DoD awards $121M contract for advanced navigation systems, with Lockheed Martin as prime

Contract Overview

Contract Amount: $121,024,118 ($121.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2018-05-08

End Date: 2026-10-15

Contract Duration: 3,082 days

Daily Burn Rate: $39.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: NRE, QUALIFICATION, TEST&FIRST ARTICLE

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32825

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $121.0 million to LOCKHEED MARTIN CORPORATION for work described as: NRE, QUALIFICATION, TEST&FIRST ARTICLE Key points: 1. Contract value of $121 million over 8 years suggests significant investment in critical defense technology. 2. Full and open competition indicates a potentially robust market for these specialized systems. 3. The contract's duration and fixed-price nature may offer cost predictability but could limit flexibility. 4. Focus on search, detection, and navigation systems highlights a strategic priority for naval operations. 5. The award to a single prime contractor, Lockheed Martin, points to the complexity and integration required. 6. Geographic concentration in Florida for performance warrants attention to regional economic impact.

Value Assessment

Rating: good

The contract's total value of $121 million over approximately 8 years averages to about $15 million annually. Benchmarking this against similar complex defense system procurements is challenging without more specific system details. However, the firm-fixed-price structure suggests an attempt to control costs upfront. The absence of detailed performance metrics in the provided data makes a definitive value-for-money assessment difficult, but the competitive award process is a positive indicator.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple capable vendors had the opportunity to bid. This process is generally favorable for price discovery and ensuring the government receives competitive offers. The number of bidders is not specified, but the 'full and open' designation implies a market that could support more than a limited or sole-source approach.

Taxpayer Impact: A competitive award process helps ensure taxpayer dollars are used efficiently by driving down prices through market forces.

Public Impact

The U.S. Department of the Navy benefits from advanced navigation and guidance systems crucial for operational effectiveness. Warfighters operating naval vessels and aircraft will utilize these systems for enhanced situational awareness and mission success. The primary geographic impact is in Florida, where the contract performance is scheduled. The contract supports specialized manufacturing and engineering roles within the defense industrial base, likely benefiting a skilled workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (over 8 years) could lead to potential cost overruns if requirements change significantly or technology evolves rapidly.
Firm-fixed-price contracts can sometimes disincentivize innovation or efficiency improvements once the price is set.
Reliance on a single prime contractor, Lockheed Martin, concentrates risk and may limit downstream subcontracting opportunities for smaller firms.

Positive Signals

Awarded through full and open competition, indicating a healthy market and competitive pricing.
Firm-fixed-price contract provides budget certainty for the Department of Defense.
The contract addresses critical defense needs for advanced navigation and guidance systems.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on the manufacturing of advanced navigation, guidance, and control systems. The market for such specialized electronic equipment is characterized by high barriers to entry due to technological complexity, stringent quality requirements, and significant R&D investment. Comparable spending benchmarks would likely be found within other major defense procurements for avionics, radar, or electronic warfare systems, often running into hundreds of millions or billions of dollars over their lifecycle.

Small Business Impact

The provided data indicates that small business participation (ss: false, sb: false) was not a primary set-aside criterion for this specific contract. While Lockheed Martin, as the prime contractor, may engage small businesses as subcontractors, the contract itself does not appear to have a dedicated small business set-aside. This suggests that the primary focus was on securing the most capable large-scale provider for these complex systems, rather than specifically targeting small business prime contracting.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. The firm-fixed-price nature provides a degree of cost control, but performance monitoring would be crucial. Transparency is facilitated by the contract's award under full and open competition, which is publicly documented. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Aviation Systems
Defense Electronics Manufacturing
Aerospace Navigation Systems
DoD Combat Systems Procurement
Guidance and Control Systems

Risk Flags

Potential for technological obsolescence due to long contract duration.
Risk of cost overruns if initial estimates for NRE/Testing are inaccurate.
Concentration of prime contract responsibility with one large corporation.
Limited visibility into specific performance metrics and value realization.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $121.0 million to LOCKHEED MARTIN CORPORATION. NRE, QUALIFICATION, TEST&FIRST ARTICLE

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 $121.0 million.

What is the period of performance?

Start: 2018-05-08. End: 2026-10-15.

What is the specific nature of the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' being procured?

The contract description 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' (NAICS 334511) encompasses a broad range of advanced technologies. This likely includes components and integrated systems for radar, sonar, GPS, inertial navigation, flight control computers, and related sensors and displays used in naval aircraft and vessels. The specific application could range from enhancing target acquisition and tracking capabilities to improving the precision of ship and aircraft positioning and maneuvering in complex operational environments. The 'NRE, QUALIFICATION, TEST & FIRST ARTICLE' data points suggest significant upfront investment in research, development, testing, and initial production validation.

How does the $121 million award compare to historical spending on similar navigation systems by the Department of the Navy?

Direct comparison of the $121 million award to historical spending requires detailed analysis of specific system types and procurement histories. However, the duration of over 8 years (3082 days) suggests a substantial, long-term investment. The Department of the Navy procures numerous complex systems annually, with individual contract values often reaching tens or hundreds of millions of dollars. For instance, major upgrades to combat systems, radar suites, or avionics packages frequently fall within this financial range. The $15 million annual average implied by this contract is consistent with the lifecycle costs associated with developing, producing, and sustaining advanced defense electronics.

What are the key performance risks associated with a firm-fixed-price contract for advanced navigation systems?

Key performance risks for a firm-fixed-price contract in advanced navigation systems include potential scope creep if requirements are not rigidly defined, technological obsolescence if the system's lifecycle outpaces rapid advancements in the field, and contractor underestimation of costs leading to quality compromises or contractor financial distress. For the government, the primary risk is that the fixed price might not reflect true value if competition was limited or if the contractor possesses significant market power. The contractor bears the risk of cost overruns, which could incentivize them to cut corners on quality or support if not adequately monitored. The 'NRE, QUALIFICATION, TEST & FIRST ARTICLE' components suggest significant upfront technical challenges where cost estimation is inherently difficult.

What is the significance of Lockheed Martin Corporation being the sole prime contractor for this award?

Lockheed Martin Corporation being the sole prime contractor signifies its established position and capabilities within the defense industrial base, particularly in complex systems integration. For this specific contract, it implies that the Department of the Navy assessed Lockheed Martin as having the most comprehensive technical solution, manufacturing capacity, and program management expertise to fulfill the demanding requirements. While this offers the advantage of a single point of accountability, it also concentrates risk. It may also influence the competitive landscape for future related procurements and the opportunities available for other potential suppliers or subcontractors in the ecosystem.

How does the performance location in Florida impact the broader defense industrial base and regional economy?

The performance location in Florida suggests a significant injection of federal funds into the state's economy, supporting jobs in advanced manufacturing, engineering, and program management. Florida has a notable presence in the aerospace and defense sector, and this contract would likely bolster that ecosystem. It could lead to increased demand for specialized labor, materials, and services within the region. For the broader defense industrial base, it reinforces the geographic distribution of critical defense manufacturing capabilities. However, it also highlights a concentration of activity, which can be a vulnerability if regional disruptions occur.

What does the contract type 'DEFINITIVE CONTRACT' imply in conjunction with 'FIRM FIXED PRICE'?

A 'DEFINITIVE CONTRACT' is a standard contract type used when the exact quantity or value of goods/services is known or can be reasonably estimated at the time of award. When paired with 'FIRM FIXED PRICE' (FFP), it means the price is set and not subject to adjustment based on the contractor's cost experience. This provides maximum price certainty for the buyer (Department of Defense). For this contract, it indicates that the Navy had a clear understanding of the scope and expected deliverables, allowing them to negotiate a final, fixed price. The 'NRE, QUALIFICATION, TEST & FIRST ARTICLE' elements suggest these initial phases were critical in defining the scope for the FFP determination.

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: ENGINES AND TURBINES AND COMPONENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002417R4200

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 2323 EASTERN BLVD, BALTIMORE, MD, 21220

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: $179,441,872

Exercised Options: $121,774,365

Current Obligation: $121,024,118

Subaward Activity

Number of Subawards: 292

Total Subaward Amount: $108,692,613

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline