitude means that opportunities for small businesses to participate in the defense supply chain are significantly reduced. Small businesses often provide specialized components, innovative solutions, and essential services. By not mandating subcontracting, the government may miss out on leveraging the agility and expertise of the small business sector, potentially leading to less competitive pricing for sub-components and limiting the broader economic benefits that could be distributed within the small business community.

How does the duration of this contract (2283 days) impact the assessment of its overall value and risk?

A contract duration of 2283 days (approximately 6.25 years) indicates a long-term commitment to the development and potential sustainment of the Next Gen EODAS system. This extended period allows for complex development and integration but also increases the overall financial exposure for the government. It necessitates sustained oversight to manage costs, ensure performance milestones are met, and adapt to any evolving technological or threat landscapes. The long duration amplifies the risks associated with cost overruns and potential obsolescence if not managed proactively.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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: $233,353,316

Exercised Options: $233,353,316

Current Obligation: $233,353,316

Subaward Activity

Number of Subawards: 51

Total Subaward Amount: $87,366,978

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0001919G0008

IDV Type: BOA

Timeline