DoD's $33.4M navigation subsystem contract awarded to Lockheed Martin without competition

Contract Overview

Contract Amount: $33,401,792 ($33.4M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2015-07-01

End Date: 2017-02-23

Contract Duration: 603 days

Daily Burn Rate: $55.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: UNDEFINITIZED CONTRACT ACTION FOR SWS NAVIGATION SUBSYSTEM SSI INCREMENT 8 DEVELOPMENT

Place of Performance

Location: UNIONDALE, NASSAU County, NEW YORK, 11553

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $33.4 million to LOCKHEED MARTIN CORPORATION for work described as: UNDEFINITIZED CONTRACT ACTION FOR SWS NAVIGATION SUBSYSTEM SSI INCREMENT 8 DEVELOPMENT Key points: 1. Contract awarded on a cost-plus-incentive-fee basis, suggesting potential for cost overruns. 2. Lack of competition raises concerns about price discovery and potential for inflated costs. 3. Contract duration of 603 days indicates a significant development effort. 4. The undefinitized contract action (UCA) status implies initial work began before full terms were settled. 5. Awarded by the Defense Contract Management Agency, indicating a focus on defense-specific needs. 6. The North American Industry Classification System (NAICS) code 334511 points to a specialized manufacturing sector.

Value Assessment

Rating: questionable

Benchmarking the value of this $33.4 million contract is challenging due to its undefinitized nature and lack of competition. Cost-plus-incentive-fee contracts can lead to higher final costs than fixed-price agreements if not managed carefully. Without comparable bids, it's difficult to assess if the pricing reflects fair market value for the navigation subsystem development. The absence of a competitive process means there's no external validation of the cost-effectiveness.

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 only one responsible source can provide the required goods or services. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms. It also raises questions about whether alternative solutions or contractors were adequately explored.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without competing the contract, there is less assurance that the government secured the most cost-effective solution available in the market.

Public Impact

The primary beneficiaries are the Department of Defense, which receives the navigation subsystem. The contract supports the development of critical navigation technology for military applications. The geographic impact is primarily within New York, where Lockheed Martin is located. The contract likely supports specialized engineering and manufacturing jobs within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Cost-plus-incentive-fee structure introduces risk of cost overruns.
Undefinitized contract action status suggests potential for initial cost uncertainty.

Positive Signals

Awarded to a major defense contractor with established capabilities.
Contract addresses a critical need for advanced navigation systems.
Development of specialized technology can lead to future innovation.

Sector Analysis

This contract falls within the "Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing" sector, classified under NAICS code 334511. This is a highly specialized segment of the manufacturing industry, often characterized by high barriers to entry due to technological complexity and stringent quality requirements. Spending in this sector is heavily influenced by defense procurement, with major players like Lockheed Martin dominating the landscape. Comparable spending benchmarks are difficult to establish without more specific details on the subsystem's capabilities, but contracts for similar advanced systems can range from tens to hundreds of millions of dollars.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the sole-source nature and the prime contractor being Lockheed Martin, a large defense corporation, the likelihood of significant subcontracting opportunities for small businesses is uncertain without further details. However, large prime contractors are often required to meet certain small business subcontracting goals, which could provide some benefit to the small business ecosystem.

Oversight & Accountability

The contract is managed by the Defense Contract Management Agency (DCMA), which provides contract administration services for the Department of Defense. Oversight mechanisms would include DCMA's monitoring of cost, schedule, and performance. Transparency is generally limited for sole-source defense contracts, and specific oversight reports or Inspector General investigations related to this particular action are not readily available in the provided data.

Related Government Programs

DoD Navigation Systems
Lockheed Martin Defense Contracts
Navigation Subsystem Development
Cost-Plus-Incentive-Fee Contracts
Undefinitized Contract Actions

Risk Flags

Sole-source award
Undefinitized Contract Action (UCA)
Cost-Plus-Incentive-Fee (CPIF) contract type

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.4 million to LOCKHEED MARTIN CORPORATION. UNDEFINITIZED CONTRACT ACTION FOR SWS NAVIGATION SUBSYSTEM SSI INCREMENT 8 DEVELOPMENT

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 $33.4 million.

What is the period of performance?

Start: 2015-07-01. End: 2017-02-23.

What is the track record of Lockheed Martin Corporation in delivering similar navigation subsystems for the Department of Defense?

Lockheed Martin Corporation is a major defense contractor with extensive experience in developing complex systems, including navigation, guidance, and control technologies for various military platforms. They have a long history of delivering sophisticated hardware and software solutions for aerospace and defense applications. While specific details on past performance for this exact 'SSI Increment 8' navigation subsystem are not provided, Lockheed Martin's general track record suggests a high level of technical capability and program execution experience. However, like any large contractor, past performance can vary across different programs and contracts, and a detailed review of their performance on similar, recent contracts would be necessary for a comprehensive assessment.

How does the $33.4 million cost compare to similar navigation subsystem development contracts?

Directly comparing the $33.4 million cost is difficult without knowing the specific capabilities and scope of the 'SWS Navigation Subsystem SSI Increment 8'. Navigation subsystems can vary significantly in complexity, from basic GPS receivers to highly advanced inertial navigation systems integrated with other sensors. Given that this was awarded as an undefinitized contract action (UCA) on a cost-plus-incentive-fee basis to a major defense contractor like Lockheed Martin, the initial award amount may not reflect the final cost. However, for specialized defense systems, a development cost in the tens of millions is not uncommon. A more robust comparison would require benchmarking against contracts for systems with equivalent technological sophistication and development phases.

What are the primary risks associated with this undefinitized contract action (UCA)?

The primary risk associated with this undefinitized contract action (UCA) is cost uncertainty. UCAs allow work to begin before all contract terms, including price, are finalized. This can lead to the contractor incurring costs without a fully negotiated ceiling, potentially resulting in a higher final price than if the contract had been fully defined upfront. Another risk is the potential for scope creep or disagreements over the final scope of work once negotiations are completed. Furthermore, the cost-plus-incentive-fee (CPIF) structure, while designed to incentivize performance, also carries the risk of cost overruns if the contractor's performance does not meet the target objectives, leading to higher government expenditure.

What does the 'cost plus incentive fee' (CPIF) contract type imply about program effectiveness and contractor motivation?

A Cost Plus Incentive Fee (CPIF) contract type implies that the contractor is reimbursed for allowable costs and also receives a fee that is adjusted based on performance against pre-determined targets, such as cost, schedule, or technical performance. This structure aims to motivate the contractor to achieve specific objectives efficiently. For program effectiveness, it suggests that the government is seeking a balance between cost control and achieving desired performance outcomes, acknowledging that the final cost may vary. It implies that the government believes the contractor has the capability to meet or exceed targets, and that the incentive structure will drive them to do so. However, the effectiveness hinges on the realism of the targets and the government's ability to monitor performance accurately.

How does the sole-source award impact the government's ability to ensure value for money?

A sole-source award significantly diminishes the government's ability to ensure value for money compared to a competitive process. In a competitive environment, multiple bidders vie for the contract, driving down prices and encouraging innovation as contractors seek to offer the best value proposition. With a sole-source award, the government lacks this leverage. Price discovery relies heavily on negotiation with the single source and internal cost analysis, which may not be as rigorous as market-driven competition. This can increase the risk of paying a higher price than necessary and potentially accepting a less optimal solution, as there is no direct comparison to alternative offerings.

What are the implications of the contract being awarded in New York (st: NY, sn: NEW YORK)?

The contract being awarded to Lockheed Martin Corporation with its location in New York (st: NY, sn: NEW YORK) primarily indicates the geographic base of the contractor performing the work. This suggests that the economic impact, such as job creation and spending, related to this contract will likely be concentrated in that region. For the Department of Defense, the specific location of the contractor is often secondary to their capability and capacity to deliver the required system. However, it can be relevant for contract administration, logistics, and potentially for leveraging regional expertise or facilities within the defense industrial base.

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

Solicitation ID: N0003015Q0045

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

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: $33,534,500

Exercised Options: $33,534,500

Current Obligation: $33,401,792

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $-13,971

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline