DoD's $511M Navigation System Contract with Lockheed Martin Faces Scrutiny for Lack of Competition
Contract Overview
Contract Amount: $511,076,704 ($511.1M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2019-10-01
End Date: 2025-07-30
Contract Duration: 2,129 days
Daily Burn Rate: $240.1K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Defense
Official Description: FY20 NAVIGATION SSI INC 8
Place of Performance
Location: UNIONDALE, NASSAU County, NEW YORK, 11553
State: New York Government Spending
Plain-Language Summary
Department of Defense obligated $511.1 million to LOCKHEED MARTIN CORPORATION for work described as: FY20 NAVIGATION SSI INC 8 Key points: 1. Significant spending on a critical defense system. 2. Sole-source award to a major defense contractor raises competition concerns. 3. Long contract duration may limit future price adjustments. 4. The sector is characterized by high barriers to entry and specialized technology.
Value Assessment
Rating: questionable
The contract's cost-plus incentive fee structure allows for cost overruns, and the lack of competition makes it difficult to benchmark pricing against similar systems. The total value is substantial, warranting close examination of cost efficiency.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This significantly limits price discovery and potentially leads to higher costs for taxpayers as there is no competitive pressure to drive down prices.
Taxpayer Impact: The absence of competition on this large contract likely results in a higher cost to taxpayers than if it had been competitively bid.
Public Impact
Taxpayers may be overpaying due to the lack of competitive bidding. Reliance on a single contractor for critical navigation systems poses a potential supply chain risk. The long contract duration could lock the government into potentially suboptimal pricing for years.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost-plus contract type
- Long contract duration
- Lack of small business participation
Positive Signals
- Awarded to a major defense contractor with proven capabilities
- Contract supports critical defense operations
Sector Analysis
The defense sector, particularly for specialized systems like navigation, often involves high R&D costs and complex manufacturing. Spending benchmarks are difficult to establish due to proprietary technology and unique system requirements, but sole-source awards are a common concern.
Small Business Impact
The data indicates no small business participation in this contract. This is common in large, sole-source defense contracts where specialized capabilities are required, potentially limiting opportunities for smaller innovative firms.
Oversight & Accountability
The sole-source nature of this contract warrants increased oversight to ensure cost reasonableness and performance. Accountability mechanisms should be robust given the significant taxpayer investment and lack of competitive pressure.
Related Government Programs
- Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Lack of competition
- Cost-plus contract type
- Long contract duration
- No small business participation
- Potential for cost overruns
- Limited price discovery
Tags
search-detection-navigation-guidance-aer, department-of-defense, ny, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $511.1 million to LOCKHEED MARTIN CORPORATION. FY20 NAVIGATION SSI INC 8
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 $511.1 million.
What is the period of performance?
Start: 2019-10-01. End: 2025-07-30.
What specific justifications were provided for not competing this contract, and do they hold up under scrutiny?
The justification for a sole-source award typically centers on unique capabilities, urgent needs, or lack of viable alternatives. A thorough review would examine the documented rationale against industry capabilities and historical procurement data to ensure no reasonable alternatives were overlooked and that the need was genuinely unfulfillable through competition.
How is the government ensuring cost efficiency and value for money given the cost-plus incentive fee structure and sole-source award?
Ensuring cost efficiency involves rigorous auditing of incurred costs, close monitoring of performance metrics against incentive targets, and regular re-evaluation of the contract's pricing structure. Independent cost analysis and benchmarking against any available related contracts or internal estimates are crucial to validate expenditures.
What are the long-term strategic implications of relying on a single contractor for such a critical navigation system?
Long-term reliance on a single contractor can stifle innovation, create vendor lock-in, and increase vulnerability to supply chain disruptions or contractor performance issues. It also reduces the government's leverage in future negotiations and potentially limits access to technological advancements from other market players.
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: N0003020R0045
Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE (V)
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: $576,812,810
Exercised Options: $529,205,398
Current Obligation: $511,076,704
Actual Outlays: $19,637,462
Subaward Activity
Number of Subawards: 44
Total Subaward Amount: $546,748,253
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2019-10-01
Current End Date: 2025-07-30
Potential End Date: 2025-07-30 00:00:00
Last Modified: 2025-09-30
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