DoD's $119M radar tech development contract awarded to Lockheed Martin shows fair competition and moderate risk
Contract Overview
Contract Amount: $119,227,868 ($119.2M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2010-09-30
End Date: 2012-09-30
Contract Duration: 731 days
Daily Burn Rate: $163.1K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: AIR AND MISSILE DEFENSE RADAR SUITE (AMDR) S-BAND RADAR (AMDR-S) AND RADAR SUITE CONTROLLER (RSC) TECHNOLOGY DEVELOPMENT AND TECHNOLOGY DEMONSTRATION PROTOTYPE EQUIPMENT, HARDWARE AND SOFTWARE AWARD.
Place of Performance
Location: MOORESTOWN, BURLINGTON County, NEW JERSEY, 08057
Plain-Language Summary
Department of Defense obligated $119.2 million to LOCKHEED MARTIN CORPORATION for work described as: AIR AND MISSILE DEFENSE RADAR SUITE (AMDR) S-BAND RADAR (AMDR-S) AND RADAR SUITE CONTROLLER (RSC) TECHNOLOGY DEVELOPMENT AND TECHNOLOGY DEMONSTRATION PROTOTYPE EQUIPMENT, HARDWARE AND SOFTWARE AWARD. Key points: 1. The contract's fixed-price incentive structure aims to balance cost control with contractor performance. 2. Awarded through full and open competition, suggesting a competitive bidding process. 3. The relatively short duration of 2 years for technology development may indicate a focused scope. 4. The contract's value is moderate within the context of large-scale defense procurements. 5. Performance risk is present, typical for advanced technology development projects. 6. The absence of small business set-asides means direct impact on this sector is limited.
Value Assessment
Rating: fair
The $119.2 million contract for radar technology development appears to be a reasonable investment for its stated purpose. Benchmarking against similar advanced technology development contracts in the defense sector is challenging due to the unique nature of R&D. However, the fixed-price incentive (FPI) contract type suggests an effort to control costs while incentivizing performance, which is a common and generally effective approach for such projects. The pricing structure will be further evaluated based on the achievement of specific milestones and performance metrics outlined in the contract.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. Three offers were received, suggesting a reasonable level of competition for this specialized technology development effort. While three bidders is not an exceptionally high number for a complex defense contract, it does provide a basis for price discovery and allows the government to select the offer that best meets its technical and cost requirements.
Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a more competitive environment, which can lead to better pricing and innovative solutions. The presence of multiple bidders helps ensure that the government is not overpaying for the technology developed.
Public Impact
The primary beneficiaries are the Department of Defense, which will receive advanced radar technology. The contract supports the development of critical components for air and missile defense systems. The geographic impact is primarily within New Jersey, where the contractor is located. The contract supports a specialized workforce in advanced engineering and radar technology.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns inherent in fixed-price incentive contracts if performance targets are not met efficiently.
- Technology development carries inherent risks of not achieving desired performance levels within the allocated budget and timeline.
- Limited visibility into the specific technological advancements and their readiness for future integration.
Positive Signals
- Awarded through full and open competition, indicating a structured procurement process.
- The fixed-price incentive structure aligns contractor incentives with government objectives.
- The contract supports the development of a key component for national defense systems.
Sector Analysis
This contract falls within the broader defense electronics and aerospace manufacturing sector, specifically focusing on radar systems. The market for advanced radar technology is characterized by high barriers to entry due to specialized knowledge, significant R&D investment, and stringent government requirements. Lockheed Martin is a major player in this sector. Comparable spending benchmarks are difficult to establish precisely due to the unique R&D nature, but investments in similar technology development programs often range in the tens to hundreds of millions of dollars.
Small Business Impact
This contract did not include a small business set-aside, and the prime contractor, Lockheed Martin, is a large business. There is no explicit information provided regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem for this specific award is likely minimal, though large defense contractors often engage small businesses for specialized components or services in their supply chains.
Oversight & Accountability
Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), ensuring compliance with contract terms and performance standards. Accountability measures are embedded within the fixed-price incentive structure, linking payment to performance milestones. Transparency is generally maintained through contract awards databases and reporting requirements, although specific technical details of the development may be sensitive.
Related Government Programs
- Air and Missile Defense Systems
- Radar Technology Development
- Advanced Sensor Systems
- Department of Defense Research and Development
Risk Flags
- Technology Development Risk
- Potential for Cost Overruns
- Schedule Delays
- Integration Challenges
Tags
defense, department-of-defense, lockheed-martin-corporation, definitive-contract, fixed-price-incentive, full-and-open-competition, technology-development, radar-systems, air-and-missile-defense, new-jersey, large-business
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $119.2 million to LOCKHEED MARTIN CORPORATION. AIR AND MISSILE DEFENSE RADAR SUITE (AMDR) S-BAND RADAR (AMDR-S) AND RADAR SUITE CONTROLLER (RSC) TECHNOLOGY DEVELOPMENT AND TECHNOLOGY DEMONSTRATION PROTOTYPE EQUIPMENT, HARDWARE AND SOFTWARE 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 (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $119.2 million.
What is the period of performance?
Start: 2010-09-30. End: 2012-09-30.
What is Lockheed Martin's track record with similar defense technology development contracts?
Lockheed Martin has an extensive and well-documented track record in developing complex defense systems, including radar technologies, for the U.S. military and international partners. They have been involved in numerous large-scale programs such as the F-35 fighter jet's integrated sensor suite, various missile defense systems, and advanced radar platforms for surveillance and targeting. Their history includes both highly successful technological advancements and instances where programs faced cost increases or schedule delays, which is common in cutting-edge R&D. The company's experience suggests a high capability for undertaking challenging technological development, but also necessitates rigorous oversight to manage program risks effectively.
How does the $119.2 million value compare to other radar technology development contracts?
The $119.2 million contract value for the AMDR-S and RSC technology development falls within a moderate range for advanced defense technology development. Contracts for foundational technology development, especially for critical systems like air and missile defense, can vary significantly. Simpler radar component development might cost tens of millions, while full-system development or upgrades for major platforms can easily exceed hundreds of millions or even billions of dollars over their lifecycle. This specific award appears to be for a focused phase of development and demonstration, making its value appropriate for that scope, rather than a full production or deployment contract.
What are the primary risks associated with this technology development contract?
The primary risks associated with this contract are typical of advanced technology development. These include technical risk, where the desired technological breakthroughs may not be achieved within the project's timeline or budget. Performance risk is also significant, as the developed prototype equipment must meet stringent operational requirements. Furthermore, there's a potential for cost growth, even with a fixed-price incentive structure, if unforeseen technical challenges arise or if the incentive targets are difficult to meet. Schedule risk exists, as R&D projects can encounter delays due to complexity or external factors. Finally, integration risk is present, concerning how effectively the developed technology will interface with existing or future defense systems.
How effective is the fixed-price incentive (FPI) contract type for this type of R&D?
The Fixed-Price Incentive (FPI) contract type is often employed for R&D projects where the scope is relatively well-defined but performance outcomes carry uncertainty. It aims to provide the contractor with an incentive to control costs and perform efficiently by sharing in any cost savings below a target cost, while also limiting the government's liability. For this radar technology development, the FPI structure encourages Lockheed Martin to achieve the performance objectives within budget. However, the effectiveness hinges on the realism of the target cost and the negotiation of the sharing ratio. If targets are too aggressive, it could stifle innovation; if too lenient, it could lead to cost overruns borne by the government beyond the target.
What is the historical spending trend for similar radar systems by the Department of Defense?
The Department of Defense has consistently allocated substantial funding towards radar systems, driven by evolving threats and technological advancements in air and missile defense, surveillance, and electronic warfare. Historical spending trends show significant investments in programs like the Ballistic Missile Defense System (BMDS), Aegis Combat System, and various fighter/bomber radar upgrades. These investments often span decades and involve multiple contract phases, from initial R&D and prototyping (like this contract) through to full-scale production and sustainment. Spending fluctuates based on strategic priorities, threat assessments, and the lifecycle of existing systems, but radar technology remains a core and continuously funded area within the defense budget.
What are the implications of awarding this contract to Lockheed Martin for future competition?
Awarding this technology development contract to Lockheed Martin, a major incumbent defense contractor, has several implications for future competition. Firstly, it positions Lockheed Martin favorably to potentially win subsequent contracts for the production and sustainment of the developed radar technology, leveraging their established expertise and intellectual property. This can create a barrier for competitors seeking to enter later stages of the program. However, the initial full and open competition ensures that other capable firms had the opportunity to demonstrate their potential. For future phases, the government may opt for different competitive strategies, such as sole-sourcing if Lockheed Martin is the only viable option due to unique technology, or re-opening competition if feasible and beneficial.
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: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: N0002410R5340
Offers Received: 3
Pricing Type: FIXED PRICE INCENTIVE (L)
Evaluated Preference: NONE
Contractor Details
Parent Company: Lockheed Martin Corp (UEI: 834951691)
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: $119,227,868
Exercised Options: $119,227,868
Current Obligation: $119,227,868
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2010-09-30
Current End Date: 2012-09-30
Potential End Date: 2012-09-30 00:00:00
Last Modified: 2021-07-29
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