Navy awards $174M contract for towed sonar array services to Lockheed Martin, with limited competition

Contract Overview

Contract Amount: $17,416,308 ($17.4M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2002-06-12

End Date: 2008-09-30

Contract Duration: 2,302 days

Daily Burn Rate: $7.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200209!023605!1700!BZ006 !NAVAL SEA SYSTEMS COMMAND !N0002402C6201 !A!N! !N! !20020612!20030415!130956345!787662220!834951691!N!LOCKHEED MARTIN CORPORATION !ELECTRONICS PARKWAY BLDG 7!SYRACUSE !NY!13221!73000!067!36!SYRACUSE !ONONDAGA !NEW YORK !+000003711400!N!N!000020680488!L058!TECH REP SVCS/COMMUNICATION EQUIPMENT !A7 !ELECTRONICS AND COMMUNICATION !2GTP!TOWED SONAR ARRAY !334511!E! !3! ! ! ! ! !99990909!B! ! !A! !D!N!U!1!001!N!1A!A!Y!Z! ! !N!C!N! ! ! !Z!Z!A!A!000!A!C!Y! ! ! !Y! ! !0001!

Place of Performance

Location: SYRACUSE, ONONDAGA County, NEW YORK, 13221

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $17.4 million to LOCKHEED MARTIN CORPORATION for work described as: 200209!023605!1700!BZ006 !NAVAL SEA SYSTEMS COMMAND !N0002402C6201 !A!N! !N! !20020612!20030415!130956345!787662220!834951691!N!LOCKHEED MARTIN CORPORATION !ELECTRONICS PARKWAY BLDG 7!SYRACUSE !NY!13221!73000!067!36!SYRACUSE !ONOND… Key points: 1. Contract awarded on a sole-source basis, raising questions about potential cost efficiencies. 2. Significant funding allocated for technical representative services and communication equipment. 3. Duration of the contract extends over six years, indicating a long-term need. 4. The award falls under engineering services, a broad category with diverse applications. 5. Geographic focus on New York suggests a concentration of related industrial capabilities.

Value Assessment

Rating: questionable

The contract's value of $174 million over approximately six years warrants scrutiny, especially given the sole-source award. Without competitive bidding, it is difficult to benchmark the pricing against market rates or alternative providers. The cost-plus-fixed-fee structure can sometimes lead to higher costs if not managed rigorously. Further analysis would be needed to determine if the pricing reflects fair market value for the specialized technical representative services and communication equipment provided.

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 may result in higher costs for the government compared to a fully competed contract.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings typically achieved through competitive bidding. This can lead to less efficient use of public funds if the awarded price is not rigorously justified.

Public Impact

The primary beneficiary is the U.S. Navy, which receives critical towed sonar array services and communication equipment. Services include technical representation and the provision of specialized communication hardware. The contract's geographic impact is centered in New York, where Lockheed Martin's facility is located. This contract supports specialized technical roles within the defense industry, potentially impacting a skilled workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus-fixed-fee contract type can incentivize higher spending if not closely monitored.
Lack of competition may reduce opportunities for innovative solutions from other vendors.

Positive Signals

Award to a major defense contractor suggests access to established expertise and technology.
Long-term contract indicates a sustained need for these critical defense capabilities.
Focus on specialized equipment like towed sonar arrays highlights support for advanced naval operations.

Sector Analysis

This contract falls within the broader defense sector, specifically focusing on naval systems and electronic warfare capabilities. The market for towed sonar arrays and related technical services is highly specialized, often dominated by a few key defense contractors. Spending in this area is driven by national security requirements and the ongoing need for advanced surveillance and detection technologies. Comparable spending benchmarks would likely be found within other large, sole-source or limited-competition contracts for similar complex defense systems.

Small Business Impact

This contract does not appear to involve a small business set-aside. As a sole-source award to a large prime contractor, Lockheed Martin Corporation, the opportunities for small businesses would likely be limited to subcontracting roles. The extent of small business participation would depend on Lockheed Martin's subcontracting plan and the availability of specialized small businesses capable of fulfilling specific requirements within the scope of this contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Given the sole-source nature, rigorous oversight of cost, performance, and schedule is crucial to ensure value for money. Transparency may be limited due to the lack of public competition, but contract performance reviews and audits by the Navy's Inspector General would be standard accountability measures.

Related Government Programs

Naval Sea Systems Command (NAVSEA) Contracts
Towed Array Sonar Systems
Defense Electronics and Communication Equipment
Lockheed Martin Defense Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of transparency in pricing due to limited competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.4 million to LOCKHEED MARTIN CORPORATION. 200209!023605!1700!BZ006 !NAVAL SEA SYSTEMS COMMAND !N0002402C6201 !A!N! !N! !20020612!20030415!130956345!787662220!834951691!N!LOCKHEED MARTIN CORPORATION !ELECTRONICS PARKWAY BLDG 7!SYRACUSE !NY!13221!73000!067!36!SYRACUSE !ONONDAGA !NEW YORK !+000003711400!N!N!000020680488!L058!TECH REP SVCS/COMMUNICATION EQUIPMENT !A7 !ELECTRONICS AND COMMUNICATION !2GTP!TOWED SONAR ARRAY !334511!E! !3! ! ! ! ! !99990909!B

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 $17.4 million.

What is the period of performance?

Start: 2002-06-12. End: 2008-09-30.

What is the specific technical capability provided by the towed sonar array and communication equipment?

The towed sonar array is a critical component of modern naval warfare, used for detecting submarines and other underwater objects. It consists of a long, flexible cable housing multiple hydrophones (underwater microphones) that are towed behind a vessel. The communication equipment likely facilitates the transmission of data from the sonar array to the ship's processing systems and potentially to shore-based command centers. This technology is essential for maritime surveillance, anti-submarine warfare (ASW), and intelligence gathering, providing the Navy with enhanced situational awareness in the underwater domain.

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

Sole-source awards are typically justified when only one responsible source is available or capable of meeting the requirement. For specialized defense systems like towed sonar arrays and associated communication equipment, it's possible that Lockheed Martin possesses unique intellectual property, proprietary technology, or extensive experience that makes them the only viable provider. Other justifications could include urgent and compelling needs where competition is not feasible, or if the cost of competition would outweigh the benefits. The specific rationale for this sole-source award would be detailed in the Justification and Approval (J&A) document associated with the contract.

How does the cost-plus-fixed-fee (CPFF) contract type impact the government's financial risk?

A Cost-Plus-Fixed-Fee (CPFF) contract is a type of cost-reimbursement contract where the contractor is reimbursed for all allowable costs incurred in performing the contract, plus a fixed amount of profit. This structure shifts a significant portion of the financial risk to the government, as the final cost is not precisely known at the outset. While the fixed fee provides the contractor with an incentive to control costs to maximize their profit margin, the government bears the risk of cost overruns. Rigorous oversight and auditing are essential to ensure that costs claimed by the contractor are reasonable, allocable, and allowable.

What is the historical spending trend for towed sonar array systems by the Department of the Navy?

Historical spending on towed sonar array systems by the Department of the Navy has been substantial and consistent, reflecting the enduring importance of anti-submarine warfare (ASW) and underwater surveillance. While specific figures for towed arrays alone can be difficult to isolate from broader sonar and electronic systems procurement, annual budgets often include billions for ASW capabilities. Spending fluctuates based on modernization programs, fleet readiness requirements, and perceived threats. Contracts for these systems are frequently awarded to major defense contractors like Lockheed Martin, often through sole-source or limited-competition vehicles due to the specialized nature of the technology.

What are the potential risks associated with relying on a single contractor for critical defense technology?

Relying on a single contractor for critical defense technology like towed sonar arrays presents several risks. Firstly, it reduces competitive pressure, potentially leading to higher prices and less incentive for innovation. Secondly, it creates a dependency that can be problematic if the contractor experiences financial difficulties, undergoes mergers, or faces production issues. Thirdly, it limits the government's options if the contractor's performance is unsatisfactory. Finally, it can stifle the development of alternative technologies or solutions from other potential suppliers, potentially hindering long-term technological advancement and strategic flexibility.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: QUALITY CONTROL, TEST, INSPECTION › QUALITY CONTROL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Contractor Details

Address: ELECTRONICS PARKWAY BLDG 7, SYRACUSE, NY, 22

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline