DoD's $82.6M contract for IGF systems awarded to Lockheed Martin without competition

Contract Overview

Contract Amount: $82,589,969 ($82.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2017-01-01

End Date: 2019-04-30

Contract Duration: 849 days

Daily Burn Rate: $97.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: FY17 UK SSI INC 4 PROCURE OF ON-BOARD IGF::CT::IGF

Place of Performance

Location: UNIONDALE, NASSAU County, NEW YORK, 11553

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $82.6 million to LOCKHEED MARTIN CORPORATION for work described as: FY17 UK SSI INC 4 PROCURE OF ON-BOARD IGF::CT::IGF Key points: 1. The contract value represents a significant investment in specialized defense systems. 2. Sole-source award suggests limited market alternatives or specific contractor capabilities. 3. The duration of the contract indicates a long-term need for these systems. 4. Performance risk may be elevated due to the lack of competitive pressure. 5. This spending falls within the broader category of defense electronics and systems manufacturing. 6. The absence of small business participation warrants further investigation.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging without comparable procurements. The cost-plus-fixed-fee structure can lead to cost overruns if not managed tightly. Given the lack of competition, it's difficult to assess if the pricing reflects fair market value. The contract's duration and the specialized nature of the equipment suggest a high barrier to entry for competitors, potentially justifying the sole-source award but raising concerns about long-term cost-effectiveness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Lockheed Martin Corporation, was solicited. This approach is typically used when only one responsible source can provide the required supplies or services. The lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to higher costs for the government compared to a competed contract.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without multiple offers, the government lacked leverage to negotiate the lowest possible price.

Public Impact

The Department of Defense is the primary beneficiary, receiving advanced IGF systems. These systems are crucial for enhancing search, detection, navigation, and guidance capabilities. The contract supports national security objectives by equipping military personnel with advanced technology. Workforce implications are likely concentrated within Lockheed Martin's specialized engineering and manufacturing divisions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs.
Cost-plus-fixed-fee contract type carries inherent risk of cost overruns.
Lack of small business involvement means missed opportunities for economic inclusion.
Long contract duration requires sustained oversight to ensure value.

Positive Signals

Award to a single, established contractor may ensure specialized expertise.
Definitive contract structure provides a framework for long-term engagement.
Focus on critical defense systems aligns with national security priorities.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically in the manufacturing of advanced navigation and guidance systems. The market for such specialized equipment is often characterized by high R&D costs, stringent performance requirements, and a limited number of qualified suppliers. Comparable spending in this sub-sector can vary widely based on technological advancements and specific military needs, but significant investments are typical for critical defense platforms.

Small Business Impact

This contract did not include a small business set-aside, nor is there any indication of subcontracting to small businesses. The specialized nature of the IGF systems and the sole-source award likely contributed to the exclusion of small businesses from direct participation. This represents a missed opportunity to leverage the innovation and capabilities of the small business sector within the defense industrial base.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance. The cost-plus-fixed-fee structure necessitates rigorous financial oversight to monitor costs and prevent overruns. Transparency may be limited due to the sole-source nature, but contract modifications and performance reports should be available through federal procurement databases.

Related Government Programs

DoD Navigation and Guidance Systems Procurement
Defense Electronics Manufacturing
Aerospace and Defense Industry Contracts
Sole-Source Defense Procurements

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of small business participation
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $82.6 million to LOCKHEED MARTIN CORPORATION. FY17 UK SSI INC 4 PROCURE OF ON-BOARD IGF::CT::IGF

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 $82.6 million.

What is the period of performance?

Start: 2017-01-01. End: 2019-04-30.

What specific capabilities do the IGF systems provide, and why were they deemed essential by the Department of Defense?

The IGF (Integrated Guidance Facility) systems are crucial for enhancing the precision and reliability of search, detection, navigation, and guidance functions for various military platforms. These systems are integral to modern warfare, enabling accurate targeting, safe navigation in complex environments, and effective intelligence gathering. The Department of Defense likely deemed them essential due to their role in maintaining a technological edge, improving operational effectiveness, and ensuring the safety of personnel and assets. Specific details on the exact capabilities are often classified due to national security implications, but they generally pertain to advanced sensor integration, real-time data processing, and sophisticated control algorithms for aircraft, missiles, or other defense assets.

What factors led to the sole-source award to Lockheed Martin Corporation for these IGF systems?

The sole-source award to Lockheed Martin Corporation was likely driven by several factors inherent to highly specialized defense procurements. These can include unique technical expertise, proprietary technology, extensive research and development already invested by the contractor, or the need for compatibility with existing military platforms where Lockheed Martin is the incumbent provider. In many cases, the government may have determined that only Lockheed Martin possessed the necessary security clearances, manufacturing capabilities, and proven performance record to meet the stringent requirements within the required timeframe. Justification for sole-source awards typically requires a detailed analysis by the procuring agency demonstrating why full and open competition is not feasible or not in the government's best interest.

How does the cost-plus-fixed-fee (CPFF) contract type typically impact project costs and contractor incentives?

The Cost-Plus-Fixed-Fee (CPFF) contract type is designed to cover all allowable costs incurred by the contractor plus a fixed fee representing profit. This structure is often used when the scope of work is not precisely defined or involves significant uncertainty, making it difficult to estimate costs accurately beforehand. For the government, the primary risk is that actual costs may exceed initial estimates, although the fixed fee provides some predictability in profit. For the contractor, the incentive is to complete the work efficiently to maximize the return on their invested effort, as the fee is fixed regardless of the final cost. However, CPFF contracts require robust government oversight to ensure costs are reasonable and allocable, and they can sometimes incentivize cost overruns if not managed carefully, as the contractor is assured of cost recovery.

What is the typical performance risk associated with sole-source contracts for complex defense systems?

Sole-source contracts for complex defense systems often carry a higher performance risk compared to competed contracts. Without the pressure of competition, a sole-source contractor may have less incentive to innovate, improve efficiency, or adhere strictly to delivery schedules and quality standards. The government's leverage to enforce performance is reduced, as finding an alternative supplier can be difficult, time-consuming, and costly. This necessitates extremely diligent contract management, clear performance metrics, and strong oversight from the contracting agency to mitigate risks. Issues such as scope creep, schedule delays, and quality deficiencies can be more challenging to address when there is no competitive alternative readily available.

Are there any historical spending patterns or trends related to IGF systems procurement by the DoD?

Analyzing historical spending patterns for specific systems like IGF requires access to detailed procurement data over multiple fiscal years. Generally, the Department of Defense's spending on advanced navigation, guidance, and detection systems tends to be cyclical, influenced by technological advancements, geopolitical events, and the modernization needs of various military branches. Procurements for such critical components are often substantial and can span several years due to the complexity and long lead times involved. Sole-source awards for highly specialized or proprietary systems are not uncommon in this domain. Trends may indicate a shift towards more integrated, software-defined systems, increased reliance on AI and machine learning for enhanced capabilities, and a continuous effort to maintain technological superiority, all of which translate into significant and ongoing investment.

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: TECHNICAL REPRESENTATIVE SVCS. › TECHNICAL REPRESENTATIVE SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0003017R0045

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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: $84,947,435

Exercised Options: $84,947,435

Current Obligation: $82,589,969

Actual Outlays: $113,184

Subaward Activity

Number of Subawards: 47

Total Subaward Amount: $172,498,614

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline