DoD awards $8.6M sole-source contract for Littoral Combat Ship engineering support to Lockheed Martin

Contract Overview

Contract Amount: $8,610,861 ($8.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2024-03-01

End Date: 2029-02-28

Contract Duration: 1,825 days

Daily Burn Rate: $4.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IN-SERVICE ENGINEERING AGENT SERVICES IN SUPPORT OF COMMAND, CONTROL, COMMUNICATIONS, COMPUTERS, COMBAT SYSTEMS AND INTELLIGENCE SYSTEM ELEMENTS SPECIFIC TO THE FREEDOM VARIANT OF THE LITTORAL COMBAT SHIP.

Place of Performance

Location: JACKSONVILLE, DUVAL County, FLORIDA, 32212

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $8.6 million to LOCKHEED MARTIN CORPORATION for work described as: IN-SERVICE ENGINEERING AGENT SERVICES IN SUPPORT OF COMMAND, CONTROL, COMMUNICATIONS, COMPUTERS, COMBAT SYSTEMS AND INTELLIGENCE SYSTEM ELEMENTS SPECIFIC TO THE FREEDOM VARIANT OF THE LITTORAL COMBAT SHIP. Key points: 1. Contract awarded on a sole-source basis, limiting competitive pricing benefits. 2. Engineering services are critical for the complex C5I systems of the LCS Freedom variant. 3. Long contract duration of 5 years suggests a need for sustained technical expertise. 4. The contract type (Cost Plus Fixed Fee) may incentivize cost overruns. 5. High value indicates significant reliance on contractor's specialized knowledge. 6. Geographic concentration in Florida for service delivery.

Value Assessment

Rating: fair

The contract value of $8.6 million for 5 years of engineering services appears reasonable given the specialized nature of supporting C5I systems for a specific naval platform. However, without comparable sole-source contracts for similar systems or platforms, a precise value-for-money assessment is challenging. The Cost Plus Fixed Fee structure warrants scrutiny to ensure efficient cost management by the contractor.

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 solicited. This approach is typically used when a unique capability or proprietary technology is required, or when only one responsible source exists. The lack of competition means that the government did not benefit from a price discovery process driven by multiple offers, potentially leading to a higher price than if it had been competed.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. The government's negotiating position is weakened without alternative sources to compare against.

Public Impact

The primary beneficiary is the U.S. Navy's Littoral Combat Ship program, specifically the Freedom variant. Services delivered include essential engineering support for Command, Control, Communications, Computers, Combat Systems, and Intelligence (C5I) elements. Geographic impact is concentrated in Florida, where the contractor is located and services will likely be performed. Workforce implications include the employment of specialized engineers and technical personnel by Lockheed Martin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost Plus Fixed Fee contract type can lead to higher costs if not managed closely.
Lack of transparency in the justification for sole-source award.

Positive Signals

Award to incumbent contractor with likely deep knowledge of the LCS platform.
Contract ensures continued support for critical C5I systems.
Long-term contract provides stability for essential engineering services.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting defense systems. The market for specialized naval engineering, particularly for complex combat systems like those on the Littoral Combat Ship, is highly concentrated among a few large defense contractors. Benchmarking this spending is difficult without direct comparisons, but it represents a small fraction of the overall defense budget allocated to shipbuilding and systems integration.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the specialized nature of the engineering services required for advanced naval combat systems and the sole-source award to a large prime contractor, it is unlikely that significant subcontracting opportunities for small businesses will be mandated or readily available through this specific award. The focus is on the prime contractor's capabilities.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Navy contracting and program management offices. Accountability measures will be embedded within the contract's terms and conditions, including performance metrics and reporting requirements. Transparency is limited due to the sole-source nature of the award, with justifications for this approach needing to be publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Littoral Combat Ship Program
Naval Surface Warfare Center
Department of Defense C5I Systems
Lockheed Martin Defense Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competitive benchmarking

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $8.6 million to LOCKHEED MARTIN CORPORATION. IN-SERVICE ENGINEERING AGENT SERVICES IN SUPPORT OF COMMAND, CONTROL, COMMUNICATIONS, COMPUTERS, COMBAT SYSTEMS AND INTELLIGENCE SYSTEM ELEMENTS SPECIFIC TO THE FREEDOM VARIANT OF THE LITTORAL COMBAT SHIP.

