DoD Awards $178M Contract for MOD 7 G&C Kit to Lockheed Martin, Facing Potential Cost Overruns

Contract Overview

Contract Amount: $178,221,385 ($178.2M)

Contractor: Lockheed Martin Sippican, Inc.

Awarding Agency: Department of Defense

Start Date: 2011-03-04

End Date: 2020-01-31

Contract Duration: 3,255 days

Daily Burn Rate: $54.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIXED PRICE INCENTIVE

Sector: IT

Official Description: MOD 7 G&C KIT (POM)/FIRST ARTICLE

Place of Performance

Location: MARION, PLYMOUTH County, MASSACHUSETTS, 02738

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $178.2 million to LOCKHEED MARTIN SIPPICAN, INC. for work described as: MOD 7 G&C KIT (POM)/FIRST ARTICLE Key points: 1. The contract value is substantial at $178.2M, primarily for a critical G&C kit. 2. Lockheed Martin is the sole awardee, raising questions about competition. 3. The fixed-price incentive contract type introduces risk related to cost overruns. 4. The sector is IT/Defense, specifically navigation and guidance systems.

Value Assessment

Rating: questionable

The contract is a fixed-price incentive type, which can lead to cost overruns if not managed carefully. The award value of $178.2M for a G&C kit needs to be benchmarked against similar systems to assess value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a competitive process. However, the specific awardee is Lockheed Martin, and further details on the bidding process are needed to confirm price discovery effectiveness.

Taxpayer Impact: The total taxpayer impact is $178.2M, with potential for increased costs due to the incentive contract structure.

Public Impact

This contract supports critical navigation and guidance systems for the Navy. The long contract duration (2011-2020) indicates a significant, ongoing need. Potential cost overruns could impact the overall defense budget. The reliance on a single contractor warrants scrutiny for long-term cost-effectiveness.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns due to fixed-price incentive contract.
Sole awardee raises questions about competitive pricing.
Long contract duration may indicate evolving requirements or scope creep.

Positive Signals

Awarded under full and open competition.
Supports critical defense systems.

Sector Analysis

This contract falls within the IT/Defense sector, specifically manufacturing navigation and guidance systems. Spending benchmarks for similar systems are crucial for assessing value, especially given the fixed-price incentive structure.

Small Business Impact

There is no indication that small businesses were involved in this contract, either as prime contractors or subcontractors. Further investigation is needed to determine if small business participation was considered or mandated.

Oversight & Accountability

The fixed-price incentive contract type requires robust oversight to manage costs and ensure performance. The Department of the Navy's oversight mechanisms will be critical in controlling potential cost escalations.

Related Government Programs

Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Potential for cost overruns.
Limited visibility into competitive pricing effectiveness.
Long contract duration.
Lack of small business participation indicated.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $178.2 million to LOCKHEED MARTIN SIPPICAN, INC.. MOD 7 G&C KIT (POM)/FIRST ARTICLE

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN SIPPICAN, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $178.2 million.

What is the period of performance?

Start: 2011-03-04. End: 2020-01-31.

What was the final cost compared to the initial target price, and what factors contributed to any variance?

The final cost of the MOD 7 G&C Kit contract needs to be compared against its initial target price to assess the effectiveness of the fixed-price incentive structure. Analyzing the variance, if any, will reveal whether cost savings were achieved or if overruns occurred, providing insight into contractor performance and potential areas for improved cost control in future contracts.

How did the competitive bidding process ensure the best possible price for this critical navigation system?

While awarded under full and open competition, the effectiveness of the price discovery for this $178.2M contract hinges on the number and quality of bids received. A thorough review of the bidding process, including the number of proposals submitted and the final negotiated price relative to initial estimates, is necessary to confirm that taxpayers received optimal value and that the chosen price reflects a competitive market.

What is the long-term strategic value and potential obsolescence risk of the MOD 7 G&C Kit?

The long-term strategic value of the MOD 7 G&C Kit is tied to its role in critical Navy navigation systems. However, given the contract's duration (2011-2020), assessing potential obsolescence risk is crucial. Understanding the technology roadmap and the kit's upgradeability will determine its continued relevance and prevent future investments in outdated 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: WEAPONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002409R6214

Offers Received: 5

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 497 ELECTRONICS PARKWAY, LIVERPOOL, NY, 13088

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

Financial Breakdown

Contract Ceiling: $191,948,662

Exercised Options: $178,682,785

Current Obligation: $178,221,385

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline