Lockheed Martin awarded $64.1M for LCCA systems, engineering services, and spares over 10 years

Contract Overview

Contract Amount: $64,124,057 ($64.1M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2013-12-13

End Date: 2023-12-29

Contract Duration: 3,668 days

Daily Burn Rate: $17.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: LOW COST CONFORMAL ARRAY (LCCA) SYSTEMS AND SPARES, ENGINEERING SERIVES, AND ORDERS

Place of Performance

Location: LIVERPOOL, ONONDAGA County, NEW YORK, 13088

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $64.1 million to LOCKHEED MARTIN CORPORATION for work described as: LOW COST CONFORMAL ARRAY (LCCA) SYSTEMS AND SPARES, ENGINEERING SERIVES, AND ORDERS Key points: 1. Contract awarded to a single, large defense contractor, indicating a focus on specialized capabilities. 2. The contract spans a decade, suggesting a long-term need for these systems and services. 3. Fixed Price Incentive contract type aims to balance cost control with performance incentives. 4. The extensive duration and value may present risks related to technological obsolescence and cost overruns. 5. This contract falls within the broader defense electronics and systems manufacturing sector. 6. The absence of small business participation suggests a focus on prime contractors with established defense infrastructure.

Value Assessment

Rating: fair

The contract value of $64.1 million over approximately 10 years averages to about $6.4 million annually. Benchmarking this against similar complex defense system contracts is challenging without more specific details on the LCCA systems' capabilities and the scope of engineering services. However, the fixed-price incentive structure suggests an attempt to manage costs, but the long duration could lead to price increases if market conditions or requirements change significantly. The value appears substantial for specialized systems, but a direct comparison to market rates for comparable systems is difficult without further data.

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 were likely considered. However, the data provided does not specify the number of bids received. The fact that Lockheed Martin Corporation was awarded the contract suggests they were the most competitive offeror based on technical merit, price, and other factors. Full and open competition is generally favorable for price discovery and ensuring the government receives the best value.

Taxpayer Impact: Taxpayers benefit from full and open competition as it drives down prices through market forces and encourages a wider range of potential suppliers to offer their best terms.

Public Impact

The primary beneficiaries are the Department of Defense, which receives critical LCCA systems and associated engineering support. Services delivered include the provision of LCCA systems, spare parts, and ongoing engineering services. The geographic impact is likely concentrated within defense installations and operational theaters where these systems are deployed. Workforce implications may include specialized engineering and manufacturing roles within Lockheed Martin and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (10 years) increases risk of technological obsolescence.
Fixed Price Incentive contract type can lead to cost overruns if not managed tightly.
Sole awardee (Lockheed Martin) may limit future competition and innovation if not carefully monitored.
Lack of small business participation could indicate missed opportunities for economic diversification.

Positive Signals

Full and open competition suggests a robust initial selection process.
Fixed Price Incentive contract structure aims to align contractor and government interests on cost and performance.
Long-term contract provides stability for critical defense system sustainment.
Award to a major defense contractor implies access to established expertise and infrastructure.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically in the manufacturing of search, detection, navigation, guidance, aeronautical, and nautical systems. The market for such specialized defense electronics is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. Spending in this sub-sector is driven by national security requirements and technological advancements. Comparable spending benchmarks would typically involve other large-scale defense system procurements for similar operational capabilities.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This suggests that the nature of the LCCA systems and engineering services required specialized capabilities, large-scale production capacity, or specific security clearances that are typically held by larger, established defense contractors. Consequently, there are likely limited direct subcontracting opportunities for small businesses unless they are part of Lockheed Martin's broader supply chain. The overall impact on the small business ecosystem for this specific contract appears minimal.

Oversight & Accountability

Oversight for this contract would primarily be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. Accountability measures are embedded within the Fixed Price Incentive contract terms, which link contractor profit to achieving cost and performance targets. Transparency is facilitated through contract award databases and reporting requirements, though detailed performance metrics may not be publicly disclosed. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Electronics Manufacturing
Navigation and Guidance Systems
Aerospace Engineering Services
Military Hardware Procurement
Long-Term Defense Contracts

Risk Flags

Long contract duration may lead to technological obsolescence.
Fixed Price Incentive contracts can be complex to manage and may not always guarantee cost savings.
Limited competition indicated by sole awardee despite full and open process.
Potential for cost growth over the 10-year period due to market fluctuations or requirement changes.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $64.1 million to LOCKHEED MARTIN CORPORATION. LOW COST CONFORMAL ARRAY (LCCA) SYSTEMS AND SPARES, ENGINEERING SERIVES, AND ORDERS

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 $64.1 million.

What is the period of performance?

Start: 2013-12-13. End: 2023-12-29.

What is the specific function and operational importance of the LCCA systems being procured?

The LCCA (LOW COST CONFORMAL ARRAY) SYSTEMS AND SPARES, ENGINEERING SERIVES, AND ORDERS contract pertains to systems likely used for search, detection, navigation, guidance, and related functions within aeronautical and nautical applications for the Department of Defense. While the exact 'conformal array' technology isn't detailed, such systems are critical for situational awareness, target identification, and operational effectiveness in complex environments. Their importance lies in providing warfighters with essential data for mission success, potentially in areas like radar, sonar, or electronic warfare. The 'low cost' aspect suggests an effort to balance capability with affordability, though the overall contract value indicates significant investment.

How does the Fixed Price Incentive (FPI) contract type typically function, and what are its implications for cost control in this $64.1M award?

A Fixed Price Incentive (FPI) contract establishes a target cost, target profit, and an established price (ceiling). The final price is determined by the contractor's actual costs, with profit adjusting based on cost performance relative to the target. If costs are below target, the contractor and government share the savings according to a pre-defined formula. If costs exceed the target but remain below the ceiling, the contractor's profit is reduced, and the government pays the actual cost plus reduced profit. If costs exceed the ceiling, the contractor is responsible for the overrun. For this $64.1M contract, the FPI structure incentivizes Lockheed Martin to control costs to maximize profit, while the government benefits from a price ceiling. However, the long duration and complexity of LCCA systems mean that cost targets must be carefully set and monitored to prevent significant overruns.

What is Lockheed Martin Corporation's track record with similar defense system contracts, particularly those involving navigation and guidance systems?

Lockheed Martin Corporation is a major global defense contractor with extensive experience in developing and producing complex defense systems, including those related to navigation, guidance, radar, and aerospace. They have a long history of delivering large-scale, high-value contracts for various branches of the U.S. military and international allies. Their portfolio includes programs like the F-35 fighter jet, Aegis combat system, and numerous satellite and missile systems, many of which incorporate sophisticated navigation and guidance components. While specific details on LCCA systems are limited, Lockheed Martin's established expertise and infrastructure in these areas likely contributed to their selection for this contract.

How does the annual spending average of approximately $6.4 million compare to other government procurements for similar navigation and guidance systems?

The annual spending average of approximately $6.4 million for LCCA systems and services is moderate within the context of large defense procurements. Major defense platforms like fighter jets or warships can involve billions of dollars in development and procurement. However, for specialized subsystems, sustainment, engineering services, and spare parts for existing or newly developed systems, $6.4 million annually can represent a significant investment. Benchmarking requires detailed comparison of system capabilities, quantities, and service levels. For instance, procuring a fleet of advanced radar systems might cost tens or hundreds of millions annually, while specialized guidance components or engineering support for a specific platform could fall within this range. Without more granular data on the LCCA system's specific role and scale, precise comparisons are difficult.

What are the potential risks associated with a 10-year contract duration for advanced technology systems like LCCA?

A 10-year contract duration for advanced technology systems like LCCA presents several potential risks. Firstly, technological obsolescence is a significant concern; advancements in sensor technology, processing power, or materials could render the procured systems outdated or less effective before the contract concludes. Secondly, the long timeframe increases the likelihood of requirement changes due to evolving threats, geopolitical shifts, or new operational doctrines, potentially necessitating costly modifications or upgrades. Thirdly, economic volatility and inflation over a decade can impact the 'fixed price' aspect, even with incentive clauses, potentially leading to cost growth if not adequately hedged. Finally, maintaining system performance and support over such an extended period requires robust long-term planning and sustainment strategies from the contractor.

Given the 'full and open competition' award, why was Lockheed Martin the sole recipient, and what does this imply about the competitive landscape for LCCA systems?

While the contract was awarded under 'full and open competition,' the fact that Lockheed Martin Corporation was the sole recipient suggests that, despite the open process, they were the only bidder or the most advantageous offer received by the government. This could be due to several factors: the highly specialized nature of LCCA systems requiring unique intellectual property or manufacturing capabilities possessed by Lockheed Martin; stringent technical requirements that only they could meet; or potentially, other bidders may have found the contract terms or anticipated costs prohibitive. This implies that the competitive landscape for these specific LCCA systems might be limited, potentially concentrating expertise and production within a single major prime contractor.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: SEALED BID

Solicitation ID: N0002412R6227

Offers Received: 2

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

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: $85,688,719

Exercised Options: $85,688,719

Current Obligation: $64,124,057

Actual Outlays: $2,817,148

Subaward Activity

Number of Subawards: 100

Total Subaward Amount: $17,175,396

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline