Navy awards $12.7M for COSAL/COSMAL spares, with Lockheed Martin as the sole provider

Contract Overview

Contract Amount: $12,742,167 ($12.7M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2020-03-30

End Date: 2026-04-30

Contract Duration: 2,222 days

Daily Burn Rate: $5.7K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: JAPAN AND KOREA INCO, COSAL, COSMAL SPARES

Place of Performance

Location: MOORESTOWN, BURLINGTON County, NEW JERSEY, 08057

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $12.7 million to LOCKHEED MARTIN CORPORATION for work described as: JAPAN AND KOREA INCO, COSAL, COSMAL SPARES Key points: 1. The contract value of $12.7 million for spares suggests a moderate investment in maintaining critical naval systems. 2. Sole-source award indicates a lack of competitive bidding, potentially impacting price efficiency. 3. The long performance period of over two years warrants scrutiny for cost escalation and performance monitoring. 4. The absence of small business set-asides or participation noted in the data requires further investigation. 5. This contract supports the operational readiness of naval assets, directly impacting defense capabilities. 6. The fixed-price contract type offers some cost certainty but relies heavily on accurate initial pricing.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without comparable sole-source awards for similar spares. The fixed-price nature provides some cost control, but the lack of competition raises concerns about whether the government is receiving the best possible price. The total award amount of $12.7 million needs to be assessed against the criticality and volume of spares required.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when a specific contractor possesses unique capabilities, intellectual property, or is the sole authorized supplier for the required parts. The lack of competition limits the government's ability to leverage market forces to drive down prices and may result in higher costs compared to a competitively bid contract.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without multiple bids, there is less assurance that the price reflects the lowest achievable cost for these essential spares.

Public Impact

Naval forces operating vessels equipped with COSAL/COSMAL systems benefit from the availability of necessary spare parts. The contract ensures the continued operational readiness and maintenance of critical naval equipment. The primary geographic impact is on naval bases and operational areas where these vessels are deployed. The contract supports the workforce at Lockheed Martin Corporation involved in the production and supply of these specialized spares.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in the justification for sole-source procurement.
No indication of small business participation or subcontracting opportunities.
Long contract duration could lead to cost overruns if not managed effectively.

Positive Signals

Contract awarded to a known entity (Lockheed Martin Corporation) with established capabilities.
Fixed-price contract type provides some cost predictability.
Supports the maintenance of critical defense systems, ensuring operational readiness.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically supporting the manufacturing and supply of components for naval systems. The market for specialized military spares is often characterized by high barriers to entry, proprietary technology, and long product lifecycles, which can lead to sole-source or limited competition scenarios. Comparable spending in this sub-sector would involve other sustainment contracts for complex defense platforms.

Small Business Impact

The provided data indicates that this contract was not awarded as a small business set-aside, nor is there information suggesting significant subcontracting to small businesses. This suggests that the primary contractor, Lockheed Martin Corporation, is handling the majority of the work. Further analysis would be needed to determine if any subcontracting opportunities were made available to the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures would be tied to the delivery of specified spares according to the fixed-price terms. Transparency is limited by the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Naval Ship Maintenance and Repair
Defense Logistics Agency (DLA) Spare Parts Procurement
Aerospace Component Manufacturing
Military Vehicle and Equipment Sustainment

Risk Flags

Sole-source award lacks competitive pricing.
Potential for cost overruns due to long contract duration.
No clear indication of small business utilization.
Dependence on a single supplier for critical spares.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.7 million to LOCKHEED MARTIN CORPORATION. JAPAN AND KOREA INCO, COSAL, COSMAL SPARES

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 $12.7 million.

What is the period of performance?

Start: 2020-03-30. End: 2026-04-30.

What is the specific justification for awarding this contract on a sole-source basis to Lockheed Martin Corporation?

The justification for a sole-source award typically stems from unique capabilities, proprietary technology, or the contractor being the only source capable of providing the required goods or services. For COSAL/COSMAL spares, Lockheed Martin likely holds the necessary technical data packages, manufacturing rights, or is the original equipment manufacturer. Without this specific justification document, it's presumed that competition was deemed impractical or impossible due to these factors. This lack of competition means the government did not explore alternative suppliers or pricing structures that could have been achieved through a competitive bidding process.

How does the unit cost of these spares compare to similar components purchased through competitive contracts?

Direct comparison of unit costs is difficult without knowing the specific part numbers and quantities within this $12.7 million award. However, as a sole-source contract, it is highly probable that the unit costs are higher than they would be if the contract were competitively awarded. Competitive bidding allows multiple suppliers to offer their prices, driving down costs through market forces. In sole-source situations, the government relies on negotiation and cost analysis, which may not fully capture potential savings. Further analysis would require access to specific part pricing data and benchmarks from similar, competitively procured spares.

What are the key performance indicators (KPIs) being used to monitor Lockheed Martin's performance under this contract?

While the provided data does not detail specific KPIs, typical performance indicators for spare parts contracts include on-time delivery rates, quality acceptance rates (minimizing defects), and adherence to delivery schedules. For a fixed-price contract, meeting delivery timelines and providing conforming parts are paramount. The Department of the Navy would likely have established metrics within the contract's statement of work to track these aspects. Regular performance reviews and acceptance testing of delivered spares would be part of the oversight process to ensure Lockheed Martin meets its contractual obligations.

What is the historical spending trend for COSAL/COSMAL spares from the Department of the Navy?

Historical spending data for COSAL/COSMAL spares from the Department of the Navy would reveal patterns in demand, pricing, and contractor reliance. If this $12.7 million award represents a significant increase or decrease compared to previous years, it could indicate changes in fleet readiness, operational tempo, or inventory management strategies. Analyzing past contracts for these spares, including their award types (sole-source vs. competitive) and values, would provide context on whether this current award is an anomaly or part of a consistent procurement strategy. Such analysis is crucial for long-term budget planning and identifying potential cost-saving opportunities.

Are there any identified risks associated with the long-term sustainment of COSAL/COSMAL systems, and how does this contract address them?

Risks associated with long-term sustainment of complex systems like COSAL/COSMAL can include obsolescence of technology, diminishing manufacturing sources, and increasing maintenance costs. This contract, with its extended performance period (ending April 2026), aims to mitigate immediate supply chain risks by ensuring a continuous flow of necessary spares. However, the sole-source nature might not incentivize innovation or proactive obsolescence management from the contractor. The Navy's program office would need to actively monitor technological advancements and potential future sustainment challenges beyond the current contract's scope.

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: FIRE CONTROL EQPT.

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002418R5124

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

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

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

Financial Breakdown

Contract Ceiling: $12,742,167

Exercised Options: $12,742,167

Current Obligation: $12,742,167

Subaward Activity

Number of Subawards: 63

Total Subaward Amount: $6,252,395

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002417G5100

IDV Type: BOA

Timeline