DoD's $13M contract for search and navigation systems awarded to Lockheed Martin without competition

Contract Overview

Contract Amount: $13,047,704 ($13.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2024-06-28

End Date: 2026-02-27

Contract Duration: 609 days

Daily Burn Rate: $21.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: PERL PHASE I

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $13.0 million to LOCKHEED MARTIN CORPORATION for work described as: PERL PHASE I Key points: 1. The contract's value of $13 million is a significant investment in advanced navigation technology. 2. Awarded sole-source, the lack of competition raises questions about potential price overruns and limited innovation. 3. The contract duration of 609 days suggests a substantial project requiring focused development. 4. The 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector is critical for defense operations. 5. The absence of small business set-asides or participation indicates a focus on large, established defense contractors.

Value Assessment

Rating: questionable

Benchmarking the value of this $13 million contract is challenging due to its sole-source nature and specific technical requirements. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value or if there are opportunities for cost savings. The cost-plus-fixed-fee structure, while common in R&D, can sometimes lead to higher costs if not meticulously managed. Further analysis of the contractor's historical performance on similar projects would be necessary to provide a more definitive value assessment.

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 bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified for unique capabilities or urgent needs, they limit price discovery and potentially reduce the incentive for the contractor to offer the most competitive pricing.

Taxpayer Impact: Taxpayers may not be receiving the best possible price for these critical navigation systems due to the lack of competitive pressure. The absence of multiple bids means there was no opportunity to leverage market forces to drive down costs.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially other branches of the Department of Defense, receiving advanced search and navigation systems. The contract will deliver specialized systems crucial for military operations, enhancing situational awareness and operational effectiveness. The geographic impact is primarily within the United States, likely involving research, development, and manufacturing facilities. Workforce implications may include specialized engineering, manufacturing, and technical roles within Lockheed Martin and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential taxpayer savings.
Cost-plus-fixed-fee contract type can incentivize higher spending if not tightly managed.
Lack of small business participation may limit broader economic impact and innovation.
Specific technical requirements may not be widely available, justifying sole-source, but transparency is key.

Positive Signals

Award to a major defense contractor like Lockheed Martin suggests access to established expertise and technology.
Focus on critical navigation systems indicates alignment with key defense modernization priorities.
Definitive contract award provides a clear framework for project execution and delivery.

Sector Analysis

This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, a critical component of the aerospace and defense industry. This industry is characterized by high R&D investment, stringent quality standards, and significant government procurement. The market size for defense electronics and navigation systems is substantial, driven by ongoing modernization efforts and global security needs. This contract represents a specific investment in advanced capabilities within this specialized niche.

Small Business Impact

The contract data indicates no small business set-aside (ss: false) and no indication of small business participation (sb: false). This suggests that the contract was not specifically targeted towards small businesses, and opportunities for subcontracting with small businesses were not explicitly mandated or highlighted in the provided data. Consequently, the direct economic impact on the small business ecosystem for this particular award appears limited, with the primary focus likely on large, established defense contractors.

Oversight & Accountability

Oversight for this contract will likely fall under the Department of the Navy's contracting and program management offices. As a cost-plus-fixed-fee contract, rigorous financial oversight and auditing will be crucial to ensure costs are reasonable and allocable. Transparency regarding the justification for the sole-source award and the progress of the project will be important for public accountability. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

DoD Research and Development Contracts
Naval Systems Procurement
Aerospace and Defense Manufacturing
Sole-Source Defense Acquisitions
Navigation and Guidance Systems

Risk Flags

Sole-source award
Cost-plus contract type
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $13.0 million to LOCKHEED MARTIN CORPORATION. PERL PHASE I

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 $13.0 million.

What is the period of performance?

Start: 2024-06-28. End: 2026-02-27.

What is Lockheed Martin Corporation's track record with sole-source defense contracts of similar value?

Lockheed Martin Corporation, as one of the largest defense contractors globally, has a extensive history with sole-source contracts across various defense programs. Analyzing their past performance on sole-source awards, particularly those involving complex systems like navigation and guidance, is crucial. This includes examining their ability to deliver on time, within budget (especially for cost-plus contracts), and to the required technical specifications. A review of publicly available contract data and GAO reports can reveal patterns in their sole-source performance, highlighting any recurring issues or consistent successes. Without specific data on this contract's predecessors or comparable sole-source awards to Lockheed Martin, a definitive assessment of their track record here remains general, pointing to a need for specific due diligence on this particular award's justification and oversight.

How does the $13 million value compare to similar navigation system contracts awarded competitively?

Comparing the $13 million value of this sole-source contract to competitively awarded contracts for similar navigation systems is essential for assessing value for money. Competitive procurements typically result in lower prices due to market forces. If comparable systems, developed and produced through open competition, have been acquired for significantly less, it raises concerns about the pricing of this sole-source award. Conversely, if the unique specifications or advanced nature of the systems procured here justify a higher cost, even compared to competitive contracts, then the value proposition might be more defensible. However, without access to specific benchmark data for comparable competitive contracts, it is difficult to definitively state whether $13 million represents a fair market price in this instance.

What are the primary risks associated with awarding a $13 million contract on a sole-source basis?

The primary risks associated with awarding a $13 million contract on a sole-source basis include: 1. **Lack of Price Competition:** Without multiple bids, taxpayers may overpay as there's no market pressure to drive down costs. 2. **Reduced Innovation:** Competitors are incentivized to offer innovative solutions; a sole-source award removes this external pressure. 3. **Potential for Cost Overruns:** Cost-plus contracts, especially when sole-sourced, require stringent oversight to prevent scope creep and unnecessary expenses. 4. **Limited Contractor Accountability:** While the contractor is accountable for performance, the lack of alternatives can reduce leverage in negotiations or issue resolution. 5. **Dependency:** The government becomes reliant on a single provider, which can be problematic if that provider faces financial or operational difficulties. The justification for sole-sourcing must clearly outweigh these inherent risks.

What specific performance metrics or milestones should be tracked for this contract?

For this $13 million Cost Plus Fixed Fee contract for search, detection, navigation, guidance, aeronautical, and nautical systems, key performance metrics and milestones should focus on technical development, schedule adherence, and cost control. Specific milestones could include: completion of preliminary design reviews (PDR), critical design reviews (CDR), successful prototype testing, system integration, and final acceptance testing. Performance metrics should encompass system accuracy, reliability (e.g., Mean Time Between Failures - MTBF), power consumption, environmental resilience (temperature, shock, vibration), and compliance with relevant military standards (e.g., MIL-STD). For cost control, tracking incurred costs against the fixed fee and projected total costs, along with variance analysis, is crucial. Regular progress reports detailing achievements against these metrics and milestones are essential for effective oversight.

How does this contract fit into the broader context of Department of the Navy's spending on navigation and guidance systems?

This $13 million contract represents a specific investment within the Department of the Navy's (DoN) broader portfolio of spending on navigation and guidance systems. The DoN, like other military branches, invests heavily in these technologies to maintain operational superiority. Such systems are critical for naval aviation, surface vessels, and subsurface platforms, supporting missions ranging from reconnaissance and targeting to troop transport and logistics. This contract likely addresses a particular capability gap or upgrades an existing system. Understanding its place requires examining the DoN's overall budget allocation for C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance) and specifically for navigation and sensor technologies. Its value should be assessed relative to other similar investments and the strategic priorities it supports.

What is the justification provided for awarding this contract to Lockheed Martin without competition?

The provided data indicates the contract was awarded under 'NOT COMPETED' (ct: NOT COMPETED), signifying a sole-source procurement. While the specific justification is not detailed in the abbreviated data, common reasons for sole-source awards include: unique or specialized capabilities possessed only by the contractor, urgent and compelling needs where competition is not feasible, or when the contract is a follow-on to a previous competitive award where only one source can provide the necessary follow-on work. For a $13 million contract involving advanced navigation systems, the justification likely centers on Lockheed Martin's proprietary technology, specialized expertise, or the need for seamless integration with existing platforms where only they can provide the required solution. A formal Justification for Other Than Full and Open Competition (JOFOC) would typically be required and publicly documented for such an award.

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: N0001924R0011

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

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: $30,833,156

Exercised Options: $30,833,156

Current Obligation: $13,047,704

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline