DoD's $121.8M contract for electronic component manufacturing awarded to Lockheed Martin without competition

Contract Overview

Contract Amount: $121,824,679 ($121.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2006-09-22

End Date: 2011-12-31

Contract Duration: 1,926 days

Daily Burn Rate: $63.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SYMPHONY SYSTEMS (BLK 10 CONFIGURATION) TAS::17 1804::TAS

Place of Performance

Location: MANASSAS, PRINCE WILLIAM County, VIRGINIA, 20110

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $121.8 million to LOCKHEED MARTIN CORPORATION for work described as: SYMPHONY SYSTEMS (BLK 10 CONFIGURATION) TAS::17 1804::TAS Key points: 1. The contract's value of over $121 million represents a significant investment in electronic component manufacturing. 2. Awarded to a single large contractor, Lockheed Martin, this contract raises questions about the extent of competition. 3. The 'NOT COMPETED' status is a key risk indicator, suggesting potential for higher costs and limited innovation. 4. This contract falls under the 'Other Electronic Component Manufacturing' NAICS code, indicating a specific niche within the defense industrial base. 5. The duration of the contract (1926 days) suggests a long-term need for these components. 6. The firm-fixed-price contract type aims to transfer cost risk to the contractor, but the lack of competition may undermine this.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without comparable sole-source awards for similar electronic components. The firm-fixed-price structure is generally favorable for cost control, but the absence of competition prevents a direct comparison of pricing against market alternatives. The reported value of $121.8 million for a 5-year contract (approximately 1926 days) needs further scrutiny to determine if it aligns with industry standards for similar specialized electronic components, especially given the lack of competitive bidding.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed among multiple potential bidders. This approach is typically reserved for situations where only one contractor possesses the necessary capabilities, technology, or security clearances. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure, as the government could not solicit bids from multiple vendors to drive down costs.

Public Impact

The primary beneficiary is the Department of Defense, which receives critical electronic components for its operations. The contract supports the manufacturing of specialized electronic components, likely for defense systems. The geographic impact is primarily centered around the contractor's facilities, with potential ripple effects on their supply chain. Workforce implications include job creation and maintenance within Lockheed Martin and its subcontractors in the advanced manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices and reduced innovation.
Sole-source awards can create vendor lock-in, limiting future flexibility.
Transparency concerns arise when contracts are not openly competed.
The long contract duration could mask inefficiencies or cost overruns without competitive checks.

Positive Signals

Firm-fixed-price contract type helps manage cost certainty.
Award to a large, established defense contractor like Lockheed Martin suggests a focus on reliability and proven capability.
The contract supports a critical defense need, ensuring the availability of essential electronic components.

Sector Analysis

This contract falls within the broader electronic component manufacturing sector, a critical part of the defense industrial base. The market for specialized defense electronics is often characterized by high barriers to entry due to technological complexity, security requirements, and long development cycles. While specific market size data for this niche is not provided, the overall defense electronics market is substantial. This contract represents a significant portion of spending within its specific sub-sector, likely supporting advanced military platforms.

Small Business Impact

The data indicates this contract was not competed and does not specify any small business set-aside provisions (ss: false, sb: false). This suggests that small businesses were likely not directly involved as prime contractors. There is no information on subcontracting plans, but in sole-source awards of this magnitude, prime contractors often have significant discretion in selecting subcontractors, which could potentially include small businesses if deemed necessary for specific components or services.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. As a firm-fixed-price contract, the primary accountability measure is the delivery of specified components according to the contract terms. Transparency is limited due to the sole-source nature of the award, making public scrutiny of the pricing and selection process more difficult. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Electronics Manufacturing
Lockheed Martin Contracts
Sole-Source Defense Procurements
Electronic Component Supply Chain

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $121.8 million to LOCKHEED MARTIN CORPORATION. SYMPHONY SYSTEMS (BLK 10 CONFIGURATION) TAS::17 1804::TAS

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 $121.8 million.

What is the period of performance?

Start: 2006-09-22. End: 2011-12-31.

What specific electronic components are being manufactured under this contract, and what are their intended applications within DoD systems?

The provided data classifies the contract under NAICS code 334419, 'Other Electronic Component Manufacturing.' This broad category encompasses a wide range of products, including semiconductors, printed circuit boards, and other specialized electronic parts. Without further details, the specific components are unknown. However, given the contractor (Lockheed Martin) and the agency (Department of Defense), it is highly probable that these components are intended for use in advanced military platforms such as aircraft, missile systems, or communication equipment. The 'SYMPHONY SYSTEMS (BLK 10 CONFIGURATION) TAS' designation in the data might offer a clue, potentially referring to a specific system or program requiring these components. Further investigation into this designation would be necessary to pinpoint the exact application and criticality of the manufactured parts.

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

The data explicitly states the contract type as 'NOT COMPETED,' indicating a sole-source award. The justification for such an award typically falls under specific exceptions to full and open competition, as outlined in federal acquisition regulations. Common reasons include the unique capability or proprietary technology of a single source, urgent and compelling needs where competition is impractical, or when only one responsible source is available. For a large defense contractor like Lockheed Martin, it's plausible that the components required were highly specialized, proprietary, or integrated into existing systems where only they possessed the necessary knowledge, tooling, or security clearances. A detailed review of the contract's justification for other than full and open competition (J&A) would be required to ascertain the precise rationale.

How does the contract's value of $121.8 million compare to similar electronic component manufacturing contracts, particularly those awarded competitively?

Directly comparing the $121.8 million value of this sole-source contract to competitive benchmarks is difficult without knowing the exact specifications of the electronic components. However, the absence of competition inherently prevents the government from leveraging market dynamics to achieve potentially lower prices. If similar, albeit less specialized, components were procured competitively, their per-unit costs might be significantly lower. The long duration (1926 days) means the total value is spread over several years, but the overall commitment is substantial. A thorough value analysis would involve identifying comparable components, their market prices, and the pricing structures of competitive contracts awarded around the same period to assess potential overpricing due to the sole-source nature of this award.

What are the potential risks associated with awarding a contract of this magnitude without competition?

Awarding a $121.8 million contract without competition carries several significant risks. Firstly, there's the risk of paying a higher price than necessary, as the lack of competitive bidding removes the downward pressure on costs that multiple bidders would typically exert. Secondly, it can stifle innovation; without the incentive to outperform competitors, the contractor may have less motivation to develop more efficient manufacturing processes or introduce technological advancements. Thirdly, it can lead to vendor lock-in, making it difficult and costly to switch to alternative suppliers in the future. Finally, sole-source awards can raise concerns about transparency and fairness in the procurement process, potentially leading to perceptions of favoritism or inefficiency.

What is Lockheed Martin's track record with similar DoD contracts, and does it suggest a history of reliable performance or cost overruns?

Lockheed Martin is a major defense contractor with an extensive history of performing large, complex contracts for the Department of Defense. While specific performance data for this particular contract (SYMPHONY SYSTEMS) is not detailed here, the company generally has a track record of delivering sophisticated systems and components. However, like many large defense firms, they have also faced scrutiny over cost overruns and schedule delays on various programs. Assessing their track record for this specific type of electronic component manufacturing would require analyzing past performance metrics, contract modifications, and any associated quality or delivery issues on similar procurements. Without that granular data, it's difficult to definitively state whether this contract aligns with a pattern of reliable performance or potential cost challenges.

Industry Classification

NAICS: Manufacturing › Semiconductor and Other Electronic Component Manufacturing › Other Electronic Component Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002406R6363

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 9500 GODWIN DR, MANASSAS, VA, 20110

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $126,700,480

Exercised Options: $121,824,681

Current Obligation: $121,824,679

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline