DoD awards $572M for SEWIP Block 2 subsystems, with Lockheed Martin as prime contractor

Contract Overview

Contract Amount: $572,194,646 ($572.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2016-09-30

End Date: 2023-01-01

Contract Duration: 2,284 days

Daily Burn Rate: $250.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: AN/SLQ-32(V)6 SEWIP BLOCK 2 SUBSYSTEMS

Place of Performance

Location: LIVERPOOL, ONONDAGA County, NEW YORK, 13088

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $572.2 million to LOCKHEED MARTIN CORPORATION for work described as: AN/SLQ-32(V)6 SEWIP BLOCK 2 SUBSYSTEMS Key points: 1. Contract value of $572M for electronic warfare systems indicates significant investment in naval defense capabilities. 2. Sole-source award to Lockheed Martin raises questions about competition and potential for cost efficiencies. 3. The contract duration of over 6 years suggests a long-term need for these critical defense subsystems. 4. Focus on SEWIP Block 2 subsystems highlights the importance of electronic warfare in modern naval operations. 5. The award's geographic impact is primarily in New York, where Lockheed Martin is headquartered. 6. The contract type (Firm Fixed Price) aims to control costs and transfer risk to the contractor.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics or comparable subsystem costs. The $572 million award over approximately 6 years suggests a substantial investment. However, the lack of competitive bidding limits the ability to assess if the pricing reflects market value or if taxpayers received the best possible price. Further analysis would require comparing the unit costs of these subsystems to similar systems or previous iterations.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to Lockheed Martin Corporation. This indicates that the Department of the Navy determined that only Lockheed Martin could provide the required SEWIP Block 2 subsystems. While sole-source awards can be justified for unique capabilities or existing systems, they limit price discovery and may result in higher costs compared to a competitive procurement.

Taxpayer Impact: Sole-source awards can mean taxpayers may not benefit from the cost savings typically achieved through competitive bidding processes.

Public Impact

The primary beneficiaries are the U.S. Navy, which receives advanced electronic warfare capabilities to enhance fleet survivability and mission effectiveness. The contract delivers critical subsystems for the AN/SLQ-32(V)6 SEWIP Block 2 system, crucial for detecting and countering enemy threats. The geographic impact is concentrated in New York, where Lockheed Martin's facilities will likely perform the work, potentially supporting local jobs and the regional economy. Workforce implications include skilled labor in engineering, manufacturing, and program management within Lockheed Martin and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source nature limits competitive pressure on pricing.
Long contract duration could lead to cost overruns if not managed effectively.
Reliance on a single contractor may create dependency and reduce future flexibility.

Positive Signals

Firm Fixed Price contract type helps control costs and manage budget predictability.
Awarding to a known prime contractor with established expertise in EW systems.
Focus on a critical defense capability (SEWIP Block 2) ensures national security needs are met.

Sector Analysis

The defense electronics sector is characterized by high R&D costs, long product lifecycles, and significant government investment. The SEWIP program falls under electronic warfare (EW), a critical component of modern military operations focused on controlling the electromagnetic spectrum. This contract represents a significant portion of spending within this specialized niche, supporting the Navy's efforts to maintain technological superiority against evolving threats. Comparable spending benchmarks would involve other major defense electronic system procurements.

Small Business Impact

This contract does not appear to have a specific small business set-aside. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely limited to subcontracting opportunities. The extent to which Lockheed Martin will engage small businesses for subcontracting will be a key factor in assessing the broader impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The Firm Fixed Price nature of the contract provides a degree of cost control. Transparency is facilitated through contract award databases, but detailed performance and cost data may be subject to security restrictions. The Inspector General of the Department of Defense would have jurisdiction for audits and investigations.

Related Government Programs

AN/SLQ-32 Electronic Warfare System
Surface Electronic Warfare Improvement Program (SEWIP)
Naval Electronic Warfare Systems
Defense Electronic Warfare Market
US Navy Shipboard Systems Procurement

Risk Flags

Sole-source award may limit price competition.
Contract duration exceeds 5 years, increasing risk of cost escalation.
Lack of detailed performance metrics in award data hinders value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $572.2 million to LOCKHEED MARTIN CORPORATION. AN/SLQ-32(V)6 SEWIP BLOCK 2 SUBSYSTEMS

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 $572.2 million.

What is the period of performance?

Start: 2016-09-30. End: 2023-01-01.

What is the historical spending trend for the SEWIP program and how does this award compare?

Historical spending on the SEWIP program has been substantial, reflecting its critical role in naval defense. While specific year-over-year figures for SEWIP Block 2 subsystems are not detailed in the provided data, the $572 million award represents a significant single investment. Previous blocks and upgrades to the AN/SLQ-32 system have also commanded multi-million dollar contracts over extended periods. To provide a precise comparison, one would need to aggregate contract data for SEWIP procurements over the last decade, analyzing trends in funding levels, contract types, and prime contractors to contextualize the scale and significance of this particular award.

What are the specific capabilities provided by the AN/SLQ-32(V)6 SEWIP Block 2 subsystems?

The AN/SLQ-32(V)6 SEWIP Block 2 subsystems are integral components of the U.S. Navy's electronic warfare (EW) suite. This system is designed to detect, identify, and counter a wide range of radar and missile threats. Specifically, Block 2 focuses on enhancing the system's ability to detect and identify threats, providing crucial situational awareness to the warship's crew. It plays a vital role in protecting naval vessels by providing early warning and enabling defensive countermeasures against enemy electronic attacks, thereby increasing survivability and mission effectiveness in contested environments.

What is the rationale behind awarding this contract on a sole-source basis to Lockheed Martin?

Sole-source awards are typically justified when a specific capability is unique to a single provider, or when there are compelling reasons for continuity with an existing system. For the AN/SLQ-32(V)6 SEWIP Block 2 subsystems, Lockheed Martin likely possesses the proprietary technology, manufacturing expertise, and established infrastructure necessary for production. The Navy may have determined that transitioning to a different vendor would incur unacceptable costs, delays, or risks to operational capability. Justification documents for sole-source procurements often detail these factors, emphasizing the lack of adequate competition or the need for specialized knowledge held by the incumbent contractor.

How does the Firm Fixed Price (FFP) contract type benefit the government in this procurement?

The Firm Fixed Price (FFP) contract type is generally advantageous for the government as it establishes a ceiling price that the contractor must adhere to, regardless of their actual costs. This shifts the risk of cost overruns from the government to the contractor. For the Department of the Navy, an FFP award for the SEWIP Block 2 subsystems provides budget certainty and predictability, making financial planning more straightforward. It incentivizes the contractor to manage its costs efficiently to maximize profit, potentially leading to better value if the contractor can perform below the fixed price.

What are the potential risks associated with relying on Lockheed Martin for these critical EW subsystems?

The primary risk associated with a sole-source award to Lockheed Martin is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government has less leverage to negotiate the lowest possible price. Additionally, over-reliance on a single supplier can create a dependency, making the Navy vulnerable to supply chain disruptions or future price increases if Lockheed Martin faces internal cost pressures. There's also a risk that innovation might be slower compared to a market with multiple competing developers vying for contracts.

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: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002416R5363

Offers Received: 2

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: $593,416,646

Exercised Options: $572,194,646

Current Obligation: $572,194,646

Subaward Activity

Number of Subawards: 358

Total Subaward Amount: $2,846,337,559

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline