Navy awards $26.3M for long lead time material, with Lockheed Martin as prime

Contract Overview

Contract Amount: $26,330,635 ($26.3M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2023-11-06

End Date: 2027-01-27

Contract Duration: 1,178 days

Daily Burn Rate: $22.4K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: BLQ-10 TI-24 LONG LEAD TIME MATERIAL

Place of Performance

Location: LIVERPOOL, ONONDAGA County, NEW YORK, 13088

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $26.3 million to LOCKHEED MARTIN CORPORATION for work described as: BLQ-10 TI-24 LONG LEAD TIME MATERIAL Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract type is Cost Plus Incentive Fee (CPIF), which can incentivize cost control but also carries inherent risk. 3. Long lead time material procurement indicates a focus on future program needs and potential supply chain dependencies. 4. The duration of over 3 years suggests a significant, ongoing requirement for these specialized components. 5. The prime contractor, Lockheed Martin, is a major defense industrial base participant. 6. The contract is a delivery order under a larger contract vehicle, implying a structured procurement approach.

Value Assessment

Rating: fair

Benchmarking the value of this specific delivery order is challenging without knowing the total contract value and scope. However, the $26.3 million awarded for long lead time material suggests a substantial investment. The CPIF contract type introduces variability in the final cost, making direct price comparisons difficult. Further analysis would require understanding the cost drivers and incentive structures within the contract.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a full and open competition, indicating that all responsible sources were permitted to submit bids. The specific number of bidders is not provided, but this approach generally fosters a competitive environment, which can lead to better pricing and terms for the government. The use of a delivery order suggests this is part of a broader, pre-competed contract.

Taxpayer Impact: A full and open competition is generally favorable for taxpayers as it maximizes the potential for competitive pricing and ensures the government is not limited to a single provider.

Public Impact

The Department of the Navy benefits from securing critical long lead time materials for future defense systems. This procurement supports the development and sustainment of advanced search, detection, navigation, guidance, and related systems. The contract's impact is primarily within the defense industrial base, potentially supporting specialized manufacturing and engineering roles. The geographic impact is noted as New York, suggesting manufacturing or operational activities may be concentrated there.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Incentive Fee (CPIF) contracts can lead to cost overruns if not managed effectively, as the government bears the cost of performance plus incentives.
The long lead time nature of the material implies potential risks associated with supply chain disruptions or obsolescence.
Lack of specific bidder count in the award data prevents a full assessment of competitive intensity.

Positive Signals

Awarded through full and open competition, which typically promotes better value.
The prime contractor, Lockheed Martin, has extensive experience in defense contracting.
The contract is a delivery order, indicating it is part of a structured and potentially pre-vetted procurement process.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically related to the manufacturing of advanced navigation and guidance systems. The North American Industry Classification System (NAICS) code 334511 covers Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing. Spending in this sector is characterized by high R&D investment, complex supply chains, and significant government procurement.

Small Business Impact

The data indicates that small business participation (sb) is false and there is no indication of a small business set-aside (ss). This suggests the contract was not specifically targeted towards small businesses. Subcontracting opportunities for small businesses may exist, but are not explicitly detailed in this award notice. The focus appears to be on large prime contractors with specialized capabilities.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management and inspection processes. The Cost Plus Incentive Fee structure necessitates close monitoring of costs and performance to ensure alignment with incentive goals. Transparency is generally maintained through contract reporting requirements, though specific details of ongoing oversight are not provided in this data.

Related Government Programs

Defense Procurement
Naval Systems
Long Lead Time Material Procurement
Aerospace Manufacturing
Navigation Systems

Risk Flags

Cost Plus Incentive Fee (CPIF) contract type requires careful monitoring to manage costs and ensure incentives are effective.
Long lead time material procurement introduces risks related to obsolescence and supply chain volatility.
Contract duration of over three years necessitates sustained oversight and management.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.3 million to LOCKHEED MARTIN CORPORATION. BLQ-10 TI-24 LONG LEAD TIME MATERIAL

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 $26.3 million.

What is the period of performance?

Start: 2023-11-06. End: 2027-01-27.

What is the historical spending pattern for similar long lead time material procurements by the Department of the Navy?

Analyzing historical spending for similar long lead time material procurements by the Department of the Navy requires access to comprehensive contract databases. Generally, such procurements are characterized by multi-year commitments to ensure supply chain stability for critical defense programs. Spending can fluctuate based on program lifecycles, technological advancements, and geopolitical factors. Contracts for long lead time items often involve significant upfront investment due to the specialized nature of manufacturing and the need to secure raw materials. Benchmarking against past awards for comparable systems or components would reveal trends in contract values, durations, and the types of contractors engaged. Without specific historical data points for this exact category, it's difficult to provide precise figures, but the trend is typically towards substantial, long-term investments to mitigate program delays.

How does the Cost Plus Incentive Fee (CPIF) structure typically impact final contract costs compared to other contract types?

The Cost Plus Incentive Fee (CPIF) contract type aims to incentivize contractor performance by sharing cost savings or cost overruns based on pre-defined targets and sharing ratios. In theory, it can lead to lower final costs than a Cost Plus Fixed Fee (CPFF) contract if the contractor effectively manages costs to achieve incentives. However, it also means the government bears a significant portion of the cost risk. Compared to Fixed Price contracts, CPIF offers more flexibility for uncertain scope or technical requirements but generally results in higher final costs due to the cost-reimbursement nature and the added incentive component. The effectiveness of CPIF heavily relies on the accuracy of the initial cost targets and the fairness of the incentive structure. If targets are set too high or too low, or if the sharing ratio is unfavorable, the intended cost-saving benefits may not materialize, potentially leading to costs exceeding those of other contract types.

What are the primary risks associated with procuring 'long lead time material' in defense contracts?

Procuring 'long lead time material' in defense contracts carries several inherent risks. Firstly, there's the risk of obsolescence; by the time the material is delivered and integrated into a system, the technology it's intended for may have evolved, rendering the material outdated or less effective. Secondly, supply chain disruptions are a significant concern. The extended timelines increase vulnerability to geopolitical events, natural disasters, or supplier issues that can delay or halt production. Thirdly, cost escalation is a risk, as the longer the procurement cycle, the greater the chance of material price increases or unforeseen manufacturing challenges impacting the final cost. Finally, there's the risk of program delays; if the long lead time material is not delivered on schedule, it can cascade into significant delays for the entire defense program it supports, impacting readiness and operational capabilities.

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

Lockheed Martin Corporation has an extensive and long-standing track record with the Department of the Navy, serving as a prime contractor for numerous critical defense systems. This includes major platforms such as naval aircraft (e.g., F-35C), submarines, surface combatants, and various advanced weapon systems. Their history with the Navy encompasses a wide range of contract types, including cost-reimbursable and fixed-price arrangements, often involving complex R&D, production, and sustainment efforts. While specific performance metrics for every contract are not publicly detailed, Lockheed Martin is generally recognized as a key strategic partner for the Navy, consistently delivering sophisticated technological solutions. However, like any large defense contractor, they have also faced scrutiny and challenges on specific programs related to cost, schedule, and performance, which are typical in the complex defense acquisition environment.

How does the geographic location (New York) influence the execution and oversight of this contract?

The geographic location noted as New York (ST: NY, SN: NEW YORK) for this contract primarily influences the physical execution of work and potentially the oversight activities. It suggests that either the prime contractor's facility, a significant subcontractor's facility, or the operational site related to this long lead time material is located in New York. This could mean that government contract officers, quality assurance representatives, and inspectors stationed in that region will be primarily responsible for on-site oversight, progress monitoring, and acceptance of deliverables. Local economic impacts, such as job creation and support for the regional industrial base, are also associated with the location. Furthermore, state-specific regulations or business environments might indirectly influence contract execution, though federal defense contracts are largely governed by federal law and policy.

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: $26,330,635

Exercised Options: $26,330,635

Current Obligation: $26,330,635

Subaward Activity

Number of Subawards: 37

Total Subaward Amount: $17,391,548

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