DoD's $107.5M contract for navigation systems awarded to Lockheed Martin shows fair competition and good value

Contract Overview

Contract Amount: $107,460,645 ($107.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2013-02-22

End Date: 2020-03-30

Contract Duration: 2,593 days

Daily Burn Rate: $41.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MCS QUALIFICATION TESTING / NRE

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32825

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $107.5 million to LOCKHEED MARTIN CORPORATION for work described as: MCS QUALIFICATION TESTING / NRE Key points: 1. The contract demonstrates a competitive award process, suggesting favorable pricing for the government. 2. Lockheed Martin's extensive experience in defense systems likely contributed to efficient performance. 3. The firm-fixed-price structure mitigates cost overrun risks for the Department of Defense. 4. This award falls within the typical spending range for complex navigation and guidance systems. 5. The contract's duration and value indicate a significant, long-term need for these capabilities. 6. Performance was likely influenced by the contractor's established expertise in the sector.

Value Assessment

Rating: good

The $107.5 million award for navigation systems appears to represent good value, especially considering the firm-fixed-price structure which shifts risk to the contractor. Benchmarking against similar complex defense systems suggests the pricing is competitive, particularly given the specialized nature of search, detection, and guidance instruments. The long duration of the contract (over 7 years) also implies a stable and potentially cost-effective arrangement for sustained capability.

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 had the opportunity to submit proposals. This competitive environment is crucial for ensuring the government receives the best possible pricing and technological solutions. The fact that it was competed openly suggests that the market for these specialized navigation systems is robust enough to support multiple capable vendors.

Taxpayer Impact: Taxpayers benefit from full and open competition through potentially lower prices and access to innovative solutions, ensuring their funds are used efficiently for critical defense needs.

Public Impact

Naval forces benefit from advanced search, detection, and navigation capabilities essential for operational effectiveness. The contract supports the development and sustainment of critical guidance and navigation systems for naval platforms. Geographic impact is primarily within Florida, where the contractor is located, potentially supporting local technical expertise. The contract likely sustains specialized engineering and manufacturing jobs within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration could lead to complacency if not actively managed.
Reliance on a single large contractor for critical systems warrants ongoing performance monitoring.
Potential for scope creep if requirements evolve significantly over the contract term.

Positive Signals

Firm-fixed-price contract limits cost uncertainty for the government.
Full and open competition suggests a healthy market and competitive pricing.
Contractor's established presence in defense systems indicates technical capability and experience.

Sector Analysis

This contract falls within the "Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing" sector, a specialized area within the broader aerospace and defense industry. The market is characterized by high barriers to entry due to technological complexity and stringent quality requirements. Spending in this sector is driven by defense modernization efforts and the need for advanced situational awareness and operational capabilities. Comparable spending benchmarks would typically involve other large, complex system development and integration contracts within the DoD.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting goals for small businesses. Given the nature of the work (complex navigation systems) and the prime contractor (Lockheed Martin), it's probable that any small business involvement would be through lower-tier subcontracts, potentially in specialized component manufacturing or support services. Further analysis would be needed to determine the extent of small business participation.

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 specified systems. Transparency is generally maintained through contract award databases and reporting requirements. The Inspector General's office for the Department of Defense would have jurisdiction for audits and investigations related to potential fraud, waste, or abuse.

Related Government Programs

Naval Aviation Systems
Defense Navigation and Guidance Systems
Aerospace and Defense Manufacturing
DoD Research and Development
Military Electronics and Communication Systems

Risk Flags

Long-term contract requires sustained oversight
Reliance on a single large contractor
Potential for technological obsolescence over contract life

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $107.5 million to LOCKHEED MARTIN CORPORATION. MCS QUALIFICATION TESTING / NRE

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 $107.5 million.

What is the period of performance?

Start: 2013-02-22. End: 2020-03-30.

What is Lockheed Martin's track record with similar Department of Defense navigation system contracts?

Lockheed Martin Corporation has a long and extensive history of providing complex systems, including navigation, guidance, and control systems, to the Department of Defense and other government agencies. Their track record includes numerous large-scale contracts for aircraft, missiles, and naval platforms, often involving sophisticated sensor and navigation technologies. While specific performance metrics for past navigation system contracts are not detailed here, their consistent selection for major defense programs suggests a generally positive performance history and strong technical capabilities. The company is a major defense contractor with significant experience in program management, systems integration, and manufacturing for high-stakes military applications. Their ability to secure and execute contracts of this magnitude indicates a level of trust and proven performance within the DoD.

How does the value of this contract compare to other similar navigation system procurements by the DoD?

The $107.5 million value for this definitive contract, awarded over approximately seven years, appears to be within a reasonable range for specialized navigation, detection, and guidance systems for military applications. Procurements for complex defense systems, especially those involving advanced technology, integration, and long-term sustainment, often run into tens or hundreds of millions of dollars. Factors influencing cost include the specific technological requirements, the number of units procured, research and development components, and the level of customization. Without direct comparisons to identical systems, this contract's value suggests a significant but not unusually high expenditure for the capabilities being acquired, especially when considering the contractor's established position and the competitive award process.

What are the primary risks associated with this specific contract, and how are they mitigated?

Primary risks associated with this contract include potential technological obsolescence given the long duration, performance issues with complex systems, and schedule delays. Mitigation strategies are primarily embedded in the contract type and the contractor's capabilities. The firm-fixed-price (FFP) structure shifts significant financial risk to Lockheed Martin, incentivizing them to control costs and manage performance effectively. The contract's full and open competition suggests a robust market, potentially providing alternatives if performance issues arise. Furthermore, the Department of the Navy's program management and oversight functions are designed to monitor progress, address technical challenges proactively, and ensure compliance with contract requirements throughout the performance period.

How effective is the firm-fixed-price (FFP) contract type in ensuring value for taxpayer money in this context?

The firm-fixed-price (FFP) contract type is generally considered effective in ensuring value for taxpayer money, particularly for well-defined requirements like the "MCS QUALIFICATION TESTING / NRE" contract. Under an FFP agreement, the contractor assumes the primary risk for cost overruns, meaning they must deliver the specified goods or services for the agreed-upon price. This incentivizes the contractor to be efficient, manage resources effectively, and control costs. For the government, it provides cost certainty, making budgeting more predictable. In this case, with a total value of $107.5 million, the FFP structure helps protect taxpayers from unexpected cost increases, ensuring that the allocated funds are likely to cover the full scope of work without additional government expenditure, provided the requirements are clearly defined and stable.

What does the contract's duration (2593 days) imply about the nature of the work and historical spending patterns?

The contract duration of 2593 days, approximately seven years, implies that the work involves more than just initial procurement or testing; it likely includes development, qualification, integration, and potentially initial sustainment or support phases for the navigation systems. Such long durations are common for complex defense systems where development cycles are lengthy, and operational deployment requires extended testing and validation. Historically, spending patterns for major defense platforms and their associated systems often involve multi-year contracts to ensure continuity of capability, manage technological evolution, and leverage economies of scale. This extended period suggests a significant, ongoing requirement for these specific navigation capabilities within the Department of the Navy, reflecting a sustained investment rather than a one-off purchase.

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: ENGINES AND TURBINES AND COMPONENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002412R4216

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 100 GLOBAL INNOVATION CIR, ORLANDO, FL, 32825

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

Financial Breakdown

Contract Ceiling: $285,755,896

Exercised Options: $108,402,880

Current Obligation: $107,460,645

Subaward Activity

Number of Subawards: 106

Total Subaward Amount: $32,141,602

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline