DoD's $195M contract for electronic equipment repair awarded to Lockheed Martin raises value and competition questions

Contract Overview

Contract Amount: $195,269,180 ($195.3M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2009-12-04

End Date: 2014-02-28

Contract Duration: 1,547 days

Daily Burn Rate: $126.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: BASIC CONTRACT AWARD

Place of Performance

Location: MOORESTOWN, BURLINGTON County, NEW JERSEY, 08057

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $195.3 million to LOCKHEED MARTIN CORPORATION for work described as: BASIC CONTRACT AWARD Key points: 1. The contract's value proposition is unclear due to a lack of competitive bidding. 2. Limited competition suggests potential for overpayment and reduced innovation. 3. The sole-source nature of the award presents a significant risk indicator. 4. Performance context is limited without comparative data on similar repair services. 5. This contract falls within the broader defense electronics maintenance sector. 6. The absence of small business participation warrants further investigation.

Value Assessment

Rating: questionable

Benchmarking the value of this $195 million contract is challenging due to its sole-source nature and the lack of publicly available performance metrics. Without competitive bids, it's difficult to assess if the pricing reflects fair market value for electronic equipment repair and maintenance services. The cost-plus-fixed-fee structure, while common in defense, can sometimes lead to higher costs if not rigorously managed. A comparison to similar, competitively awarded contracts for comparable services would be necessary to provide a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, security clearances, or proprietary technology. The lack of competition limits the government's ability to leverage market forces to drive down prices and encourage innovative solutions. It also raises concerns about whether alternative solutions were adequately explored.

Taxpayer Impact: Taxpayers may have paid a premium for these services due to the absence of competitive pressure. The sole-source award bypasses the typical price discovery mechanisms that competition provides, potentially leading to less cost-effective outcomes.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Department of the Navy, receiving essential repair and maintenance for electronic equipment. The services delivered are critical for maintaining the operational readiness of naval assets. The geographic impact is primarily within New Jersey, where Lockheed Martin is located, but the ultimate impact is on naval operations nationwide. Workforce implications include employment for skilled technicians and support staff at Lockheed Martin's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Lack of competition may stifle innovation in repair and maintenance techniques.
Absence of small business participation could mean missed opportunities for smaller firms.
Cost-plus-fixed-fee contract type requires robust oversight to control costs.
Limited public data makes independent value assessment difficult.

Positive Signals

Awarded to a major defense contractor with established capabilities.
Contract duration suggests a long-term need for these services.
Services are critical for maintaining defense readiness.

Sector Analysis

The defense electronics repair and maintenance sector is a critical component of the broader aerospace and defense industry. This contract, valued at $195 million over its period of performance, fits within the specialized niche of maintaining complex electronic systems for military applications. The industry is characterized by high barriers to entry, including specialized technical expertise, security clearances, and established relationships with government agencies. Comparable spending benchmarks are difficult to establish precisely due to the proprietary nature of many defense systems and the unique service requirements.

Small Business Impact

This contract was not awarded as a small business set-aside, nor does it indicate any subcontracting requirements for small businesses. The sole-source nature of the award further precludes opportunities for small businesses to participate in this specific contract. This suggests that the primary contractor, Lockheed Martin, is expected to perform the majority, if not all, of the work. The impact on the small business ecosystem is neutral in terms of direct participation, but it represents a missed opportunity for small businesses that may possess relevant repair capabilities.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures would be tied to the terms of the cost-plus-fixed-fee contract, requiring detailed reporting and justification of costs. Transparency is limited due to the sole-source nature and the proprietary aspects of defense contracting. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse, but specific performance oversight is managed internally by the agency.

Related Government Programs

Defense Logistics Agency (DLA) Repair and Maintenance Contracts
Naval Sea Systems Command (NAVSEA) Support Contracts
Aerospace and Defense MRO Services
Electronic Systems Maintenance Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns (CPFF structure)
Limited transparency
No small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $195.3 million to LOCKHEED MARTIN CORPORATION. BASIC CONTRACT AWARD

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 $195.3 million.

What is the period of performance?

Start: 2009-12-04. End: 2014-02-28.

What is Lockheed Martin's track record with similar Department of Defense contracts, particularly in electronic equipment repair and maintenance?

Lockheed Martin Corporation is a major defense contractor with extensive experience across various military platforms and systems. They have a long history of performing complex repair, maintenance, and overhaul services for the Department of Defense, including electronic systems. While specific data on their performance for this particular contract is not publicly detailed, their overall track record with the DoD is substantial, encompassing numerous large-scale contracts. Analyzing their past performance on similar cost-plus-fixed-fee contracts, especially those involving electronic systems, would provide further insight into their ability to manage costs and deliver services effectively. However, the sole-source nature of this award limits the ability to compare their performance against competitors for this specific service.

How does the pricing structure (Cost Plus Fixed Fee) for this contract compare to industry standards for similar services, and what are the potential cost implications?

The Cost Plus Fixed Fee (CPFF) pricing structure is common in defense contracting, particularly for services where the scope of work can be difficult to define precisely upfront or involves research and development. It allows the contractor to recover all allowable costs plus a predetermined fixed fee representing profit. While standard, CPFF contracts carry a risk of cost overruns if not managed diligently by the government. Without competitive bids or detailed cost breakdowns, it's challenging to benchmark the fixed fee against industry standards for comparable electronic repair services. The potential cost implication for taxpayers is that the government bears the risk of cost increases, and the fixed fee might not reflect the most competitive profit margin achievable in a more open market.

What specific risks are associated with awarding a $195 million contract on a sole-source basis for electronic equipment repair?

The primary risk associated with a sole-source award of this magnitude is the lack of competitive pressure, which can lead to inflated prices and reduced incentives for efficiency and innovation. Taxpayers may overpay for the services rendered. Another risk is vendor lock-in, where the government becomes dependent on a single provider, potentially limiting future flexibility and negotiation power. Furthermore, without competition, there's a reduced opportunity to discover potentially more cost-effective or technologically superior solutions from other capable vendors. Ensuring robust oversight and performance management becomes even more critical to mitigate these inherent risks.

What is the historical spending pattern for electronic equipment repair and maintenance services by the Department of the Navy, and how does this contract fit within that pattern?

Historical spending by the Department of the Navy on electronic equipment repair and maintenance is substantial, reflecting the complexity and critical nature of its technological assets. This $195 million contract, awarded in late 2009 with an end date in early 2014, represents a significant, multi-year investment in sustaining these capabilities. Without access to detailed historical spending databases specifically for this type of service and contractor, it's difficult to place this contract precisely within the broader pattern. However, such awards are typical for ensuring the operational readiness of naval fleets, which rely heavily on sophisticated electronic systems. The duration and value suggest it addresses a consistent and long-term requirement.

Are there any performance metrics or key performance indicators (KPIs) publicly available for this contract to assess its effectiveness?

Publicly available performance metrics or Key Performance Indicators (KPIs) for this specific contract are not readily accessible. Defense contracts, especially those awarded on a sole-source basis and involving sensitive electronic systems, often have performance data that is considered proprietary or classified for national security reasons. While the contract likely includes performance standards and reporting requirements managed by the Department of the Navy, this information is typically not disclosed to the public. Assessing the effectiveness of the contract would therefore rely on internal government evaluations or potentially declassified reports, which are rare.

Industry Classification

NAICS: Other Services (except Public Administration) › Electronic and Precision Equipment Repair and Maintenance › Other Electronic and Precision Equipment Repair and Maintenance

Product/Service Code: MAINT/REPAIR SHOP EQPT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002408R5124

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 199 BORTON LANDING RD, MOORESTOWN, NJ, 08057

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $195,269,180

Exercised Options: $195,269,180

Current Obligation: $195,269,180

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline