DoD's $29.1M contract for navigation systems awarded to Lockheed Martin without competition

Contract Overview

Contract Amount: $29,101,013 ($29.1M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2019-03-27

End Date: 2022-12-19

Contract Duration: 1,363 days

Daily Burn Rate: $21.4K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ICP INFRASTRUCTURE

Place of Performance

Location: MANASSAS, PRINCE WILLIAM County, VIRGINIA, 20110

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $29.1 million to LOCKHEED MARTIN CORPORATION for work described as: ICP INFRASTRUCTURE Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The contract duration of 1363 days suggests a long-term need for these specialized systems. 3. Focus on Search, Detection, Navigation, Guidance, Aeronautical, and Nautical systems indicates critical defense capabilities. 4. The use of a Cost Plus Fixed Fee (CPFF) pricing structure can incentivize cost overruns. 5. Virginia is the primary state for this contract, suggesting a concentration of related economic activity. 6. No small business set-aside was applied, potentially limiting opportunities for smaller firms in this sector.

Value Assessment

Rating: questionable

Benchmarking the value of this specific contract is challenging due to its sole-source nature and specialized equipment. However, the CPFF contract type, while common for R&D or uncertain scope, carries inherent risks of cost escalation. Without competitive bids, it's difficult to ascertain if the fixed fee adequately reflects the effort or if the overall cost is aligned with market expectations for similar navigation systems. Further analysis would require access to detailed cost breakdowns and comparisons with other sole-source procurements for comparable technologies.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed openly. This approach is typically reserved for situations where only one responsible source can provide the required supplies or services. The lack of competition means that multiple bidders were not evaluated, and the government did not benefit from the price reductions and innovation that can arise from a competitive bidding process. This limits the government's ability to ensure it is receiving the best possible value.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure to drive down prices. The government's negotiating position is weakened without alternative suppliers to consider.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Navy, which receives critical navigation and guidance systems. The contract supports the development, production, and integration of advanced search, detection, and navigation instruments. Geographic impact is concentrated in Virginia, where Lockheed Martin's operations are likely based, potentially supporting local jobs and the defense industrial base in that state. Workforce implications include employment for engineers, technicians, and manufacturing personnel involved in the production and maintenance of these complex systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Cost Plus Fixed Fee (CPFF) contract type can lead to cost overruns if not managed carefully.
Lack of small business participation may limit opportunities for smaller, innovative firms in this specialized sector.

Positive Signals

Award to a major defense contractor like Lockheed Martin suggests access to advanced technological capabilities.
The contract addresses critical defense needs for navigation and guidance systems, essential for operational effectiveness.
Long contract duration indicates a sustained commitment to a vital capability.

Sector Analysis

This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector (NAICS 334511). This industry is characterized by high technological barriers to entry, significant R&D investment, and a strong reliance on government contracts, particularly from defense agencies. Market size is substantial, driven by national security requirements. Comparable spending benchmarks are difficult to establish precisely due to the specialized nature of the systems, but overall defense spending on electronic and navigation equipment is in the billions annually.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses indicated in the provided data. This means that opportunities for small businesses to participate in this specific procurement are likely limited to indirect contributions or through subcontracts awarded by the prime contractor, Lockheed Martin. The absence of a set-aside may reflect the specialized nature of the required technology, which might be predominantly supplied by large, established defense contractors.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. The Cost Plus Fixed Fee structure necessitates rigorous financial oversight to monitor costs and ensure the fixed fee remains appropriate. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse. Transparency is generally limited for sole-source defense contracts, with details often classified or proprietary.

Related Government Programs

DoD Navigation Systems Procurement
Naval Aviation Electronics
Defense Radar and Sonar Systems
Aeronautical Instrument Manufacturing
Guidance System Development

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.1 million to LOCKHEED MARTIN CORPORATION. ICP INFRASTRUCTURE

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 $29.1 million.

What is the period of performance?

Start: 2019-03-27. End: 2022-12-19.

What is Lockheed Martin's track record with similar sole-source navigation system contracts?

Lockheed Martin Corporation is a major defense contractor with extensive experience in developing and producing complex systems, including navigation, guidance, and sensor technologies. While specific data on their sole-source contracts for navigation systems is not publicly detailed here, their history includes numerous large-scale, sole-source awards for critical defense platforms and components. These awards are often justified by unique technological capabilities, proprietary designs, or the need for integration with existing platforms where only they possess the necessary expertise. Their track record generally indicates a capacity to deliver on complex technical requirements, though the absence of competition means direct value-for-money comparisons are difficult without internal DoD cost analyses or broader market intelligence on comparable systems.

How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types for this kind of system?

The Cost Plus Fixed Fee (CPFF) contract type is often used when the scope of work is not precisely defined, or when there is significant uncertainty in the costs associated with research, development, or production. In this case, it means Lockheed Martin is reimbursed for allowable costs plus a negotiated fixed fee representing their profit. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers less cost certainty for the government, as cost overruns are borne by the agency. However, it can be advantageous when innovation or adaptation is required, as it incentivizes the contractor to perform the work without the risk of bearing unexpected cost increases. For mature, well-defined systems, FFP is generally preferred for better cost control. The choice of CPFF here suggests the Navy anticipated potential cost fluctuations or the need for developmental flexibility.

What are the primary risks associated with sole-source procurements of this magnitude?

The primary risks associated with sole-source procurements of this magnitude include a lack of competitive pricing, which can lead to inflated costs for the government and taxpayers. Without competing bids, there is less incentive for the contractor to optimize efficiency or offer the lowest possible price. There's also a risk of reduced innovation, as the contractor may not feel the same pressure to develop novel solutions or cost-saving measures as they would in a competitive environment. Furthermore, sole-source awards can create vendor lock-in, making it difficult and costly to switch suppliers in the future. Dependence on a single supplier can also pose supply chain risks if that supplier encounters production issues or financial instability.

What is the historical spending pattern for navigation systems by the Department of the Navy?

Historical spending by the Department of the Navy on navigation systems is substantial and has followed a generally upward trend, reflecting the increasing complexity and technological sophistication of naval operations. While specific figures for this contract's category (NAICS 334511) are not detailed, the Navy consistently invests billions annually in electronics, avionics, and related systems crucial for fleet readiness and mission effectiveness. This includes spending on radar, sonar, guidance, and communication equipment, often through large, multi-year contracts with major defense primes. Spending patterns are influenced by modernization programs, new platform acquisitions, and the need to maintain and upgrade existing fleets, often involving sole-source or limited-competition awards for highly specialized or integrated systems.

How does the $29.1 million contract value compare to the total addressable market for such systems?

The $29.1 million contract value represents a specific procurement for navigation systems and instruments. It is difficult to compare this directly to the 'total addressable market' without a precise definition of that market, which would encompass all potential buyers (government and commercial) and all types of navigation systems. However, within the defense sector alone, spending on electronic warfare, navigation, and communication systems runs into the tens of billions of dollars annually. This $29.1 million contract, while significant for a single award, is a component of a much larger defense procurement ecosystem. Its value is more meaningfully assessed against similar, specific system procurements or against the contractor's overall revenue from similar product lines, rather than the entire market.

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: N0003916R0075

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 9500 GODWIN DR, MANASSAS, VA, 20110

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

Financial Breakdown

Contract Ceiling: $30,790,444

Exercised Options: $30,790,444

Current Obligation: $29,101,013

Subaward Activity

Number of Subawards: 124

Total Subaward Amount: $31,141,453

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0003918D0001

IDV Type: IDC

Timeline