Lockheed Martin awarded $826M for miscellaneous communication equipment for DDG-51 destroyers

Contract Overview

Contract Amount: $127,833,354 ($127.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 1996-11-21

End Date: 2001-11-30

Contract Duration: 1,835 days

Daily Burn Rate: $69.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 199703!1700!1406!BZ006!NAVAL SEA SYSTEMS COMMAND !N0002495C6535 !A!*!P00021 !19961121!20010930!826412801!931114334!834951691!N!52088!LOCKHEED MARTIN CORPORATION !9500 GODWIN DR !MANASSAS !VA!20110!48952!683!51!MANASSAS !MANASSAS (CITY) !VIRGINIA !0001!+000014181173!N!N!000000000000!5895!MISCELLANEOUS COMMUNICATION EQUIPMENT !A7 !ELECTRONICS AND COMMUNICATION !2SCY!DESTROYER DDG-51 !8711!3!*!*!C!B!A!*!D !N!R!1!001!N!1G!A!Y!Z!* !* !N!C!*!A!A!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: MANASSAS, PRINCE WILLIAM County, VIRGINIA, 20110

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $127.8 million to LOCKHEED MARTIN CORPORATION for work described as: 199703!1700!1406!BZ006!NAVAL SEA SYSTEMS COMMAND !N0002495C6535 !A!*!P00021 !19961121!20010930!826412801!931114334!834951691!N!52088!LOCKHEED MARTIN CORPORATION !9500 GODWIN DR !MANASSAS !VA!20110!48952!683!51!MANASSAS !MANASS… Key points: 1. Contract awarded for specialized communication equipment, indicating a need for advanced systems. 2. The contract's duration of over 5 years suggests a long-term requirement for these components. 3. Awarded to a single, large defense contractor, raising questions about competition and potential cost efficiencies. 4. The 'Cost Plus Award Fee' structure incentivizes performance but can lead to higher final costs. 5. This spending supports the Navy's Arleigh Burke-class destroyer program, crucial for national defense. 6. The geographic location of the contractor in Manassas, VA, suggests a concentration of defense industry activity in the region.

Value Assessment

Rating: fair

The total contract value of $826,412,801 for miscellaneous communication equipment appears substantial. Benchmarking this against similar contracts for specialized naval communication systems is challenging without more granular data on the specific equipment. However, the 'Cost Plus Award Fee' pricing structure, while common in defense, inherently carries a risk of cost overruns compared to fixed-price contracts. The final award fee component makes a direct value-for-money assessment difficult without knowing the performance metrics achieved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source procurement, meaning it was not competed among multiple vendors. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. The lack of competition means that the government did not benefit from potential price reductions or innovative solutions that might have emerged from a competitive bidding process.

Taxpayer Impact: Sole-source awards can limit taxpayer savings as there is no competitive pressure to drive down prices. The government may end up paying a premium for the goods or services.

Public Impact

The primary beneficiaries are the U.S. Navy, which receives critical communication equipment for its destroyer fleet. Services delivered include the provision of miscellaneous communication equipment, essential for naval operations and command and control. The geographic impact is primarily centered around the contractor's facilities in Manassas, Virginia, supporting local employment and the defense industrial base. Workforce implications include skilled labor in engineering, manufacturing, and logistics at Lockheed Martin and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential innovation.
Cost-plus contract structure can lead to cost overruns if not managed tightly.
Lack of detailed performance data makes it difficult to assess true value for money.
Long contract duration increases exposure to potential technological obsolescence.

Positive Signals

Awarded to a major defense contractor with a track record in naval systems.
Contract supports a critical naval platform (DDG-51 destroyers), ensuring fleet readiness.
The 'Award Fee' component provides an incentive for contractor performance.
The contract duration aligns with the expected operational life cycle of the equipment.

Sector Analysis

This contract falls within the Defense sector, specifically related to electronics and communication equipment for naval vessels. The market for such specialized military hardware is often dominated by a few large, established defense contractors like Lockheed Martin. Spending in this area is driven by defense budgets and strategic priorities, such as maintaining a robust naval fleet. Comparable spending benchmarks would likely involve other contracts for integrated communication systems or electronic warfare suites for naval platforms.

Small Business Impact

There is no indication of a small business set-aside for this contract. Given the sole-source nature and the likely complexity of the communication equipment, it is probable that the prime contractor, Lockheed Martin, will handle the majority of the work. Subcontracting opportunities for small businesses may exist, but they would be determined by the prime contractor's procurement strategy rather than a specific set-aside requirement.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which ensures compliance with contract terms and quality standards. The 'Cost Plus Award Fee' structure requires careful monitoring of costs and performance metrics to ensure the government receives fair value. Transparency is often limited in sole-source defense procurements, but contract modifications and payment data are generally available through federal procurement databases.

Related Government Programs

Arleigh Burke-class Destroyer Program
Naval Surface Warfare Systems
Defense Communications and Electronics
Lockheed Martin Naval Programs

Risk Flags

Sole-source procurement
Cost-plus contract type
Lack of detailed technical specifications in summary data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $127.8 million to LOCKHEED MARTIN CORPORATION. 199703!1700!1406!BZ006!NAVAL SEA SYSTEMS COMMAND !N0002495C6535 !A!*!P00021 !19961121!20010930!826412801!931114334!834951691!N!52088!LOCKHEED MARTIN CORPORATION !9500 GODWIN DR !MANASSAS !VA!20110!48952!683!51!MANASSAS !MANASSAS (CITY) !VIRGINIA !0001!+000014181173!N!N!000000000000!5895!MISCELLANEOUS COMMUNICATION EQUIPMENT !A7 !ELECTRONICS AND COMMUNICATION !2SCY!DESTROYER DDG-51 !8711!3!*!*!C!B!A!*!D !N!R!1!0

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $127.8 million.

What is the period of performance?

Start: 1996-11-21. End: 2001-11-30.

What specific types of 'miscellaneous communication equipment' were procured under this contract?

The provided data classifies the equipment under PSC code 5895 as 'MISCELLANEOUS COMMUNICATION EQUIPMENT' and the product service code description as 'ELECTRONICS AND COMMUNICATION'. However, the specific technical details, models, or functionalities of the communication equipment are not detailed in this summary. This level of detail is typically found in the contract's statement of work or technical specifications, which are not publicly available in this format. Understanding the exact nature of the equipment would be crucial for a precise value assessment and comparison.

How does the $826 million contract value compare to historical spending on similar communication systems for the DDG-51 class?

Direct comparison is difficult without knowing the exact specifications of the equipment procured. However, the DDG-51 class destroyers are a major component of the U.S. Navy's fleet, and their communication systems are complex and vital. Historical spending on similar systems for this class would likely be in the hundreds of millions of dollars over the life of the program, given the number of ships and the technological advancements required. The $826 million figure represents a significant investment, suggesting either a large quantity of equipment, highly advanced technology, or a combination thereof, spread over the contract's duration.

What were the key performance metrics that determined the 'Award Fee' for Lockheed Martin?

The specific performance metrics used to determine the 'Award Fee' are not detailed in the provided data. In 'Cost Plus Award Fee' (CPAF) contracts, these metrics are typically outlined in the contract's Performance Work Statement (PWS) and are designed to incentivize the contractor to meet or exceed specific objectives. For communication equipment, these could include factors like on-time delivery, system reliability, adherence to technical specifications, successful integration, and post-delivery support. The government's contracting officer assesses the contractor's performance against these criteria to determine the amount of the award fee.

What is the typical lifespan and upgrade cycle for communication equipment on DDG-51 destroyers?

The typical lifespan and upgrade cycle for communication equipment on DDG-51 destroyers can vary significantly depending on the specific technology. However, naval platforms like these are designed for long operational lives, often 30-40 years or more. Communication systems, being technology-dependent, usually undergo upgrades or replacements every 5-10 years to keep pace with advancements and maintain operational effectiveness. This contract's duration of over five years suggests it covers a significant portion of the equipment's lifecycle or a major upgrade phase.

Were there any identified risks or challenges associated with this sole-source procurement?

The primary risk associated with a sole-source procurement is the lack of competition, which can lead to higher prices and potentially less innovation than a competed contract. Without competitive pressure, there's a reduced incentive for the contractor to offer the most cost-effective solution. Additionally, reliance on a single source can create vulnerabilities if that source encounters production issues, financial difficulties, or faces geopolitical challenges. The government must rely heavily on negotiation skills and robust oversight to mitigate these risks.

What is the strategic importance of this communication equipment to the DDG-51 class destroyers?

Communication equipment is fundamental to the operational effectiveness of any naval vessel, especially advanced platforms like the Arleigh Burke (DDG-51) class destroyers. This equipment enables command and control, data sharing, situational awareness, and interoperability with other friendly forces. For destroyers, which often operate independently or as part of carrier strike groups or surface action groups, reliable and secure communication systems are critical for mission success, coordination of defensive and offensive actions, and overall fleet C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance) capabilities.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 9500 GODWIN DR, MANASSAS, VA, 20110

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline