Navy awards $17M for DDG 51 Modernization Engine Controller, a complex defense system

Contract Overview

Contract Amount: $17,015,868 ($17.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2009-03-19

End Date: 2016-09-30

Contract Duration: 2,752 days

Daily Burn Rate: $6.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DDG 51 MODERNIZATION - ENGINE CONTROLLER (EC) FIRST ARTICLE SHIP SET

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32825

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $17.0 million to LOCKHEED MARTIN CORPORATION for work described as: DDG 51 MODERNIZATION - ENGINE CONTROLLER (EC) FIRST ARTICLE SHIP SET Key points: 1. The contract value of $17 million for a specialized engine controller suggests a significant investment in naval modernization. 2. Competition dynamics for such niche defense components can be limited, potentially impacting price. 3. The firm fixed-price contract type aims to control costs for the government. 4. Performance context is crucial for ensuring the reliability of critical ship systems. 5. This contract falls within the defense sector, specifically supporting naval vessel upgrades.

Value Assessment

Rating: fair

Benchmarking the value of this specific engine controller is challenging without detailed technical specifications and comparable system costs. The $17 million award for a 'first article ship set' indicates an initial investment for development and testing, which can be more expensive than mass production. Further analysis would require comparing the unit cost against similar complex electronic or mechanical systems for naval applications and assessing the contractor's historical performance on similar projects to determine if the pricing reflects good value for the initial development phase.

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. The presence of four bids suggests a reasonable level of competition for this specialized defense component. However, the actual number of capable bidders for such niche technology might be limited, which could influence the final pricing and the government's negotiation leverage.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it encourages competitive pricing and potentially leads to better value. The fact that four bids were received suggests that the government explored multiple options, which should have helped in securing a more reasonable price compared to a sole-source award.

Public Impact

The primary beneficiaries are the U.S. Navy, receiving critical components for the modernization of DDG 51 class destroyers. The services delivered include the development, testing, and delivery of an Engine Controller (EC) first article ship set. The geographic impact is primarily within Florida, where the contractor is located, and potentially at naval shipyards where the destroyers are serviced. Workforce implications include specialized engineering, manufacturing, and quality assurance roles within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if the 'first article' development proves more complex than anticipated.
Risk of schedule delays if technical challenges arise during the initial production and testing phase.
Dependence on a single contractor for critical components could pose supply chain risks if not managed carefully.

Positive Signals

Firm fixed-price contract structure helps mitigate cost uncertainty for the government.
Full and open competition suggests a robust bidding process, potentially leading to better technical solutions.
The award to a known entity like Lockheed Martin Corporation may indicate a level of confidence in their capability.

Sector Analysis

This contract falls within the broader defense industrial base, specifically focusing on naval modernization and electronic/mechanical systems for warships. The market for such specialized components is often characterized by high barriers to entry due to technical expertise, security clearances, and established relationships with government agencies. Comparable spending benchmarks would typically be found within other naval shipbuilding and modernization programs, where similar complex systems are procured.

Small Business Impact

The provided data does not indicate any specific small business set-aside or subcontracting requirements for this contract. Given the specialized nature of an engine controller for naval vessels, it is possible that the prime contractor, Lockheed Martin, may engage small businesses for specific components or services, but this is not explicitly detailed in the award information. Further investigation into subcontracting plans would be needed to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of the specified goods. Transparency is generally maintained through contract award databases, though detailed technical specifications and performance metrics may be considered sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

DDG 51 Class Destroyer Modernization Programs
Naval Ship Systems Procurement
Defense Electronics and Control Systems
Engine Controller Manufacturing
U.S. Navy Ship Maintenance and Repair

Risk Flags

Potential for cost growth on 'first article' development
Technical complexity of specialized defense components
Supply chain risks for critical naval systems

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.0 million to LOCKHEED MARTIN CORPORATION. DDG 51 MODERNIZATION - ENGINE CONTROLLER (EC) FIRST ARTICLE SHIP SET

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 $17.0 million.

What is the period of performance?

Start: 2009-03-19. End: 2016-09-30.

What is the specific technical function of the Engine Controller (EC) being procured for the DDG 51 modernization?

The Engine Controller (EC) for the DDG 51 class destroyers is a critical component responsible for managing and regulating the operation of the ship's main propulsion engines. This includes controlling fuel injection, air intake, exhaust systems, and monitoring engine performance parameters such as temperature, pressure, and speed. Its primary function is to ensure optimal engine efficiency, reliability, and safety under various operational conditions, from low-speed maneuvering to high-speed transit. The 'first article ship set' implies this is an initial production run for testing and validation before potential broader implementation across the fleet.

How does the $17 million award compare to other engine controller procurements for naval vessels?

Direct comparison of the $17 million award for a 'first article ship set' of engine controllers for the DDG 51 class is difficult without specific technical details and the number of units procured. First article procurements are typically more expensive on a per-unit basis due to initial setup, testing, and validation costs. However, $17 million represents a substantial investment, suggesting a highly complex and integrated system. To benchmark effectively, one would need to compare it against the total cost of similar advanced propulsion control systems for other naval platforms, considering factors like system complexity, technological sophistication, and the number of engines or vessels involved in the broader program.

What are the key performance risks associated with this engine controller contract?

Key performance risks include the potential for technical challenges during the development and testing of the 'first article' system, which could lead to delays or increased costs. Ensuring the reliability and durability of the engine controller under harsh maritime conditions (e.g., salt spray, vibration, extreme temperatures) is paramount. Furthermore, integration risks with existing shipboard systems and the potential for obsolescence of components over the system's lifecycle are significant concerns. The contractor's ability to meet stringent performance specifications and maintain consistent quality throughout production is also a critical factor.

What is Lockheed Martin Corporation's track record with similar defense electronics or propulsion systems?

Lockheed Martin Corporation is a major defense contractor with extensive experience in developing and producing complex systems for naval platforms, including combat systems, sensors, and integrated platforms. While specific details on their engine controller production for the DDG 51 class prior to this award are not provided, their history includes significant work on naval modernization programs and advanced technological solutions. Their track record generally indicates a strong capability in systems integration and manufacturing for demanding defense applications. However, a deeper dive into their specific performance on past propulsion or critical electronic control system contracts would be necessary for a comprehensive assessment.

What does the 'Transportation Equipment and Supplies (except Motor Vehicle) Merchant Wholesalers' NAICS code signify in this context?

The NAICS code 423860, 'Transportation Equipment and Supplies (except Motor Vehicle) Merchant Wholesalers,' appears to be a classification for the contractor's business activity related to the distribution of transportation equipment. In the context of this contract, it suggests that Lockheed Martin Corporation, through its relevant division or subsidiary, is involved in supplying specialized transportation equipment, which in this case is the engine controller for naval vessels. This classification might not fully capture the complexity of designing and manufacturing such a critical component but rather reflects a part of their supply chain or distribution role for related equipment.

What is the historical spending pattern for engine controllers or similar propulsion components for the DDG 51 class?

Historical spending patterns for engine controllers or similar propulsion components for the DDG 51 class would likely show a history of procurements tied to the ship's construction, upgrades, and maintenance cycles. Initial procurements during the ship's construction phase would have been part of larger shipbuilding contracts. Subsequent awards, like this 'first article' contract, indicate modernization efforts or replacements needed due to aging systems or technological advancements. Analyzing past contracts for the DDG 51 class would reveal trends in spending on propulsion systems, the types of contracts awarded (e.g., fixed-price, cost-plus), and the primary contractors involved, providing context for the current $17 million award.

Industry Classification

NAICS: Wholesale Trade › Machinery, Equipment, and Supplies Merchant Wholesalers › Transportation Equipment and Supplies (except Motor Vehicle) Merchant Wholesalers

Product/Service Code: ENGINES AND TURBINES AND COMPONENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002408R4205

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

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: $23,517,553

Exercised Options: $19,133,003

Current Obligation: $17,015,868

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline