Lockheed Martin awarded $323.6M for SEWIP Block 2 units, a sole-source definitive contract

Contract Overview

Contract Amount: $323,624,774 ($323.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2014-09-11

End Date: 2019-03-31

Contract Duration: 1,662 days

Daily Burn Rate: $194.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SEWIP BLOCK 2 UNITS; IGF::CT::IGF

Place of Performance

Location: LIVERPOOL, ONONDAGA County, NEW YORK, 13088

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $323.6 million to LOCKHEED MARTIN CORPORATION for work described as: SEWIP BLOCK 2 UNITS; IGF::CT::IGF Key points: 1. The contract value of $323.6 million represents a significant investment in electronic warfare capabilities. 2. As a sole-source award, the absence of competition may impact price negotiation and value for money. 3. The contract duration of over 1600 days suggests a long-term need for these systems. 4. The firm fixed-price nature of the contract shifts cost risk to the contractor. 5. This award falls under the Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing NAICS code. 6. The Department of the Navy is the primary procuring agency, indicating a focus on naval electronic warfare.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and specific system requirements. Without competitive bids, it's difficult to ascertain if the $323.6 million price reflects optimal market value. However, the firm fixed-price structure provides cost certainty for the government, mitigating the risk of cost overruns. The long duration suggests a sustained need, which could imply a reasonable price over the contract's life if performance is consistent.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, Lockheed Martin Corporation, was solicited. This approach is typically used when a unique capability is required, or when only one source can provide the necessary goods or services. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices or spurred innovation from multiple vendors.

Taxpayer Impact: Taxpayers may not have received the best possible price due to the absence of competitive pressure. The government's negotiating position is inherently weaker in a sole-source scenario.

Public Impact

The primary beneficiaries are the U.S. Navy personnel who will utilize the SEWIP Block 2 systems for enhanced situational awareness and electronic warfare capabilities. The contract delivers critical electronic warfare systems essential for naval operations, including search, detection, and countermeasures. The geographic impact is primarily within naval operations theaters, supporting fleet readiness and mission success. This contract supports high-skilled jobs within Lockheed Martin's defense sector, contributing to the aerospace and defense workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential value.
Long contract duration could lead to price escalation if not managed effectively.
Dependence on a single contractor for critical EW systems poses a supply chain risk.

Positive Signals

Firm fixed-price contract shifts cost risk to the contractor.
Award supports a critical national defense capability.
Long-term contract indicates sustained government need and potential for stable production.

Sector Analysis

The SEWIP Block 2 program falls within the broader defense electronics sector, specifically focusing on electronic warfare (EW) systems. This sector is characterized by high technological complexity, significant R&D investment, and long product development cycles. The market is dominated by a few large defense contractors. Comparable spending benchmarks would involve other major defense procurements for advanced sensor and countermeasure systems, often running into hundreds of millions or billions of dollars.

Small Business Impact

This contract does not appear to have a small business set-aside component, as it was awarded to Lockheed Martin Corporation. There is no explicit information regarding subcontracting plans for small businesses within this award notice. The focus is on a large prime contractor, suggesting that small business participation would likely be through lower-tier subcontracts, if at all.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a definitive contract, it is subject to standard federal procurement regulations and oversight. The firm fixed-price nature provides some cost control, but performance monitoring and quality assurance remain crucial. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Naval Electronic Warfare Systems
Electronic Warfare Pods
Ship Self-Defense Systems
Electronic Support Measures
Electronic Countermeasures

Risk Flags

Sole-source award
Lack of competitive pricing
Long-term contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $323.6 million to LOCKHEED MARTIN CORPORATION. SEWIP BLOCK 2 UNITS; IGF::CT::IGF

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 $323.6 million.

What is the period of performance?

Start: 2014-09-11. End: 2019-03-31.

What is the historical spending trend for SEWIP Block 2 units with Lockheed Martin?

Historical spending data for SEWIP Block 2 units with Lockheed Martin indicates a consistent and significant investment by the Department of the Navy. Prior to this $323.6 million award, there were likely preceding contracts or contract modifications for the development, testing, and initial production phases of SEWIP Block 2. Analyzing the cumulative spending over the program's lifecycle would reveal the total investment in this capability. For instance, if this $323.6 million represents a specific production lot, previous lots might have had similar or varying values depending on quantity and system configuration. Understanding the evolution of spending can highlight cost trends, potential efficiencies gained over time, or increasing program scope. Without access to the full contract history and all modifications, a precise trend analysis is limited, but the scale of this award suggests a substantial, ongoing commitment to the SEWIP program.

How does the pricing of this SEWIP Block 2 contract compare to similar electronic warfare systems procured by the DoD?

Direct price comparison for this $323.6 million SEWIP Block 2 contract is difficult due to its sole-source nature and the specific, often proprietary, technological capabilities involved. Electronic warfare systems are highly specialized, and their pricing is influenced by factors such as technological sophistication, required performance metrics, integration complexity, and production volume. However, in the broader context of major defense procurements, contracts in the hundreds of millions of dollars for advanced systems are not uncommon. To assess value, one would ideally benchmark against competitively procured systems with similar functionalities or against previous iterations of SEWIP if available through competitive means. The absence of competition here means a direct 'apples-to-apples' value assessment against market rates is not feasible. The firm fixed-price structure does offer cost certainty, which is a positive attribute from a budgeting perspective, but it doesn't inherently guarantee the lowest possible price.

What are the key performance indicators (KPIs) for the SEWIP Block 2 system, and how is performance being measured under this contract?

The specific Key Performance Indicators (KPIs) for the SEWIP Block 2 system are typically classified due to their sensitive nature related to electronic warfare capabilities. However, generally, KPIs for such systems would focus on aspects like detection range and accuracy, jamming effectiveness, signal identification capabilities, system reliability (Mean Time Between Failures - MTBF), response time, and integration with other shipboard systems. Under this firm fixed-price contract, performance measurement would likely involve rigorous testing and evaluation protocols defined in the contract's Statement of Work (SOW). This could include government acceptance testing, operational assessments, and potentially contractor self-reporting against agreed-upon metrics. The Department of the Navy would be responsible for monitoring these KPIs to ensure the system meets the required operational capabilities for fleet defense and electronic warfare missions. Failure to meet critical performance standards could result in contract remedies, although the specifics depend on the contract terms.

What is Lockheed Martin's track record with the SEWIP program and similar electronic warfare contracts?

Lockheed Martin Corporation has a well-established and extensive track record in developing and producing electronic warfare (EW) systems for the U.S. military, including the SEWIP program. They are a major defense contractor with significant expertise in radar, sensors, and electronic countermeasures. The SEWIP program itself has evolved over several blocks (Block I, II, III), with Lockheed Martin being a key participant, particularly in the later blocks like Block II and III, which involve more advanced capabilities. Their history with SEWIP suggests a deep understanding of the system's requirements and a proven ability to deliver. Beyond SEWIP, Lockheed Martin has been involved in numerous other EW-related contracts across various platforms (air, sea, land), reinforcing their position as a leading provider in this domain. While this specific award is sole-source, their long-standing involvement and demonstrated capabilities in EW provide a basis for the government's confidence in their ability to fulfill the contract requirements.

What are the potential risks associated with a sole-source award for critical defense systems like SEWIP Block 2?

Sole-source awards for critical defense systems like SEWIP Block 2 present several potential risks. Firstly, the most significant risk is the lack of price competition, which can lead to higher costs for the government and taxpayers compared to what might be achieved through a competitive bidding process. Without competing offers, there is less incentive for the contractor to offer the lowest possible price. Secondly, sole-sourcing can stifle innovation, as there is no external pressure from competitors to develop more advanced or cost-effective solutions. Thirdly, it can create vendor lock-in, making it difficult and costly to switch to alternative suppliers or technologies in the future. Lastly, there's a risk of complacency; a sole-source contractor might face less pressure to maintain high levels of efficiency or quality if they are assured of continued business without competition. These risks necessitate robust government oversight, negotiation, and performance management to mitigate potential downsides.

How does the $323.6 million contract value compare to the total historical spending on the SEWIP program?

The $323.6 million awarded to Lockheed Martin for SEWIP Block 2 units represents a substantial single award, but placing it in the context of the total historical spending on the SEWIP program requires a broader view. The SEWIP program is an incremental capability development effort, meaning it has progressed through multiple blocks (I, II, III) and likely involved numerous contracts, modifications, and sustainment efforts over many years. Therefore, this $323.6 million is likely a portion of the overall program cost, possibly for a specific production lot or a defined period of sustainment. To understand the total historical spending, one would need to aggregate all contracts awarded for all SEWIP blocks by the Department of the Navy and potentially other services. Given the program's strategic importance and long development timeline, total program spending could easily reach billions of dollars. This single award highlights the significant ongoing investment required for advanced electronic warfare capabilities.

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: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002413R5340

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 497 ELECTRONICS PKWY BLDG 5, 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: $329,404,208

Exercised Options: $328,178,678

Current Obligation: $323,624,774

Subaward Activity

Number of Subawards: 139

Total Subaward Amount: $55,763,217

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline