DoD's $15M contract for mission computers awarded to Lockheed Martin, raising questions about competition and value

Contract Overview

Contract Amount: $14,997,480 ($15.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2025-09-30

End Date: 2030-06-01

Contract Duration: 1,705 days

Daily Burn Rate: $8.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DOMESTIC GEN 5I MISSION COMPUTER

Place of Performance

Location: OWEGO, TIOGA County, NEW YORK, 13827

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $15.0 million to LOCKHEED MARTIN CORPORATION for work described as: DOMESTIC GEN 5I MISSION COMPUTER Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The fixed-price contract type offers some cost certainty but may not fully capture efficiencies. 3. The duration of the contract (over 5 years) suggests a long-term need for these components. 4. Awarded by the Department of the Navy, indicating a specific defense application. 5. The North American Industry Classification System (NAICS) code 336413 points to aircraft parts manufacturing. 6. No small business set-aside was utilized, potentially impacting small business participation.

Value Assessment

Rating: questionable

Benchmarking the value of this $15 million contract is challenging due to its sole-source nature and the specific nature of 'DOMESTIC GEN 5I MISSION COMPUTER'. Without competitive bids, it's difficult to ascertain if the price reflects fair market value or if alternative solutions could offer better value. The fixed-price contract provides some cost control, but the lack of competition is a significant risk factor for achieving optimal value for money. Further analysis would require understanding the specific technical requirements and comparing them to similar, competitively procured systems if available.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning only one bidder, Lockheed Martin Corporation, was considered. This approach bypasses the standard competitive bidding process, which typically involves multiple companies submitting proposals. While sole-source awards can be justified for unique capabilities or urgent needs, they inherently limit price discovery and can lead to higher costs for the government compared to a fully competed contract. The absence of competition means taxpayers do not benefit from the potential cost savings that arise from market forces.

Taxpayer Impact: The sole-source award means taxpayers may not be receiving the best possible price for these mission computers, as there was no competitive pressure to drive down costs.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially the broader U.S. Air Force, depending on the '5I' designation. The contract will deliver critical mission computer hardware essential for advanced military aircraft operations. The geographic impact is primarily within New York, where the contractor is located, but the end-use is national defense. This contract supports specialized roles within Lockheed Martin's workforce, likely involving engineers and manufacturing personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Sole-source awards can reduce transparency in government spending.
Long contract duration could lock the government into potentially outdated technology if not managed carefully.
Dependence on a single supplier for critical components poses a supply chain risk.

Positive Signals

Fixed-price contract offers some cost predictability.
Award to a major defense contractor suggests a high level of technical capability.
Contract supports a critical defense mission, ensuring operational readiness.

Sector Analysis

The aerospace and defense sector is characterized by high R&D investment, long product development cycles, and significant government procurement. Contracts for mission-critical components like these computers are essential for maintaining technological superiority. The market is dominated by a few large prime contractors, often leading to sole-source or limited competition awards for specialized systems. Spending in this sub-sector, related to aircraft parts and auxiliary equipment manufacturing (NAICS 336413), is substantial, driven by modernization programs and sustainment efforts for existing fleets.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award to a large prime contractor like Lockheed Martin suggests that the primary work will be performed by the prime or its large subcontractors. This limits opportunities for small businesses to directly participate in this specific contract, although they may be involved further down the supply chain.

Oversight & Accountability

Oversight for this contract will primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price structure, which shifts some cost risk to the contractor. Transparency is limited due to the sole-source nature of the award. The Inspector General for the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

F-35 Program
Advanced Fighter Aircraft Sustainment
Defense Mission Systems Procurement
Avionics Manufacturing
Aerospace Component Supply

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns (if initial estimate is low)
Long-term dependency on a single supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.0 million to LOCKHEED MARTIN CORPORATION. DOMESTIC GEN 5I MISSION COMPUTER

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 $15.0 million.

What is the period of performance?

Start: 2025-09-30. End: 2030-06-01.

What is the specific '5I' designation and how does it relate to the mission computer's capabilities?

The '5I' designation likely refers to the fifth generation of integrated intelligence, surveillance, and reconnaissance (ISR) capabilities or a specific platform's generation within the DoD's classification system. Mission computers are the central processing units for aircraft, integrating data from various sensors (radar, infrared, electronic warfare) and providing situational awareness and tactical information to the pilot or autonomous systems. For a '5I' generation system, this implies the computer must handle extremely high data volumes, complex algorithms for sensor fusion, advanced networking, and potentially cyber-hardened operations, supporting next-generation combat effectiveness.

Can the government benchmark the pricing of this sole-source contract against similar systems?

Benchmarking the pricing of this sole-source contract is difficult without access to detailed cost breakdowns from Lockheed Martin or comparable, competitively awarded contracts for similar systems. Sole-source awards inherently lack the price discovery mechanism of competition. The government may have internal cost-estimating capabilities or historical pricing data for similar components, but these are often proprietary. The firm-fixed-price (FFP) nature provides some cost certainty, but the initial price negotiation is critical. Without competitive bids, it's hard to definitively say if the $15 million represents fair market value or if taxpayers are overpaying.

What are the risks associated with a sole-source award for critical defense components?

Sole-source awards for critical defense components carry several risks. Firstly, the lack of competition can lead to higher prices than might be achieved through a competitive process, resulting in less value for taxpayer money. Secondly, it can reduce transparency in the procurement process. Thirdly, it creates a dependency on a single supplier, which can pose supply chain risks if the supplier faces production issues, financial instability, or decides to discontinue the product line. Lastly, without competitive pressure, there might be less incentive for the sole-source provider to innovate or offer cost-saving improvements over the contract's duration.

How does the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code (336413) apply to this mission computer contract?

The NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' is a broad category that encompasses the production of various components for aircraft, excluding engines, propellers, and complete airframes. Mission computers, while sophisticated electronic systems, are integral parts of an aircraft's overall systems and directly support its operational functions. Therefore, their manufacturing and integration fall under this classification, indicating that the contract is for a specific, manufactured component essential for aircraft operation, rather than for services or the entire aircraft.

What is the historical spending pattern for similar mission computer systems by the Department of the Navy?

Historical spending patterns for similar mission computer systems by the Department of the Navy are typically substantial and often involve complex, multi-year contracts. Given the advanced nature of defense technology, these systems are frequently procured through sole-source or limited-competition vehicles due to specialized requirements and the dominance of a few large defense contractors like Lockheed Martin. Spending often aligns with major aircraft platform modernization or new platform development programs. Analyzing past contracts for comparable avionics or mission computing suites would reveal significant investment, often in the tens to hundreds of millions of dollars, reflecting the high cost and critical importance of these components.

What are the implications of the firm-fixed-price (FFP) contract type for this acquisition?

A firm-fixed-price (FFP) contract type means the price is set and not subject to adjustment based on the contractor's cost experience. This shifts the risk of cost overruns entirely to the contractor, Lockheed Martin. For the government, it provides budget certainty and predictability. However, the success of an FFP contract hinges heavily on the initial price negotiation and the accuracy of the contractor's cost estimates. If the contractor significantly underestimates costs, they may cut corners on quality or performance, although the government's oversight mechanisms aim to prevent this. Conversely, if the initial price is too high, the government may overpay.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1801 STATE RT 17 C, OWEGO, NY, 13827

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $14,997,480

Exercised Options: $14,997,480

Current Obligation: $14,997,480

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001923G0002

IDV Type: BOA

Timeline