DoD Awards $54.3M to Lockheed Martin for Navigation Subsystem, Raising Cost Concerns

Contract Overview

Contract Amount: $54,297,783 ($54.3M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2015-03-31

End Date: 2020-12-31

Contract Duration: 2,102 days

Daily Burn Rate: $25.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: NAVIGATION SUBSYSTEM SSI INCREMENT 4 AND 8 REQUIREMENTS

Place of Performance

Location: UNIONDALE, NASSAU County, NEW YORK, 11553

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $54.3 million to LOCKHEED MARTIN CORPORATION for work described as: NAVIGATION SUBSYSTEM SSI INCREMENT 4 AND 8 REQUIREMENTS Key points: 1. High contract value ($54.3M) with a single vendor. 2. Sole-source award limits competitive pricing. 3. Cost-plus-fixed-fee structure may incentivize cost increases. 4. Long contract duration (2102 days) increases risk exposure.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure, combined with a sole-source award, suggests potential for cost overruns. Benchmarking against similar navigation subsystem contracts is difficult without competitive data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no competition. This significantly limits price discovery and potentially leads to higher costs for the government.

Taxpayer Impact: The lack of competition and cost-plus structure could result in taxpayers paying more than necessary for this navigation subsystem.

Public Impact

Military readiness may be impacted by the performance of this critical navigation system. Taxpayer funds are allocated to a high-value contract with limited oversight on cost efficiency. Dependence on a single contractor for essential defense technology.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost-plus-fixed-fee
Long duration
Lack of competition

Positive Signals

Experienced contractor
Definitive contract award

Sector Analysis

This contract falls within the Defense sector, specifically in the manufacturing of navigation systems. Spending in this area is critical for military operations, but efficiency is paramount.

Small Business Impact

There is no indication that small businesses were involved in this sole-source award, suggesting limited opportunities for small business participation.

Oversight & Accountability

The sole-source nature and cost-plus structure warrant close oversight to ensure costs are controlled and the system meets requirements effectively.

Related Government Programs

Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Potential for cost overruns due to contract type.
Lack of competitive pressure on pricing.
Long contract duration increases exposure to risks.
Limited transparency on cost justification.
Potential for vendor lock-in.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $54.3 million to LOCKHEED MARTIN CORPORATION. NAVIGATION SUBSYSTEM SSI INCREMENT 4 AND 8 REQUIREMENTS

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 $54.3 million.

What is the period of performance?

Start: 2015-03-31. End: 2020-12-31.

What is the justification for the sole-source award, and were alternative competitive strategies considered?

The justification for a sole-source award typically involves unique capabilities or urgent needs. Without further details, it's unclear if alternatives were explored. A thorough review should confirm the necessity of excluding competition to ensure the best value and prevent potential price inflation.

How are cost overruns being managed under the cost-plus-fixed-fee structure?

Cost-plus-fixed-fee contracts can incentivize contractors to increase costs to maximize their fee. Robust oversight mechanisms, including detailed cost audits and performance monitoring, are crucial to control spending and ensure the government receives value for money. The agency must actively manage the contractor's expenditures.

What is the long-term strategy for ensuring competitive sourcing for future navigation subsystem needs?

Given the sole-source nature of this award, a forward-looking strategy is needed to foster competition for future requirements. This could involve market research, breaking down requirements into smaller lots, or incentivizing new entrants to develop competing technologies to ensure better pricing and innovation.

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: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 55 CHARLES LINDBERGH BLVD, UNIONDALE, NY, 11553

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

Financial Breakdown

Contract Ceiling: $55,066,912

Exercised Options: $55,066,912

Current Obligation: $54,297,783

Subaward Activity

Number of Subawards: 16

Total Subaward Amount: $7,159,815

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline