DoD awards $137.8M for TL-29A array production to Lockheed Martin, a sole-source contract

Contract Overview

Contract Amount: $137,787,033 ($137.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2020-02-28

End Date: 2027-04-24

Contract Duration: 2,612 days

Daily Burn Rate: $52.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 2/3 TL-29A ARRAY PRODUCTION

Place of Performance

Location: LIVERPOOL, ONONDAGA County, NEW YORK, 13088

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $137.8 million to LOCKHEED MARTIN CORPORATION for work described as: 2/3 TL-29A ARRAY PRODUCTION Key points: 1. Contract awarded to a single, established provider suggests limited market exploration. 2. Fixed-price contract type may offer cost certainty but could limit contractor incentive for efficiency. 3. Long contract duration (2020-2027) indicates a sustained need for the arrays. 4. The award represents a significant investment in defense systems manufacturing. 5. Lack of competition raises questions about potential overpayment or missed opportunities for innovation. 6. Performance context is tied to the production of specific defense system components.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging without comparable bids. The firm fixed-price structure provides cost predictability for the government, but the absence of competition means there's no direct market comparison to assess if the pricing is optimal. Without alternative quotes, it's difficult to determine if the $137.8 million represents a fair market value or if a more competitive process could have yielded savings.

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 considered. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. The lack of competition limits the government's ability to leverage market forces to secure the best possible price and terms.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the price reductions and innovation that can arise from a competitive bidding environment. This can potentially lead to higher costs for the government compared to a competed contract.

Public Impact

The primary beneficiaries are the Department of Defense, which receives critical TL-29A array components for its defense systems. The contract ensures the continued production and availability of essential hardware for national security applications. Geographic impact is primarily centered around Lockheed Martin's manufacturing facilities, likely in New York. Workforce implications include sustained employment for engineers, technicians, and manufacturing personnel involved in the production process.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential savings.
Lack of competition may stifle innovation from other potential suppliers.
Long-term contract duration without competitive re-evaluation could lead to complacency.
Dependence on a single supplier for critical defense components poses a supply chain risk.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to an established contractor like Lockheed Martin suggests a high likelihood of successful delivery.
Sustained production ensures availability of critical defense system components.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on the production of specialized electronic systems and components. The market for such defense-specific hardware is often characterized by high barriers to entry, significant R&D investment, and a limited customer base, primarily government entities. Comparable spending benchmarks would typically involve other large-scale defense procurement contracts for complex systems, where sole-source awards are not uncommon due to specialized capabilities.

Small Business Impact

The contract data indicates that small business participation was not a primary consideration, as the 'sb' field is false and the contract was sole-sourced. There is no explicit mention of small business set-asides or subcontracting plans. This suggests that the primary contractor, Lockheed Martin, will likely handle the majority of the work, with limited direct opportunities for small businesses within this specific award, unless they are already part of Lockheed Martin's established supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices, with potential involvement from the Defense Contract Management Agency (DCMA). Accountability measures are inherent in the firm fixed-price contract type, which obligates Lockheed Martin to deliver the specified arrays within the agreed-upon budget. Transparency is limited due to the sole-source nature, but contract award details are publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense System Production
Aerospace Manufacturing
Electronic Component Manufacturing
Military Hardware Procurement
Sole-Source Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $137.8 million to LOCKHEED MARTIN CORPORATION. 2/3 TL-29A ARRAY PRODUCTION

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 $137.8 million.

What is the period of performance?

Start: 2020-02-28. End: 2027-04-24.

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

Lockheed Martin Corporation is a major defense contractor with extensive experience in producing complex defense systems and components. They have a long history of securing sole-source contracts, particularly for specialized or proprietary technologies where they are the sole developer or manufacturer. While this provides a degree of assurance in their capability to deliver, it also highlights a pattern of non-competitive awards. Analyzing their performance on previous sole-source contracts would involve reviewing delivery timelines, quality metrics, and any cost overruns or disputes. Without specific data on this contract's performance history, a general assessment suggests a high probability of technical execution, but continued scrutiny on pricing and efficiency is warranted due to the lack of competitive pressure.

How does the $137.8 million cost compare to similar TL-29A array production contracts or market rates?

Direct comparison of the $137.8 million cost is difficult due to the sole-source nature of this award and the specific, likely proprietary, nature of the TL-29A arrays. Without competitive bids, there is no direct market benchmark. To assess value, one would need to compare this contract's unit costs (if calculable and provided) against historical production costs for similar components, or against internal cost estimates if available. If this is a new production run or an upgrade, costs could naturally fluctuate. However, the absence of competition means the government cannot leverage market dynamics to ensure the most cost-effective outcome. A thorough value assessment would require access to detailed cost breakdowns and potentially independent government cost estimates.

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

The primary risks associated with this sole-source, long-term contract (2020-2027) include potential cost overruns if the fixed-price structure doesn't adequately account for unforeseen production challenges, and a lack of incentive for Lockheed Martin to innovate or improve efficiency beyond contractual requirements. The sole-source nature poses a significant risk of paying a premium due to the absence of competitive pressure, potentially leading to suboptimal value for taxpayer dollars. Furthermore, long-term reliance on a single supplier for critical defense components creates a supply chain vulnerability; any disruption at Lockheed Martin could have substantial national security implications. There's also a risk that the technology could become outdated during the contract's long duration without opportunities to explore alternative, potentially superior, solutions.

How effective is the firm fixed-price contract type in managing costs for this specific defense procurement?

The firm fixed-price (FFP) contract type is generally considered effective in managing costs by shifting the risk of cost overruns to the contractor, Lockheed Martin. This structure provides the Department of Defense with a high degree of cost certainty, as the final price is predetermined. However, the effectiveness is somewhat diminished in a sole-source environment. While the government knows the total cost, it cannot be certain it's the *best* possible cost achievable through competition. The contractor has less incentive to reduce costs below the agreed-upon price unless it significantly impacts their profit margin or future contract opportunities. For FFP to be truly effective in driving down costs, it typically needs to be coupled with robust competition.

What is the historical spending pattern for TL-29A array production or similar systems by the Department of Defense?

Historical spending data for TL-29A array production specifically is not readily available in the provided snippet. However, the Department of Defense (DoD) consistently allocates substantial budgets towards the procurement of advanced systems and components, including those for search, detection, navigation, and guidance. Contracts for such specialized defense hardware often run into millions or billions of dollars and can be sole-sourced due to the unique technological requirements and limited number of qualified manufacturers. Analyzing broader DoD spending trends in defense electronics and systems manufacturing would likely show a pattern of significant, long-term investments in maintaining and upgrading military capabilities, with a mix of competitive and sole-source awards depending on the specific technology and market dynamics.

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: N0003919R0003

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: $281,320,694

Exercised Options: $154,893,155

Current Obligation: $137,787,033

Actual Outlays: $2,565,710

Subaward Activity

Number of Subawards: 229

Total Subaward Amount: $70,225,843

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline