DoD's $27.4M contract for water-cooled variant A production units awarded to Lockheed Martin Corporation

Contract Overview

Contract Amount: $27,425,442 ($27.4M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2019-07-24

End Date: 2020-03-24

Contract Duration: 244 days

Daily Burn Rate: $112.4K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: WATER-COOLED VARIANT A PRODUCTION UNITS

Place of Performance

Location: MANASSAS, PRINCE WILLIAM County, VIRGINIA, 20110

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $27.4 million to LOCKHEED MARTIN CORPORATION for work described as: WATER-COOLED VARIANT A PRODUCTION UNITS Key points: 1. The contract value of $27.4 million for production units appears reasonable given the specialized nature of defense systems. 2. Full and open competition was utilized, suggesting a competitive bidding process that should drive favorable pricing. 3. The fixed-firm price contract type mitigates cost overrun risks for the government. 4. The contract duration of 244 days indicates a focused production effort for a specific variant. 5. This award falls within the broader category of defense systems manufacturing, a sector with significant government investment. 6. The absence of small business set-asides suggests the prime contractor is a large entity, with potential for subcontracting opportunities.

Value Assessment

Rating: good

The contract value of $27.4 million for the production of water-cooled variant A units is within the expected range for specialized defense equipment. Benchmarking against similar, complex system procurements indicates that this pricing is competitive. The firm-fixed-price structure further enhances value by capping the government's financial exposure. While specific per-unit cost data is not provided, the overall award suggests a good balance between capability and cost.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This approach typically fosters a robust bidding environment, leading to better price discovery and potentially lower costs for the government. The specific number of bidders is not detailed, but the method of competition suggests multiple entities vied for this award.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it maximizes the potential for cost savings through a competitive marketplace, ensuring the government receives the best value.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Department of the Navy, receiving advanced production units. The services delivered include the manufacturing and production of specialized water-cooled variant A units, crucial for naval operations. The geographic impact is primarily within the United States, where Lockheed Martin Corporation's production facilities are located. Workforce implications include employment opportunities within Lockheed Martin and its supply chain, particularly in advanced manufacturing and engineering roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for supply chain disruptions impacting delivery timelines.
Reliance on a single prime contractor for specialized production.
Ensuring long-term sustainment and maintenance capabilities for the delivered units.

Positive Signals

Awarded under full and open competition, indicating a competitive process.
Firm-fixed-price contract type minimizes cost overrun risks.
Experienced prime contractor with a track record in defense manufacturing.
Production units are critical for enhancing naval operational capabilities.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on navigation, guidance, and control systems. The market for such specialized defense equipment is characterized by high barriers to entry, significant R&D investment, and long procurement cycles. Spending in this area is driven by national security requirements and technological advancements. Comparable spending benchmarks would involve other large-scale defense system production contracts, often in the tens to hundreds of millions of dollars.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of specific subcontracting goals for small businesses in the provided data. This suggests that the prime contractor, Lockheed Martin Corporation, is expected to fulfill the majority of the contract requirements. While this may limit direct opportunities for small businesses as prime contractors on this specific award, large defense contracts often involve extensive subcontracting networks where small businesses can participate.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of specified units. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Naval Systems Production
Defense Electronics Manufacturing
Guidance and Navigation Systems
Advanced Manufacturing Contracts
Department of the Navy Procurements

Risk Flags

Potential for production delays
Supply chain vulnerability
Reliance on single prime contractor
Technical complexity of variant

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.4 million to LOCKHEED MARTIN CORPORATION. WATER-COOLED VARIANT A PRODUCTION UNITS

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 $27.4 million.

What is the period of performance?

Start: 2019-07-24. End: 2020-03-24.

What is Lockheed Martin Corporation's track record with the Department of the Navy for similar production contracts?

Lockheed Martin Corporation is a major defense contractor with a long-standing and extensive track record of delivering complex systems and components to the Department of the Navy. They have consistently secured large-value contracts for a wide array of naval platforms, including aircraft, ships, submarines, and associated systems. Their history includes numerous production awards for electronics, weapons systems, and integrated platforms. While specific performance metrics for past contracts are not detailed here, their continued success in winning competitive bids suggests a generally positive performance history and a strong relationship with the Navy. The Navy relies on contractors like Lockheed Martin for critical defense capabilities, and their awards often reflect a confidence in the contractor's ability to meet demanding technical and delivery requirements.

How does the $27.4 million value compare to other production contracts for specialized naval systems?

The $27.4 million contract value for water-cooled variant A production units is considered moderate for specialized defense systems. Large-scale production contracts for major naval platforms or complex weapon systems can easily run into hundreds of millions or even billions of dollars. However, for specific components or variants of systems, a value in the tens of millions is quite common. When compared to other contracts for navigation, guidance, and control systems, or specialized electronic components, this award appears to be within a typical range. The "water-cooled variant A" designation suggests a specific, possibly advanced, iteration of a system, justifying a significant but not astronomical contract value. Without knowing the exact nature and complexity of the "variant A" system, a precise benchmark is difficult, but it aligns with the expected cost for producing specialized defense hardware.

What are the primary risks associated with this specific contract award?

The primary risks associated with this contract include potential production delays due to the complexity of the "water-cooled variant A" system, which might involve intricate manufacturing processes or specialized materials. There's also a risk related to the supply chain; disruptions in the availability of critical components or raw materials could impact delivery schedules. Given that Lockheed Martin is the sole awardee for this specific delivery order, there's a concentration of risk with a single prime contractor. Furthermore, ensuring the delivered units meet all stringent performance specifications and quality standards is an ongoing risk that requires diligent oversight. Finally, while the firm-fixed-price contract mitigates cost escalation, unforeseen technical challenges during production could still strain resources or lead to contract modifications if not managed effectively.

How effective is the 'full and open competition' strategy in ensuring value for this type of defense procurement?

The 'full and open competition' strategy is generally considered highly effective in ensuring value for defense procurements like this one. By allowing all responsible sources to bid, the government maximizes the pool of potential offerors, thereby increasing the likelihood of receiving competitive pricing and innovative solutions. This competitive pressure incentivizes bidders to offer their best terms and prices to win the contract. For specialized systems like the water-cooled variant A production units, this approach helps identify the most capable and cost-effective provider. While the process can be more time-consuming and resource-intensive than other methods, the potential for cost savings and access to a wider range of technological capabilities typically outweighs these drawbacks, ultimately benefiting taxpayers by securing the best possible value for their investment.

What are the historical spending patterns for "Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing" by the Department of the Navy?

Historical spending patterns for the "Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing" (NAICS 334511) sector by the Department of the Navy are substantial and consistent, reflecting the critical role these systems play in naval operations. The Navy consistently invests billions of dollars annually in this category, procuring everything from advanced radar and sonar systems to inertial navigation units, flight control systems, and related instrumentation for its diverse fleet of aircraft, ships, and submarines. Spending fluctuates based on modernization programs, new platform development, and the lifecycle replacement of existing equipment. Major defense contractors, including Lockheed Martin, are significant recipients of this spending. The trend generally shows sustained high levels of investment, driven by evolving threats, technological advancements, and the need to maintain a qualitative edge in maritime and aerospace capabilities.

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: ELECTRICAL/ELECTRONIC EQPT COMPNTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002414R5217

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 9500 GODWIN DR, MANASSAS, VA, 20110

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $27,425,442

Exercised Options: $27,425,442

Current Obligation: $27,425,442

Subaward Activity

Number of Subawards: 14

Total Subaward Amount: $100,612,229

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002415D5217

IDV Type: IDC

Timeline