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 $8.6 million.

What is the period of performance?

Start: 2024-03-01. End: 2029-02-28.

What is Lockheed Martin's track record with the Littoral Combat Ship program, particularly regarding C5I systems?

Lockheed Martin Corporation is the prime contractor for the Freedom variant of the Littoral Combat Ship (LCS). Their track record with the program is extensive, encompassing design, construction, and ongoing support. Specifically concerning C5I systems, Lockheed Martin has been responsible for integrating and maintaining these complex networks throughout the LCS's lifecycle. Past performance reviews and program execution data from the Navy would provide a more detailed assessment of their success in delivering these critical capabilities, including any challenges encountered with system integration, reliability, or upgrades.

How does the $8.6 million contract value compare to similar engineering support contracts for naval combat systems?

Direct comparison of this $8.6 million contract value is challenging due to its specific focus on the LCS Freedom variant's C5I systems and its sole-source nature. However, engineering services for major defense platforms can range from millions to hundreds of millions of dollars annually, depending on the scope, duration, and complexity. Contracts for similar naval combat system support, especially those involving sole-source providers with deep platform knowledge, often represent significant investments. Without access to proprietary data on comparable sole-source awards or detailed cost breakdowns, it's difficult to definitively benchmark this value against the market.

What are the primary risks associated with a sole-source award for critical engineering services?

The primary risks associated with a sole-source award for critical engineering services include a lack of competitive pricing, potentially leading to higher costs for the government. There is also a reduced incentive for the contractor to innovate or improve efficiency beyond contractual requirements, as there is no direct competition. Furthermore, reliance on a single source can create vulnerabilities if the contractor experiences financial difficulties, operational issues, or decides to exit the market. The government's negotiating leverage is also diminished, making it harder to secure favorable terms.

How effective is the Cost Plus Fixed Fee (CPFF) contract type in ensuring value for money for the government in this context?

The Cost Plus Fixed Fee (CPFF) contract type aims to provide a balance between contractor risk and government oversight. The contractor is reimbursed for allowable costs plus a fixed fee representing profit. While it allows for flexibility in scope, which can be beneficial for evolving engineering needs, it carries risks. The fixed fee provides some incentive for the contractor to control costs, as their profit is not directly tied to the total cost. However, the government bears the risk of cost overruns if initial estimates are inaccurate or unforeseen issues arise. Effective management and oversight by the Navy are crucial to ensure the contractor remains cost-conscious and delivers value.

What are the historical spending patterns for engineering support on the Littoral Combat Ship program?

Historical spending on engineering support for the Littoral Combat Ship (LCS) program, particularly for the Freedom variant, has been substantial, reflecting the complexity of the platform and its systems. Lockheed Martin, as the prime contractor, has received significant funding over the years for design, development, integration, and sustainment. Annual spending on engineering services can fluctuate based on program milestones, upgrade cycles, and sustainment needs. Analyzing past contract awards and obligations for LCS engineering support would reveal trends in spending and identify periods of higher or lower investment in these critical services.

What is the justification for awarding this contract on a sole-source basis rather than through full and open competition?

The justification for awarding this contract on a sole-source basis typically stems from the unique capabilities or proprietary knowledge held by Lockheed Martin Corporation concerning the Freedom variant of the Littoral Combat Ship (LCS). This includes deep institutional knowledge of the ship's design, its specific C5I systems, and the intricacies of their integration and sustainment. For such specialized engineering services, it's often argued that only the original equipment manufacturer or prime contractor possesses the necessary expertise, technical data, and understanding to perform the work effectively and without significant risk to the program's continuity and performance. This justification is usually documented in a Justification and Approval (J&A) for Other Than Full and Open Competition.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N6339422R0009

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 199 BORTON LANDING RD, MOORESTOWN, NJ, 08057

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: $68,956,741

Exercised Options: $25,950,779

Current Obligation: $8,610,861

Actual Outlays: $480,051

Subaward Activity

Number of Subawards: 20

Total Subaward Amount: $3,658,221

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline