Lockheed Martin awarded $47.9M contract for advanced navigation systems by the Department of the Navy

Contract Overview

Contract Amount: $47,917,006 ($47.9M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2020-05-08

End Date: 2024-02-26

Contract Duration: 1,389 days

Daily Burn Rate: $34.5K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: PROGRAM MANAGEMENT

Place of Performance

Location: LIVERPOOL, ONONDAGA County, NEW YORK, 13088

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $47.9 million to LOCKHEED MARTIN CORPORATION for work described as: PROGRAM MANAGEMENT Key points: 1. Contract awarded to a single, large defense contractor, indicating a focus on specialized capabilities. 2. The contract type (Cost Plus Incentive Fee) suggests a need for flexibility in managing evolving project requirements and incentivizing performance. 3. The duration of the contract (over 3 years) points to a long-term need for these systems. 4. The award was made under full and open competition, suggesting a robust bidding process. 5. The North American Industry Classification System (NAICS) code 334511 points to a specialized manufacturing sector. 6. The contract's value is significant within its specific product category.

Value Assessment

Rating: good

The contract value of $47.9 million for search, detection, navigation, guidance, and control systems appears reasonable given the specialized nature of the equipment and the duration of the contract. Benchmarking against similar complex defense systems suggests that this award falls within expected cost ranges for advanced technological development and manufacturing. The Cost Plus Incentive Fee (CPIF) structure allows for adjustments based on performance, which can lead to better value if targets are met.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded through full and open competition, indicating that multiple bidders were likely considered. This process is designed to ensure the government receives competitive pricing and the best available technology. The number of bidders is not specified, but the use of full and open competition generally leads to a more dynamic price discovery process compared to sole-source or limited competition awards.

Taxpayer Impact: Taxpayers benefit from the competitive nature of this award, as it increases the likelihood of securing advanced navigation systems at a fair market price and encourages innovation among defense contractors.

Public Impact

The Department of the Navy is the primary beneficiary, receiving advanced systems crucial for naval operations. These systems are vital for search, detection, navigation, guidance, and control, enhancing operational effectiveness and safety. The contract supports high-tech manufacturing jobs, likely concentrated in areas with defense industry presence. The geographic impact is primarily within the United States, supporting domestic defense industrial capabilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in CPIF contracts if performance incentives are not structured effectively.
Reliance on a single large contractor may limit future competition for follow-on work or upgrades.
The specialized nature of the systems could create vendor lock-in.

Positive Signals

Awarded through full and open competition, suggesting a competitive pricing environment.
The CPIF contract type incentivizes contractor performance and cost control.
The contract supports the development and procurement of critical national defense capabilities.

Sector Analysis

The contract falls within the broader defense manufacturing sector, specifically focusing on advanced navigation and guidance systems. This is a highly specialized segment of the aerospace and defense industry, characterized by significant research and development investment, stringent quality requirements, and long product lifecycles. The market for such systems is dominated by a few large, established defense contractors. Spending in this area is driven by military modernization efforts and the need for cutting-edge technology to maintain strategic advantage.

Small Business Impact

This contract was awarded to Lockheed Martin Corporation, a large prime contractor, and there is no indication of a small business set-aside. While the prime contractor may utilize small businesses for subcontracting, the primary award does not directly benefit small businesses through a set-aside. The extent of small business participation will depend on Lockheed Martin's subcontracting strategy.

Oversight & Accountability

Oversight for this contract will be managed by the Department of the Navy, likely through contracting officers and program managers. The Cost Plus Incentive Fee structure includes specific performance metrics that will be monitored to ensure accountability and value for money. Transparency is generally maintained through contract award databases and reporting requirements, though specific performance details may be sensitive. The Inspector General for the Department of Defense would have jurisdiction for audits and investigations.

Related Government Programs

Naval Combat Systems
Aerospace Systems Manufacturing
Defense Electronics
Navigation and Guidance Technology
Military Sensor Systems

Risk Flags

Potential for cost growth due to CPIF structure
Reliance on a single large contractor
Technical complexity may lead to unforeseen challenges

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.9 million to LOCKHEED MARTIN CORPORATION. PROGRAM MANAGEMENT

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 $47.9 million.

What is the period of performance?

Start: 2020-05-08. End: 2024-02-26.

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

Lockheed Martin Corporation is a major defense contractor with extensive experience delivering complex systems to the Department of the Navy. They have a long history of producing aircraft, ships, electronic systems, and other defense materiel. Historically, their performance on similar contracts has varied, with notable successes in large-scale programs but also instances of cost overruns and schedule delays, which are not uncommon in the defense sector. The Navy's contracting officers would have evaluated Lockheed Martin's past performance, including relevant experience and compliance with contract terms, as part of the source selection process for this award. Specific details on past performance evaluations are typically considered sensitive source selection information.

How does the $47.9 million award compare to previous spending on similar navigation systems?

Comparing this $47.9 million award requires access to historical spending data for specific navigation, guidance, and control systems procured by the Department of the Navy. Without granular data on the exact systems being procured under this contract (e.g., specific radar types, inertial navigation units, or flight control computers), a precise comparison is difficult. However, given the duration of the contract (over three years) and the advanced technological nature implied by the contractor and sector, the value appears consistent with significant investments in defense modernization. The average annual value of this contract is approximately $15.9 million, which is a reasonable figure for specialized defense electronics procurement when considering R&D, manufacturing, and integration costs.

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

The primary risks associated with a CPIF contract include potential cost overruns if the incentive targets are not well-defined or achievable, and the contractor does not perform as expected. There's also a risk that the government may pay more than anticipated if the contractor significantly exceeds performance goals. Furthermore, the complexity of the systems being developed or manufactured could lead to technical challenges, schedule delays, or integration issues. The government must diligently monitor the contractor's progress and cost accumulation to manage these risks effectively. The CPIF structure aims to mitigate some of these risks by aligning contractor incentives with government objectives, but requires robust oversight.

How effective are navigation systems in enhancing the Navy's operational capabilities?

Advanced navigation systems are absolutely critical to the effectiveness of U.S. Navy operations across all domains – surface, subsurface, air, and space. They provide precise positioning, timing, and situational awareness essential for mission success, whether conducting patrols, engaging targets, deploying forces, or performing complex maneuvers in contested environments. Modern systems integrate data from multiple sources (e.g., GPS, inertial navigation, celestial navigation, sonar) to ensure reliability and accuracy, even when primary systems like GPS are denied or degraded. Enhanced navigation capabilities directly contribute to improved operational tempo, reduced risk to personnel and assets, and the ability to execute missions with greater precision and confidence.

What is the historical spending trend for navigation and guidance systems within the Department of the Navy?

Historical spending trends for navigation and guidance systems within the Department of the Navy generally show consistent and significant investment, reflecting the critical nature of these technologies for naval operations. While specific figures fluctuate based on modernization cycles, technological advancements, and geopolitical priorities, the Navy consistently allocates substantial funds to acquire and maintain state-of-the-art systems. Spending often increases during periods of heightened military readiness or when new platforms (ships, aircraft, submarines) are introduced that require updated or entirely new navigation suites. The overall trend indicates a sustained commitment to ensuring naval forces possess superior navigation and guidance capabilities.

What is the typical profit margin for Lockheed Martin on CPIF contracts of this nature?

Determining the exact profit margin for Lockheed Martin on this specific CPIF contract is not publicly available, as profit is a component of the negotiated contract price and is influenced by various factors including base fee, incentive fees, and cost ceilings. However, for defense contracts, particularly those involving complex technologies and significant risk, profit margins are regulated. The Cost Plus Incentive Fee structure is designed to allow for a base fee plus an incentive fee, which is earned if certain cost and performance targets are met or exceeded. Historically, profit margins on defense contracts can range from single digits to the low double digits, depending on the contract type, risk, and competition. The specific incentive targets and sharing arrangements negotiated for this contract would dictate the potential profit.

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: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002418R6200

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Address: 497 ELECTRONICS PKWY BLDG 5, LIVERPOOL, NY, 13088

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: $47,917,006

Exercised Options: $47,917,006

Current Obligation: $47,917,006

Subaward Activity

Number of Subawards: 207

Total Subaward Amount: $80,089,714

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002419D6200

IDV Type: IDC

Timeline