Lockheed Martin awarded $137.6M for FMS JAOS TL-29A array production and engineering services by the Department of Defense

Contract Overview

Contract Amount: $137,631,604 ($137.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2015-09-03

End Date: 2022-12-22

Contract Duration: 2,667 days

Daily Burn Rate: $51.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FMS JAOS TL-29A ARRAY PRODUCTION AND ENGINEERING SERVICES; IGF::OT::IGF

Place of Performance

Location: LIVERPOOL, ONONDAGA County, NEW YORK, 13088

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $137.6 million to LOCKHEED MARTIN CORPORATION for work described as: FMS JAOS TL-29A ARRAY PRODUCTION AND ENGINEERING SERVICES; IGF::OT::IGF Key points: 1. Contract awarded as a sole-source, indicating limited competition and potential for higher pricing. 2. Long contract duration of 2667 days suggests a need for sustained support and potential for cost overruns. 3. The contract type is Firm Fixed Price, which shifts cost risk to the contractor. 4. No small business set-aside was utilized, potentially limiting opportunities for smaller firms. 5. The North American Industry Classification System (NAICS) code 334511 points to specialized manufacturing in search, detection, and navigation systems. 6. The contract was managed by the Defense Contract Management Agency (DCMA), a common oversight body for defense contracts.

Value Assessment

Rating: fair

Benchmarking this contract's value is challenging without specific performance metrics or comparable sole-source awards. The $137.6 million over approximately 7.3 years averages to about $18.8 million annually. Given the specialized nature of array production and engineering services for defense systems, the pricing could be within a reasonable range, but the lack of competition prevents a definitive value-for-money assessment. Further analysis would require understanding the specific technical requirements and the contractor's cost structure.

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 among multiple vendors. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the government's requirements. The lack of competition means that the government did not benefit from the price discovery mechanisms inherent in a competitive bidding process, potentially leading to less favorable pricing.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure to drive down costs. Without competition, there is less assurance that the government secured the best possible price for these specialized services.

Public Impact

The primary beneficiaries are the Department of Defense, which receives critical array production and engineering services for its systems. The services delivered are essential for the development, production, and sustainment of advanced defense technologies. The contract's geographic impact is primarily linked to Lockheed Martin's operations in New York (ST: NY, SN: NEW YORK). Workforce implications include employment for engineers, technicians, and manufacturing personnel involved in specialized defense systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Long contract duration increases risk of cost escalation and scope creep.
Lack of small business participation may limit broader economic impact.

Positive Signals

Firm Fixed Price contract shifts cost risk to the contractor.
Award to a major defense contractor suggests access to specialized expertise.
Long-term nature indicates a sustained need for critical defense capabilities.

Sector Analysis

The defense electronics and systems manufacturing sector is characterized by high barriers to entry, significant R&D investment, and long product development cycles. This contract falls within the domain of specialized defense systems, likely involving advanced radar, sensor, or communication arrays. The market is dominated by a few large prime contractors like Lockheed Martin, who possess the necessary technical expertise, security clearances, and manufacturing capabilities. Spending in this sector is driven by national security priorities and technological advancements.

Small Business Impact

This contract was not set aside for small businesses, and the data indicates no subcontracting plan was utilized (SB: false). This means that opportunities for small businesses to participate in this significant defense contract were likely limited. The absence of a small business set-aside or subcontracting requirement means that the economic benefits may be concentrated with the prime contractor, rather than being distributed across a wider ecosystem of smaller, specialized firms.

Oversight & Accountability

Oversight for this contract was provided by the Defense Contract Management Agency (DCMA). As a definitive contract with a firm fixed price, oversight would focus on contract performance, delivery schedules, and adherence to technical specifications. Transparency is generally maintained through contract databases, but detailed performance reports are often not publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

FMS JAOS TL-29A Program
Defense Contract Management Agency (DCMA) Contracts
Lockheed Martin Defense Contracts
Sole-Source Defense Procurements
Array Production and Engineering Services

Risk Flags

Sole-source award
Long contract duration
Potential for cost overruns
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $137.6 million to LOCKHEED MARTIN CORPORATION. FMS JAOS TL-29A ARRAY PRODUCTION AND ENGINEERING SERVICES; IGF::OT::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 $137.6 million.

What is the period of performance?

Start: 2015-09-03. End: 2022-12-22.

What is the historical spending trend for FMS JAOS TL-29A array production and engineering services with Lockheed Martin?

The provided data reflects a single definitive contract awarded to Lockheed Martin Corporation for FMS JAOS TL-29A array production and engineering services, totaling $137,631,603.84, with a start date of September 3, 2015, and an end date of December 22, 2022. This represents a significant, long-term investment over approximately 7.3 years. Without access to historical contract databases or specific program documentation, it is difficult to ascertain if there were prior contracts for this specific service or if this represents a new or expanded capability. However, the substantial value and duration suggest a sustained requirement for these specialized services within the Department of Defense, likely indicating a consistent or growing need for this technology.

How does the pricing of this contract compare to similar sole-source defense contracts for array production?

Directly comparing the pricing of this $137.6 million sole-source contract to similar sole-source defense contracts for array production is challenging without specific details on the technical scope, performance requirements, and market conditions at the time of award. Sole-source awards inherently lack the price discovery mechanism of competition, which can lead to higher prices. However, the firm-fixed-price (FFP) nature of this contract shifts cost risk to Lockheed Martin, which is a positive indicator for the government. To assess value, one would need to benchmark against other FFP sole-source contracts for comparable systems, considering factors like technological complexity, production volume, and the contractor's overhead structure. Without such comparative data, the pricing can only be considered 'fair' with a caveat regarding the lack of competitive benchmarking.

What are the primary risks associated with this sole-source, long-duration contract?

The primary risks associated with this sole-source, long-duration contract include: 1. **Cost Overruns:** Despite being a firm-fixed-price contract, unforeseen technical challenges or changes in material costs over the 2667-day period could still lead to contractor requests for equitable adjustments or claims, potentially increasing the final cost. 2. **Scope Creep:** The extended duration increases the likelihood of evolving requirements or the addition of new tasks, which, if not managed carefully, could expand the contract's scope beyond its original intent and budget. 3. **Lack of Innovation:** Without competitive pressure, there might be less incentive for the contractor to innovate or find more cost-effective solutions throughout the contract life. 4. **Contractor Performance Deterioration:** Over a long period, contractor performance could decline due to changes in personnel, management, or focus, potentially impacting delivery schedules or quality.

What is the significance of the NAICS code 334511 for this contract?

The North American Industry Classification System (NAICS) code 334511, 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing,' is highly significant for this contract. It precisely categorizes the core business activity of Lockheed Martin under this award: the manufacturing of sophisticated systems and instruments used for locating, identifying, and guiding aircraft, ships, and other platforms. This includes technologies like radar, sonar, GPS, inertial navigation systems, and related control equipment. Awarding the contract under this code indicates that the Department of Defense requires highly specialized, technologically advanced manufactured goods critical for its operational capabilities in areas such as surveillance, reconnaissance, and mission execution.

What are the implications of this contract being a 'Definitive Contract'?

The classification of this award as a 'Definitive Contract' signifies that it is a standard, legally binding agreement that clearly outlines the rights and obligations of both the government and the contractor. Unlike basic ordering agreements or other indefinite-delivery contracts, a definitive contract typically involves a specific scope of work, a fixed price (or a clearly defined pricing structure), and a set period of performance. For this $137.6 million contract with Lockheed Martin, being a definitive contract implies that the terms, including the total price and delivery schedule, were established upfront. This provides a higher degree of certainty for both parties regarding the commitment and expected outcomes, simplifying administration and oversight compared to more flexible contract types.

How does the 'Firm Fixed Price' (FFP) contract type benefit the government in this scenario?

The Firm Fixed Price (FFP) contract type offers significant benefits to the government in this scenario. Primarily, it places the responsibility for managing costs and absorbing any cost overruns directly onto the contractor, Lockheed Martin. This means the government's financial liability is capped at the agreed-upon contract price, providing budget certainty. While the initial price might be higher to account for the contractor's risk, the FFP structure incentivizes the contractor to control costs efficiently and complete the work within the established budget. This is particularly advantageous for a long-duration contract where unforeseen cost fluctuations could otherwise impact the government's finances.

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: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0003914R0214

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 497 ELECTRONICS PKWY BLDG 5, LIVERPOOL, NY, 13088

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

Financial Breakdown

Contract Ceiling: $145,247,991

Exercised Options: $140,466,178

Current Obligation: $137,631,604

Actual Outlays: $5,924,139

Subaward Activity

Number of Subawards: 342

Total Subaward Amount: $141,810,917

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline