DoD's Littoral Combat Ship Integration contract with Lockheed Martin exceeds $90M, facing potential cost overruns

Contract Overview

Contract Amount: $90,482,486 ($90.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2013-05-21

End Date: 2025-05-05

Contract Duration: 4,367 days

Daily Burn Rate: $20.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: LITTORAL COMBAT SHIP (LCS) INTEGRATION

Place of Performance

Location: RIVIERA BEACH, PALM BEACH County, FLORIDA, 33404

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $90.5 million to LOCKHEED MARTIN CORPORATION for work described as: LITTORAL COMBAT SHIP (LCS) INTEGRATION Key points: 1. Contract awarded to a single, dominant defense contractor. 2. Significant taxpayer investment in advanced naval technology. 3. Potential for cost escalation due to fixed-fee structure. 4. Long contract duration raises concerns about adaptability to evolving threats.

Value Assessment

Rating: questionable

The Cost Plus Fixed Fee (CPFF) contract type, while incentivizing cost control, can lead to cost overruns if initial estimates are inaccurate. The significant award amount suggests a complex integration process, making precise cost estimation challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award likely due to the specialized nature of integrating Lockheed Martin's LCS platform. This lack of competition limits price discovery and potentially increases the cost to the government.

Taxpayer Impact: The absence of competition for a contract of this magnitude means taxpayers may be paying a premium for the integration services, as there was no market pressure to drive down costs.

Public Impact

Enhances U.S. naval capabilities with advanced combat systems. Supports high-tech manufacturing jobs within the defense sector. Represents a substantial commitment to national security infrastructure. Potential for cost overruns impacts overall defense budget allocation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition.
Cost Plus Fixed Fee contract type risks overruns.
Long duration may not align with evolving threats.
Lack of small business participation noted.

Positive Signals

Supports critical defense modernization.
Awarded to a prime contractor with proven capabilities.
Contract duration ensures sustained integration support.

Sector Analysis

This contract falls within the Engineering Services sector, specifically related to defense systems integration. Spending benchmarks for similar complex defense integration projects are highly variable, but large sole-source contracts often represent a significant portion of specialized defense budgets.

Small Business Impact

The data indicates no specific set-aside for small businesses in this contract. Large, sole-source defense contracts often bypass small business participation unless they are subcontractors to the prime. Further investigation into subcontracting opportunities would be needed.

Oversight & Accountability

The Department of Defense, through its contracting agencies like the Defense Contract Management Agency, is responsible for overseeing this contract. Robust oversight is crucial to manage costs, ensure performance, and mitigate risks associated with sole-source, cost-plus contracts.

Related Government Programs

Engineering Services
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Potential for cost overruns due to CPFF structure.
Sole-source award limits competitive pricing.
Long contract duration may lead to technology obsolescence.
Lack of transparency in total program cost.
Limited visibility into small business subcontracting.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $90.5 million to LOCKHEED MARTIN CORPORATION. LITTORAL COMBAT SHIP (LCS) INTEGRATION

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 $90.5 million.

What is the period of performance?

Start: 2013-05-21. End: 2025-05-05.

What is the projected total cost of the LCS integration program, considering potential cost growth under the CPFF structure?

The current award is over $90 million, but the total projected cost is not explicitly stated. Under a Cost Plus Fixed Fee (CPFF) contract, the government pays the actual costs plus a fixed fee. If costs exceed initial estimates, the government bears the burden, potentially leading to significant cost growth beyond the initial award amount. Detailed cost projections and risk assessments are essential for accurate budgeting.

What are the specific risks associated with the long contract duration (ending in 2025) for integrating the Littoral Combat Ship?

A long contract duration, especially for technology integration, carries risks of obsolescence and misalignment with evolving operational requirements and threats. The LCS platform itself has faced scrutiny, and extending integration efforts over many years could lock the DoD into outdated systems or require costly modifications later. Continuous review and potential renegotiation are vital.

How effectively does the sole-source award of this integration contract serve the government's interest in obtaining the best value and technological solution?

Sole-source awards inherently limit the government's ability to achieve best value through competitive bidding. While justified for unique capabilities, it places a heavy reliance on the contractor's integrity and the government's oversight. The effectiveness hinges on rigorous negotiation, performance monitoring, and ensuring the chosen solution truly meets long-term strategic needs without undue cost.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002413R6300

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 100 E 17TH ST, RIVIERA BEACH, FL, 33404

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: $94,294,540

Exercised Options: $94,194,540

Current Obligation: $90,482,486

Subaward Activity

Number of Subawards: 22

Total Subaward Amount: $1,234,051

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline