DoD Awards $59M Lockheed Martin Contract for Warhead Electronics System Fabrication and Testing

Contract Overview

Contract Amount: $59,015,886 ($59.0M)

Contractor: Lockheed Martin Sippican, Inc.

Awarding Agency: Department of Defense

Start Date: 2020-02-07

End Date: 2026-11-30

Contract Duration: 2,488 days

Daily Burn Rate: $23.7K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING SERVICES TO FABRICATE AND TEST PROOF OF MANUFACTURING WARHEAD ELECTRONICS SYSTEM (WES) UNITS, AND DELIVER A WES TDP FOR THE UPDATED DESIGN THAT THE CONTRACTOR HAS DEMONSTRATED MEETS DESIGN VERIFICATION TESTING (DVT) REQUIREMENTS

Place of Performance

Location: MARION, PLYMOUTH County, MASSACHUSETTS, 02738

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $59.0 million to LOCKHEED MARTIN SIPPICAN, INC. for work described as: ENGINEERING SERVICES TO FABRICATE AND TEST PROOF OF MANUFACTURING WARHEAD ELECTRONICS SYSTEM (WES) UNITS, AND DELIVER A WES TDP FOR THE UPDATED DESIGN THAT THE CONTRACTOR HAS DEMONSTRATED MEETS DESIGN VERIFICATION TESTING (DVT) REQUIREMENTS Key points: 1. This contract focuses on critical defense manufacturing for the Warhead Electronics System (WES). 2. The award to Lockheed Martin Sippican, Inc. highlights a significant investment in advanced electronics for defense applications. 3. The long duration (2020-2026) suggests a complex, multi-phase project with ongoing development and testing. 4. The 'Cost Plus Fixed Fee' contract type warrants close monitoring of cost overruns.

Value Assessment

Rating: fair

The contract value of $59,015,886 for engineering services to fabricate and test WES units appears substantial. Benchmarking against similar complex defense electronics development contracts would be necessary for a precise assessment, but the scope suggests a significant investment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits price discovery and potentially reduces competitive pressure, which could lead to higher costs for the government compared to a fully competed procurement.

Taxpayer Impact: The lack of competition for this substantial contract raises concerns about potential overspending of taxpayer funds, as competitive bidding was bypassed.

Public Impact

Ensures continued development and production of essential warhead electronics for national defense. Supports advanced manufacturing capabilities within the defense industrial base. Potential for technological advancements in electronic warfare and ordnance systems. Long-term commitment may indicate strategic importance of the WES program.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and price discovery.
Cost Plus Fixed Fee contract type can incentivize cost overruns.
Long contract duration increases risk of scope creep and cost escalation.

Positive Signals

Focus on critical defense technology (WES).
Contractor has demonstrated DVT requirements are met.
Long-term engagement allows for sustained development and testing.

Sector Analysis

This contract falls under Engineering Services within the defense sector, specifically for the fabrication and testing of advanced electronics for a warhead system. Spending in this niche area is driven by national security requirements and technological advancement in military hardware.

Small Business Impact

The contract was awarded to Lockheed Martin Sippican, Inc., a large defense contractor. There is no indication of small business participation in this specific award, which is common for highly specialized defense systems requiring extensive R&D and manufacturing capabilities.

Oversight & Accountability

The 'Cost Plus Fixed Fee' structure necessitates robust oversight from the Department of the Navy to manage costs and ensure adherence to the fixed fee. The long duration also requires continuous monitoring for performance and potential adjustments.

Related Government Programs

Engineering Services
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Sole-source procurement.
Cost Plus Fixed Fee contract type.
Long contract duration (over 6 years).
Potential for cost escalation.
Lack of transparency in price discovery.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $59.0 million to LOCKHEED MARTIN SIPPICAN, INC.. ENGINEERING SERVICES TO FABRICATE AND TEST PROOF OF MANUFACTURING WARHEAD ELECTRONICS SYSTEM (WES) UNITS, AND DELIVER A WES TDP FOR THE UPDATED DESIGN THAT THE CONTRACTOR HAS DEMONSTRATED MEETS DESIGN VERIFICATION TESTING (DVT) REQUIREMENTS

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN SIPPICAN, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $59.0 million.

What is the period of performance?

Start: 2020-02-07. End: 2026-11-30.

What is the justification for the sole-source award, and what steps were taken to ensure fair and reasonable pricing without competition?

The justification for a sole-source award typically stems from unique capabilities, proprietary technology, or urgent needs where only one contractor can fulfill the requirement. For this contract, the government likely conducted a price reasonableness analysis based on historical data, independent cost estimates, or market research to ensure the pricing was fair despite the lack of competition. However, without a competitive process, the potential for savings is inherently limited.

How will the Cost Plus Fixed Fee (CPFF) structure be managed to mitigate the risk of cost overruns, given the project's complexity and long duration?

Managing a CPFF contract involves stringent oversight of incurred costs and performance. The Department of the Navy will likely implement detailed auditing procedures, regular progress reviews, and clear milestones to track expenditures against the fixed fee. Performance metrics and potential incentives or penalties tied to the fixed fee can also be employed to encourage efficiency and cost control throughout the project's lifecycle.

What are the key performance indicators (KPIs) for the successful fabrication and testing of the WES units and the delivery of the TDP?

Key performance indicators would likely include successful completion of design verification testing (DVT) as demonstrated, adherence to manufacturing tolerances, reliability of fabricated units under simulated conditions, timely delivery of the Technical Data Package (TDP) meeting all specified requirements, and successful integration testing if applicable. Quality assurance metrics and defect rates would also be critical KPIs.

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: N6660414R0607

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 7 BARNABAS RD, MARION, MA, 02738

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: $59,015,886

Exercised Options: $59,015,886

Current Obligation: $59,015,886

Actual Outlays: $4,881,665

Subaward Activity

Number of Subawards: 77

Total Subaward Amount: $25,299,144

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6660415D0343

IDV Type: IDC

Timeline