Lockheed Martin awarded $61.6M for Navy's XLUUV ORCA system design and technical data package

Contract Overview

Contract Amount: $61,611,644 ($61.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2017-09-28

End Date: 2024-09-30

Contract Duration: 2,559 days

Daily Burn Rate: $24.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: IGF::OT::IGF XLUUV(ORCA)SYSTEM DESIGN&TECH DATA PKG

Place of Performance

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

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $61.6 million to LOCKHEED MARTIN CORPORATION for work described as: IGF::OT::IGF XLUUV(ORCA)SYSTEM DESIGN&TECH DATA PKG Key points: 1. Contract awarded to a single, large defense contractor, indicating specialized capabilities. 2. The contract type (Cost Plus Incentive Fee) suggests performance incentives tied to cost and schedule. 3. A long duration (2559 days) implies a complex, multi-year development effort. 4. The award is for system design and technical data, a foundational phase for future production. 5. Geographic concentration in Florida may indicate specific R&D or testing facilities. 6. No small business set-aside or subcontracting noted, suggesting a focus on prime contractor capabilities.

Value Assessment

Rating: fair

The contract value of $61.6 million for system design and technical data for an Unmanned Extra Large Unmanned Undersea Vehicle (XLUUV) program appears reasonable given the complexity and long duration. However, without specific benchmarks for similar XLUUV system design contracts or detailed cost breakdowns, a precise value-for-money assessment is challenging. The Cost Plus Incentive Fee (CPIF) structure allows for potential cost savings if performance targets are met, which could enhance value, but also carries inherent cost escalation risks.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple interested parties had the opportunity to bid. The presence of three bidders suggests a competitive environment for this specialized system design. While the specific number of bids received is not detailed, full and open competition generally promotes price discovery and encourages contractors to offer competitive terms.

Taxpayer Impact: Taxpayers benefit from the competitive process which aims to secure the best technical solution at a reasonable price for this advanced naval technology.

Public Impact

The primary beneficiary is the Department of the Navy, which will receive the design and technical data for the ORCA XLUUV system. This contract supports the development of advanced unmanned undersea vehicle technology, crucial for future naval operations. The geographic impact is concentrated in Florida, likely leveraging specialized research and development facilities. The contract supports highly skilled engineering and technical roles within the defense industry, particularly at Lockheed Martin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost overruns are a risk with CPIF contracts if performance incentives are not structured effectively.
Technological obsolescence is a potential concern for long-duration R&D projects in rapidly evolving defense sectors.
Dependence on a single large contractor for critical system design may limit future flexibility.
Integration challenges with existing naval systems could arise during development.
Scope creep is a possibility in complex R&D efforts, potentially increasing costs and timelines.

Positive Signals

Awarded through full and open competition, suggesting a robust selection process.
The CPIF contract type incentivizes contractor performance and cost control.
The long contract duration allows for thorough development and testing of a complex system.
Focus on system design and technical data ensures a solid foundation for future production.
Lockheed Martin's established track record in defense systems provides a degree of confidence in execution.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on advanced unmanned systems. The market for unmanned undersea vehicles (UUVs) is growing rapidly, driven by increasing demand for persistent surveillance, mine countermeasures, and intelligence, surveillance, and reconnaissance (ISR) capabilities. Spending in this area is significant, with major defense contractors investing heavily in R&D. Comparable spending benchmarks are difficult to ascertain without more specific program details, but system design contracts for major platforms can range from tens to hundreds of millions of dollars.

Small Business Impact

This contract does not appear to include specific small business set-asides, nor is there an indication of mandatory subcontracting goals for small businesses. The award to a large prime contractor like Lockheed Martin suggests that the primary focus is on leveraging their extensive internal capabilities and established supply chains. This could limit direct opportunities for small businesses on this specific contract, although they may be involved further down the supply chain or in subsequent production phases.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. The Cost Plus Incentive Fee (CPIF) structure necessitates close monitoring of costs, performance, and schedule to ensure that incentives are met and taxpayer funds are used efficiently. Transparency is typically maintained through regular reporting requirements mandated by the contract. The Inspector General's office for the Department of Defense would have jurisdiction over audits and investigations related to potential fraud, waste, or abuse.

Related Government Programs

Unmanned Undersea Vehicle (UUV) Programs
Naval Surface Warfare Center (NSWC) Contracts
Defense Advanced Research Projects Agency (DARPA) Unmanned Systems Initiatives
Naval Air Systems Command (NAVAIR) Contracts
Department of Defense Research and Development Budgets

Risk Flags

Long contract duration increases exposure to changing technological landscapes and budget priorities.
CPIF contract type requires diligent oversight to manage cost and performance incentives effectively.
Sole reliance on a large prime contractor may limit opportunities for smaller, innovative firms in the supply chain.
Development of novel technology carries inherent risks of technical challenges and schedule delays.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $61.6 million to LOCKHEED MARTIN CORPORATION. IGF::OT::IGF XLUUV(ORCA)SYSTEM DESIGN&TECH DATA PKG

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 $61.6 million.

What is the period of performance?

Start: 2017-09-28. End: 2024-09-30.

What is Lockheed Martin's track record with similar large-scale unmanned systems development contracts for the Department of Defense?

Lockheed Martin has a significant track record in developing complex defense systems, including various unmanned platforms. They have been involved in the development of unmanned aerial vehicles (UAVs) and have a history with naval systems. For instance, they have been a key player in programs like the F-35 fighter jet, which involves extensive systems integration and advanced technology. Their experience with large, multi-year, high-value contracts suggests a capacity to manage complex development efforts. Specific details on their past XLUUV or similar large UUV development contracts would provide a more direct comparison, but their overall portfolio indicates substantial experience in the domain of advanced defense technology development and large-scale program management.

How does the $61.6 million award compare to the typical cost of system design and technical data packages for advanced naval platforms?

Benchmarking the $61.6 million cost for the ORCA XLUUV system design and technical data package against similar contracts is challenging without access to detailed cost data and specific program complexities. However, for major defense platforms, the system design and technical data phase represents a critical, often lengthy, and resource-intensive part of the acquisition lifecycle. Costs can vary significantly based on the novelty of the technology, the required level of detail in the technical data, the number of iterations needed, and the specific performance requirements. Given that XLUUVs represent a significant technological advancement in naval capabilities, a multi-million dollar investment for the foundational design and data package is not unexpected. It is likely within the expected range for developing cutting-edge, large-scale unmanned systems for a major military branch.

What are the primary risks associated with the Cost Plus Incentive Fee (CPIF) contract type for this program?

The primary risks associated with a CPIF contract for the ORCA XLUUV system design revolve around cost control and the effectiveness of the incentive structure. While CPIF aims to incentivize the contractor to perform efficiently by sharing in cost savings or overruns, poorly defined targets or metrics can lead to unintended consequences. There's a risk that the contractor might prioritize achieving incentive fees over optimal long-term system design or quality if the incentives are not perfectly aligned with program goals. Furthermore, the government bears a significant portion of the cost risk, meaning that if costs escalate beyond the target, the government will pay a substantial share. Effective oversight and clear, measurable performance metrics are crucial to mitigate these risks and ensure the government receives good value.

What is the anticipated effectiveness of the ORCA XLUUV system based on the current stage of development indicated by this contract?

This contract specifically covers the system design and technical data package phase, meaning the ORCA XLUUV system is still in its developmental stages. Therefore, its ultimate effectiveness cannot be fully assessed at this point. The contract's purpose is to establish the foundational design and specifications that will enable future prototyping, testing, and eventual operational deployment. The effectiveness will depend on the successful execution of this design phase, the subsequent engineering and manufacturing, and rigorous testing to validate its capabilities against intended mission requirements. The Navy's investment in this phase suggests a strategic intent to enhance its unmanned undersea capabilities, implying an expectation of significant operational advantages once the system is realized.

How has federal spending on unmanned undersea vehicle (UUV) programs evolved over the past five years, and where does this contract fit in?

Federal spending on UUV programs has seen a notable increase over the past five years, driven by the recognized strategic importance of autonomous maritime capabilities for intelligence, surveillance, reconnaissance (ISR), mine countermeasures, and anti-submarine warfare. While specific aggregate figures fluctuate annually based on budget allocations and program priorities, there has been a consistent upward trend in investment across the Department of Defense, particularly within the Navy. This $61.6 million contract for the design and technical data package of the ORCA XLUUV fits into this trend as a significant investment in a next-generation, large-displacement UUV. It represents a foundational step in a larger program that likely involves substantial follow-on funding for prototyping, testing, and procurement, reflecting the growing emphasis on advanced unmanned systems in naval strategy.

What are the potential long-term implications of developing the ORCA XLUUV system for naval warfare doctrine and force structure?

The development of the ORCA XLUUV, a large, extra-long endurance unmanned undersea vehicle, has the potential to significantly reshape naval warfare doctrine and force structure. Its long endurance and payload capacity could enable persistent ISR missions over vast ocean areas, provide distributed lethality through mine-clearing or strike capabilities, and act as a force multiplier for manned submarines and surface vessels. This could lead to a shift towards more autonomous and distributed naval operations, reducing the risk to human personnel in dangerous environments. Force structure implications may include a greater reliance on unmanned assets, potentially altering the balance between manned and unmanned platforms and requiring new training, maintenance, and command-and-control paradigms. The ORCA could enable the Navy to project power and maintain situational awareness in contested environments more effectively and affordably.

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: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SEALED BID

Solicitation ID: N0002417R6308

Offers Received: 3

Pricing Type: COST PLUS INCENTIVE FEE (V)

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: $91,111,925

Exercised Options: $87,815,470

Current Obligation: $61,611,644

Actual Outlays: $2,169,350

Subaward Activity

Number of Subawards: 45

Total Subaward Amount: $14,893,183

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline