Lockheed Martin awarded $57.7M for DDG 51 Modernization - Machinery Control Systems

Contract Overview

Contract Amount: $57,686,721 ($57.7M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2008-12-29

End Date: 2019-03-13

Contract Duration: 3,726 days

Daily Burn Rate: $15.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: DDG 51 MODERNIZATION - MACHINERY CONTROL SYSTEMS

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32825

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $57.7 million to LOCKHEED MARTIN CORPORATION for work described as: DDG 51 MODERNIZATION - MACHINERY CONTROL SYSTEMS Key points: 1. Contract awarded to a single, large defense contractor, indicating a focus on specialized capabilities. 2. The contract duration of over 10 years suggests a long-term need for these modernization services. 3. The cost-plus-fixed-fee pricing structure may lead to cost overruns if not closely managed. 4. The absence of small business set-asides suggests the scope may not be easily divisible for smaller firms. 5. This contract falls within the broader category of defense systems modernization, a critical area for naval readiness.

Value Assessment

Rating: fair

The contract value of $57.7 million over approximately 10 years averages to about $5.77 million per year. Benchmarking this against similar modernization efforts for naval vessels is challenging without more specific details on the scope of work. However, the cost-plus-fixed-fee (CPFF) structure inherently carries risk for the government, as costs can escalate beyond initial projections, though the fixed fee provides some predictability. The value proposition depends heavily on the successful and timely delivery of the modernized machinery control systems and their impact on the DDG 51 class's operational lifespan and capabilities.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely solicited. However, the presence of only two bids suggests a highly specialized market where only a few companies possess the necessary technical expertise and security clearances to compete. This level of competition, while technically 'full and open,' may not have driven the most aggressive pricing due to the limited number of qualified participants.

Taxpayer Impact: While full and open competition was utilized, the low number of bidders suggests that taxpayers may not have benefited from the most competitive pricing possible. The government secured a solution, but the potential for cost savings through broader competition appears limited.

Public Impact

The primary beneficiaries are the U.S. Navy and its fleet of DDG 51 destroyers, ensuring their continued operational effectiveness. This contract delivers essential upgrades to machinery control systems, crucial for ship propulsion, power generation, and overall combat system integration. The geographic impact is primarily within the United States, likely involving shipyards and contractor facilities in Florida, where the contract was managed. The contract supports highly skilled jobs in engineering, systems integration, and technical support within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contract type introduces potential for cost overruns if not meticulously managed.
Limited competition (2 bidders) may have resulted in a higher price than a more robustly contested procurement.
Long contract duration (over 10 years) increases the risk of technological obsolescence or changing requirements.
The specific nature of 'machinery control systems' implies critical infrastructure, making any failure or delay highly impactful.

Positive Signals

Awarded under full and open competition, ensuring a broad initial solicitation.
The contractor, Lockheed Martin, is a major defense prime with extensive experience in naval systems.
Modernization of existing platforms like the DDG 51 class extends their service life and maintains fleet readiness.
The contract addresses a critical component (machinery control systems) essential for ship operations.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on the manufacturing and integration of complex systems for naval platforms. The market for naval modernization and combat systems is dominated by a few large, established defense contractors. Spending in this area is driven by the need to maintain a technologically superior fleet and extend the service life of aging vessels. Comparable spending benchmarks would involve other major platform modernization programs, such as upgrades to aircraft carriers, submarines, or other surface combatants.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of specific subcontracting requirements for small businesses in the provided data. This suggests that the primary contractor, Lockheed Martin, will likely perform the majority of the work in-house or with other large subcontractors. The absence of set-asides means that opportunities for small businesses to directly participate in this specific contract are likely limited, though they may be involved further down the supply chain.

Oversight & Accountability

Oversight for this contract would typically be provided by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance, quality, and compliance with contract terms. The cost-plus-fixed-fee structure necessitates rigorous financial oversight to monitor expenditures and prevent cost creep. Transparency is generally maintained through contract reporting requirements, though detailed public access to performance metrics and cost breakdowns may be limited due to national security considerations.

Related Government Programs

DDG 51 Class Destroyer Modernization Programs
Naval Ship Systems Modernization
Machinery Control Systems Development
US Navy Ship Maintenance and Repair Contracts
Defense Contract Management Agency Oversight

Risk Flags

Cost-plus-fixed-fee contract type
Limited competition (2 bidders)
Long contract duration (over 10 years)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $57.7 million to LOCKHEED MARTIN CORPORATION. DDG 51 MODERNIZATION - MACHINERY CONTROL SYSTEMS

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 $57.7 million.

What is the period of performance?

Start: 2008-12-29. End: 2019-03-13.

What is Lockheed Martin's track record with similar naval modernization contracts?

Lockheed Martin is a major defense contractor with a long history of delivering complex systems for naval platforms, including the Aegis Combat System which is integral to the DDG 51 class. They have been involved in numerous modernization and upgrade programs for various U.S. Navy vessels. While specific performance metrics for past contracts are often proprietary, their continued selection for large-scale programs suggests a generally reliable track record. However, like many large defense projects, past programs may have experienced schedule delays or cost adjustments, which are common in complex, long-term defense procurements. Evaluating their performance requires a detailed review of specific contract histories, including on-time delivery rates, budget adherence, and system performance post-integration.

How does the $57.7 million value compare to other DDG 51 modernization efforts?

The $57.7 million contract value for machinery control systems modernization represents a specific component of the overall DDG 51 modernization effort. The DDG 51 class is undergoing continuous upgrades and life-extension programs, which can involve numerous individual contracts for different systems (e.g., combat systems, propulsion, sensors, habitability). The total cost for modernizing a single DDG 51 destroyer over its extended service life can run into hundreds of millions of dollars. Therefore, $57.7 million for a critical system like machinery controls appears to be a significant but not exceptionally large investment within the context of a comprehensive platform modernization program. Direct comparisons are difficult without knowing the exact scope and duration of other modernization contracts for the same class.

What are the primary risks associated with this machinery control system modernization?

The primary risks associated with this contract include technical complexity, integration challenges, and potential cost overruns inherent in a CPFF contract. Machinery control systems are critical for ship operation, and any failure or delay in modernization could impact fleet readiness. Integration with existing ship systems, some of which may be decades old, presents significant technical hurdles. Furthermore, the long duration of the contract increases the risk of requirements evolving or technology becoming obsolete before completion. Contractor performance, including schedule adherence and quality of work, is also a key risk factor. The limited competition could also pose a risk if the chosen contractor faces unforeseen difficulties, limiting alternative solutions.

How effective are machinery control system upgrades in extending the service life of DDG 51 destroyers?

Upgrading machinery control systems is a crucial element in extending the service life and maintaining the operational effectiveness of DDG 51 destroyers. These systems manage essential functions such as propulsion, power generation, and damage control. Modernizing them enhances reliability, improves efficiency, and enables better integration with newer combat and sensor systems. By replacing aging components and incorporating advanced digital technologies, these upgrades reduce the likelihood of critical system failures, lower maintenance costs, and improve overall ship performance. This directly contributes to the Navy's ability to keep its platforms mission-capable for longer durations, delaying the need for costly new construction and ensuring sustained fleet presence.

What has been the historical spending trend for DDG 51 modernization?

Historical spending on DDG 51 modernization has been substantial and ongoing, reflecting the Navy's commitment to maintaining this critical class of destroyers. The DDG 51 program, initiated in the late 1980s, has seen continuous upgrades and life-extension efforts throughout its service life. Spending encompasses various aspects, including combat system upgrades (like Aegis enhancements), propulsion system improvements, hull and structural repairs, and habitability enhancements. While specific annual spending figures fluctuate based on program priorities and budget allocations, the overall trend indicates consistent, significant investment in keeping the DDG 51 fleet modern and capable. This particular contract for machinery control systems is one piece of that larger, sustained modernization investment.

What is the potential impact of this contract on future naval technology development?

This contract has the potential to influence future naval technology development by incorporating advanced control systems that could set new standards for reliability, efficiency, and integration. The lessons learned and technologies developed for the DDG 51 machinery control systems may inform the design of control systems for future naval platforms, including next-generation destroyers or other surface combatants. Successful implementation of modern digital architectures and potentially AI-driven diagnostics within these systems could pave the way for more autonomous operations or predictive maintenance capabilities across the fleet. Furthermore, the performance of Lockheed Martin in delivering these upgrades could shape future procurement strategies and technology roadmaps for naval systems.

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: SHIP AND MARINE EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002408R4210

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 12506 LAKE UNDERHILL RD, ORLANDO, FL, 32825

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

Financial Breakdown

Contract Ceiling: $79,321,247

Exercised Options: $63,080,450

Current Obligation: $57,686,721

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline