DoD's $20.5M contract for search and navigation systems awarded to Lockheed Martin without competition

Contract Overview

Contract Amount: $20,505,678 ($20.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2020-09-28

End Date: 2026-05-31

Contract Duration: 2,071 days

Daily Burn Rate: $9.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: NRE&TEST ARTICLES

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $20.5 million to LOCKHEED MARTIN CORPORATION for work described as: NRE&TEST ARTICLES Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to cost overruns. 2. Sole-source award limits price discovery and potentially increases costs for taxpayers. 3. Long contract duration of over 2000 days suggests a significant, ongoing need. 4. The contract is for NRE&TEST ARTICLES, indicating development and testing phases. 5. Geographic focus on Florida may indicate specific operational or testing requirements. 6. No small business set-aside or subcontracting was indicated, potentially limiting small business participation.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure, combined with a sole-source award, raises concerns about value for money. Without competitive bidding, it is difficult to benchmark pricing against market rates or similar contracts. The lack of transparency in pricing mechanisms makes it challenging to assess if the $20.5 million represents a fair price for the NRE&TEST ARTICLES and services provided. Further analysis would be needed to compare the contractor's historical performance and pricing on similar sole-source awards.

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 competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified for unique capabilities or urgent needs, they limit the government's ability to secure the best possible price and terms through market competition.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings that competition typically drives. The absence of multiple bids prevents price negotiation based on market forces, potentially leading to higher overall expenditures.

Public Impact

The Department of the Navy benefits from the acquisition of critical search, detection, navigation, guidance, and related systems. This contract supports the development and testing of advanced aeronautical and nautical system instruments. The primary geographic impact is in Florida, suggesting a concentration of naval operations or testing facilities. The contract likely supports a specialized workforce within Lockheed Martin and potentially its subcontractors, particularly in engineering and technical roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contract type can incentivize cost overruns.
Sole-source award limits price discovery and potential savings.
Lack of competition may reduce pressure on the contractor to innovate or improve efficiency.
Long contract duration could indicate potential for scope creep or evolving requirements.
No indication of small business participation limits opportunities for smaller firms.

Positive Signals

Award to a large, established defense contractor like Lockheed Martin suggests access to specialized expertise and technology.
The contract addresses critical defense needs for search, detection, and navigation systems.
The contract is for NRE&TEST ARTICLES, indicating investment in future capabilities.
The contract is managed by the Department of the Navy, a major defense agency with established oversight processes.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on the manufacturing of navigation and guidance systems. The market for such systems is characterized by high barriers to entry due to complex technology requirements, stringent quality standards, and significant R&D investment. Major players like Lockheed Martin dominate this space. Comparable spending benchmarks are difficult to establish precisely due to the specialized nature of NRE&TEST ARTICLES and sole-source awards, but overall defense spending on similar systems runs into billions annually.

Small Business Impact

This contract does not appear to include any small business set-aside provisions, nor is there information indicating subcontracting opportunities for small businesses. This means that the primary contract value is likely to be fully utilized by the prime contractor, Lockheed Martin. The absence of small business involvement in this specific award limits the direct economic benefit to the small business ecosystem within this particular procurement, although Lockheed Martin may engage small businesses through other channels.

Oversight & Accountability

The Department of the Navy, as the awarding agency, is responsible for oversight of this contract. Oversight mechanisms would typically include regular progress reviews, financial audits, and performance monitoring to ensure compliance with contract terms and objectives. Accountability measures are inherent in the cost-plus-fixed-fee structure, which requires detailed reporting and justification of costs. Transparency may be limited due to the sole-source nature of the award and the proprietary information involved in NRE&TEST ARTICLES.

Related Government Programs

Naval Aviation Systems
Defense Research and Development
Navigation and Guidance Systems Manufacturing
Aerospace Electronics
Military Sensor Technology

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Long contract duration
Lack of small business participation indicated

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.5 million to LOCKHEED MARTIN CORPORATION. NRE&TEST ARTICLES

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 $20.5 million.

What is the period of performance?

Start: 2020-09-28. End: 2026-05-31.

What is the specific nature of the 'NRE&TEST ARTICLES' being procured under this contract?

NRE&TEST ARTICLES typically refers to Non-Recurring Engineering and Test Articles. Non-Recurring Engineering encompasses the design, development, and testing efforts required to bring a new product or system into existence. This includes activities like research, prototyping, simulation, and initial design validation. Test Articles are the physical or digital representations of the system or its components that are used during the testing phase to verify performance, reliability, and adherence to specifications. For this Lockheed Martin contract, it implies the procurement of services and potentially hardware related to the development and rigorous testing of advanced search, detection, navigation, guidance, and related systems for naval applications.

How does the cost-plus-fixed-fee (CPFF) contract type compare to other contract types in terms of risk and potential value for the government?

Cost-plus-fixed-fee (CPFF) contracts are used when the scope of work is not clearly defined or is expected to evolve, such as in research and development. The government agrees to pay the contractor's actual costs plus a fixed fee, which represents the contractor's profit. While CPFF provides flexibility and allows work to commence without a fully defined scope, it carries higher risk for the government. The contractor has less incentive to control costs, as their profit is fixed regardless of the final cost. This can lead to cost overruns if not managed diligently. In contrast, fixed-price contracts offer better cost certainty for the government but may be less suitable for R&D where costs are unpredictable. Best value often lies in competitive bidding with well-defined scopes and appropriate contract types that align risk and reward.

What are the implications of a sole-source award for government procurement efficiency and cost control?

Sole-source awards, by definition, bypass the competitive bidding process. This means the government does not benefit from the price reductions and innovation that typically arise when multiple companies compete for a contract. While sole-source awards are sometimes necessary due to unique capabilities, proprietary technology, or urgent needs, they can lead to higher costs for taxpayers. Without competition, there is less pressure on the contractor to offer the most competitive pricing or to be highly efficient. Government agencies must have strong justification for sole-source awards and robust oversight to mitigate potential cost inefficiencies and ensure the government receives fair value, which is often more challenging without a competitive baseline.

What is Lockheed Martin Corporation's track record with the Department of the Navy, particularly on sole-source contracts?

Lockheed Martin Corporation is a major defense contractor with a long-standing and extensive relationship with the Department of the Navy, as well as other branches of the U.S. military. They are a primary provider of various defense systems, including naval platforms, aerospace technologies, and weapons systems. Given their significant role, they have undoubtedly been awarded numerous contracts, including sole-source ones, over many years. Analyzing their specific track record on sole-source contracts with the Navy would require a deep dive into historical procurement data to assess performance, cost control, and adherence to schedules on similar agreements. However, their consistent presence and large contract values suggest a generally accepted capability, though the efficiency and value of sole-source awards remain a point of scrutiny.

How does the $20.5 million contract value compare to overall Department of the Navy spending on navigation and guidance systems?

The $20.5 million contract value for NRE&TEST ARTICLES related to search, detection, navigation, and guidance systems is a significant sum for a single award, especially one that is sole-source and covers a long duration. However, when compared to the Department of the Navy's overall annual budget, which runs into tens of billions of dollars, and specifically its spending on research, development, and procurement of complex systems, this contract represents a relatively small fraction. The Navy procures a vast array of equipment, from aircraft carriers and submarines to individual components and advanced electronics. While this specific contract is important for its intended purpose, its financial scale should be viewed within the broader context of the Navy's extensive and diverse procurement portfolio.

What are the potential risks associated with the long contract duration (2071 days) for NRE&TEST ARTICLES?

A contract duration of 2071 days (approximately 5.7 years) for Non-Recurring Engineering and Test Articles presents several potential risks. Firstly, requirements can change significantly over such a long period due to evolving threats, technological advancements, or shifts in strategic priorities. This can lead to scope creep, where the project expands beyond its original intent, potentially increasing costs and delaying delivery. Secondly, maintaining consistent performance and motivation from the contractor over an extended period can be challenging. Thirdly, the longer the duration, the greater the opportunity for unforeseen technical issues to arise, requiring additional time and resources to resolve. Finally, market conditions and the availability of specialized components or expertise can fluctuate, impacting the project's feasibility and cost-effectiveness over its lifespan.

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: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0016420RJQ96

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 5600 W SAND LAKE RD # MP-265, ORLANDO, FL, 32819

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: $20,505,678

Exercised Options: $20,505,678

Current Obligation: $20,505,678

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $287,783

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0016420GJQ96

IDV Type: BOA

Timeline