DoD's $18.2M contract for search and detection systems awarded to Lockheed Martin, with 3 bidders

Contract Overview

Contract Amount: $18,235,028 ($18.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2019-07-01

End Date: 2026-10-30

Contract Duration: 2,678 days

Daily Burn Rate: $6.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: TEST PROCEDURES, TSN,&MTP

Place of Performance

Location: MOORESTOWN, BURLINGTON County, NEW JERSEY, 08057

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $18.2 million to LOCKHEED MARTIN CORPORATION for work described as: TEST PROCEDURES, TSN,&MTP Key points: 1. Value for money appears fair given the specialized nature of the equipment and the competitive bidding process. 2. Competition dynamics show a healthy level of interest with three bidders, suggesting a reasonably competitive market. 3. Risk indicators are moderate, typical for complex defense systems requiring specialized manufacturing and integration. 4. Performance context is tied to advanced navigation and guidance systems crucial for naval operations. 5. Sector positioning places this contract within the advanced defense manufacturing and systems integration segment.

Value Assessment

Rating: fair

The contract's value of $18.2 million for search, detection, navigation, guidance, and related systems appears within a reasonable range for specialized defense equipment. Benchmarking against similar complex system procurements by the Department of the Navy suggests that the pricing is competitive, especially considering the inclusion of incentive fees which align contractor performance with government objectives. The Cost Plus Incentive Fee (CPIF) structure allows for cost savings to be shared, potentially driving efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. With three bidders participating, the competition level suggests a moderately active market for these specialized defense systems. The presence of multiple bidders generally supports price discovery and encourages more competitive pricing, although the exact impact is difficult to quantify without knowing the specific capabilities and cost structures of each bidder.

Taxpayer Impact: The full and open competition with multiple bidders is beneficial for taxpayers as it increases the likelihood of securing the best possible price and value for the required advanced systems.

Public Impact

The primary beneficiaries are the Department of the Navy, receiving advanced search and detection systems for operational readiness. Services delivered include the manufacturing and integration of critical navigation and guidance equipment for naval vessels. Geographic impact is primarily within New Jersey, where Lockheed Martin's facility is located for contract performance. Workforce implications include employment opportunities for skilled engineers, technicians, and manufacturing personnel at the contractor's site.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in Cost Plus Incentive Fee contracts if not closely managed.
Dependence on a single large contractor for critical defense system components.
Long-term sustainment and upgrade costs for these complex systems are not detailed in this award.

Positive Signals

Awarded through full and open competition, indicating a robust bidding process.
Incentive fee structure encourages contractor efficiency and cost control.
Contractor's established track record in defense systems manufacturing provides a degree of reliability.

Sector Analysis

This contract falls within the defense electronics and systems manufacturing sector, a segment characterized by high technological complexity, significant R&D investment, and long product development cycles. The market is dominated by a few large prime contractors capable of handling the intricate requirements of military systems. Spending in this sector is driven by national security needs and technological advancements, with contracts often being multi-year and high-value. Comparable spending benchmarks would involve other large-scale procurements of advanced sensor, navigation, and communication systems for military applications.

Small Business Impact

This contract was awarded under full and open competition and does not indicate a specific small business set-aside. While Lockheed Martin is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors, particularly in specialized component manufacturing or support services. The extent of small business subcontracting will depend on the prime contractor's strategy and the availability of qualified small business suppliers for specific needs.

Oversight & Accountability

Oversight for this contract will be managed by the Department of the Navy's contracting and program management offices. Accountability measures are embedded within the Cost Plus Incentive Fee structure, which links contractor profit to performance metrics and cost targets. Transparency is facilitated through contract award databases, though detailed performance data may be restricted due to national security considerations. The Inspector General for the Department of Defense would have jurisdiction over audits and investigations related to potential fraud, waste, or abuse.

Related Government Programs

Naval Combat Systems
Defense Electronics Manufacturing
Aerospace Systems Integration
Search and Detection Equipment
Navigation and Guidance Systems

Risk Flags

Cost Plus Incentive Fee contract type requires careful monitoring to ensure cost efficiency.
Long-term sustainment and upgrade costs not detailed in award.
Dependence on a single prime contractor for critical defense components.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.2 million to LOCKHEED MARTIN CORPORATION. TEST PROCEDURES, TSN,&MTP

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 $18.2 million.

What is the period of performance?

Start: 2019-07-01. End: 2026-10-30.

What is Lockheed Martin Corporation's track record with the Department of Defense for similar systems?

Lockheed Martin Corporation has an extensive and long-standing track record with the Department of Defense, having been a major defense contractor for decades. They are known for producing a wide array of complex systems, including aircraft, missiles, radar, and other advanced electronic warfare and command and control systems. For search, detection, navigation, and guidance systems specifically, Lockheed Martin has consistently been a key player, often involved in developing and manufacturing cutting-edge technology for various military branches. Their history includes numerous large-scale contracts for naval systems, indicating a deep understanding of the requirements and a proven capability to deliver. While specific performance metrics for past contracts are often proprietary, their continued success in securing significant defense awards suggests a generally positive performance history and a strong relationship with the DoD.

How does the $18.2 million award compare to historical spending on similar systems by the Navy?

The $18.2 million award for search, detection, navigation, and guidance systems represents a moderate investment for the Department of the Navy, particularly for specialized equipment. Historical spending on similar systems can vary significantly based on the scope, technological sophistication, and quantity of units procured. For instance, major platform upgrades or the development of entirely new sensor suites could easily run into hundreds of millions or even billions of dollars. However, for specific component procurements or upgrades to existing systems, an $18.2 million contract is not unusual. To provide a precise comparison, one would need to analyze historical contract data for systems with comparable functionalities and complexity, considering factors like inflation and technological obsolescence over time. Given the competitive nature of this award, it suggests that the price point is likely aligned with current market conditions for such specialized defense technology.

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

The primary risks associated with this Cost Plus Incentive Fee (CPIF) contract revolve around cost control and the potential for scope creep. While the incentive fee structure is designed to motivate the contractor to achieve cost savings and performance targets, there remains a risk that costs could exceed initial estimates if not managed diligently by both the contractor and the government. The government bears the risk of paying actual allowable costs plus a negotiated fee, which could be higher than anticipated if the contractor struggles to meet efficiency targets or if unforeseen technical challenges arise. Scope creep is another risk; if requirements are not clearly defined and managed, the project's complexity and cost can increase. Effective oversight, clear communication, and robust change management processes are crucial to mitigating these risks and ensuring the contract delivers value.

How effective is the full and open competition process in ensuring value for taxpayer money in this specific procurement?

The full and open competition process is generally considered the most effective method for ensuring value for taxpayer money in federal procurements, and this contract appears to follow that principle. By allowing all responsible sources to bid, the government maximizes the pool of potential suppliers, thereby increasing the likelihood of receiving competitive offers. The fact that three bidders participated suggests a healthy level of market interest, which typically drives down prices and encourages innovation. This competitive pressure incentivizes bidders to offer their best technical solutions at the most cost-effective rates. While the CPIF structure introduces some cost uncertainty, the competitive bidding process itself provides a strong foundation for price discovery and ensures that the selected contractor is likely offering a fair price relative to the market and their capabilities.

What are the potential long-term implications of this contract on the specific defense technology sector?

This contract could have several long-term implications for the defense technology sector. Firstly, it signifies continued investment by the Department of the Navy in advanced search, detection, navigation, and guidance systems, potentially driving further innovation and development in this niche. Secondly, the award to Lockheed Martin, a major industry player, reinforces their position and capabilities in this area, potentially influencing future market dynamics and competition. Thirdly, the specific technologies developed or integrated under this contract could have spin-off applications in other defense or even commercial sectors, fostering broader technological advancement. Lastly, the success of this contract could set benchmarks for future procurements of similar systems, influencing pricing, performance expectations, and competitive strategies within the sector.

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: TECHNICAL REPRESENTATIVE SVCS. › TECHNICAL REPRESENTATIVE SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SEALED BID

Solicitation ID: N0002418R5102

Offers Received: 3

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Address: 199 BORTON LANDING RD, MOORESTOWN, NJ, 08057

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: $124,982,379

Exercised Options: $66,676,803

Current Obligation: $18,235,028

Actual Outlays: $380,679

Subaward Activity

Number of Subawards: 30

Total Subaward Amount: $886,063

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NOT OBTAINED - WAIVED

Timeline