DoD's $19.6M contract for electronic equipment repair awarded to Lockheed Martin raises value-for-money questions

Contract Overview

Contract Amount: $19,569,060 ($19.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2006-11-20

End Date: 2007-12-31

Contract Duration: 406 days

Daily Burn Rate: $48.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PBL CSP SERVICE

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32801

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $19.6 million to LOCKHEED MARTIN CORPORATION for work described as: PBL CSP SERVICE Key points: 1. The contract's value-for-money is questionable given the lack of competition and the firm-fixed-price structure, which may not incentivize cost savings. 2. Competition dynamics were non-existent, with a sole-source award to Lockheed Martin, limiting price discovery and potentially increasing costs. 3. Risk indicators include the sole-source nature of the award and the absence of performance metrics that could signal potential cost overruns or quality issues. 4. Performance context is limited due to the lack of publicly available details on the specific services rendered and their effectiveness. 5. Sector positioning shows this contract falls within the broader defense electronics maintenance and repair market, a critical but often opaque segment.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without more detailed service descriptions and performance data. However, the $19.6 million price tag for electronic equipment repair, awarded on a sole-source basis, warrants scrutiny. A lack of competitive bidding means there's no market validation of the price. Comparing this to similar sole-source contracts for comparable services would be necessary to assess if the pricing is reasonable. The firm-fixed-price structure, while providing cost certainty, could also mean the government pays a premium if costs are lower than anticipated by the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. The data indicates only one bidder, Lockheed Martin Corporation, was considered. This lack of competition significantly limits the government's ability to secure the best possible price and service through market forces. It suggests that either no other vendors were capable of performing the service, or the agency did not pursue competitive options.

Taxpayer Impact: Taxpayers may have paid a higher price than necessary due to the absence of competitive pressure. Without multiple bids, there's no guarantee that Lockheed Martin's price reflects the most cost-effective solution available in the market.

Public Impact

The primary beneficiaries are the Department of Defense (specifically the Department of the Navy) and Lockheed Martin Corporation. The services delivered are related to the repair and maintenance of electronic and precision equipment, crucial for military readiness. The geographic impact is noted as Florida (ST: FL, SN: FLORIDA), suggesting the work was performed or managed from this state. Workforce implications include employment opportunities for skilled technicians and support staff within Lockheed Martin's operations in Florida.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially inflates costs for taxpayers.
Lack of performance metrics makes it difficult to assess the quality and effectiveness of the repair services.
Firm-fixed-price contract may not incentivize contractor efficiency if actual costs are lower than anticipated.
Limited public data on the specific nature of 'Other Electronic and Precision Equipment Repair and Maintenance' hinders detailed analysis.

Positive Signals

Award to a major defense contractor like Lockheed Martin suggests a capability to handle complex electronic systems.
Firm-fixed-price contract provides budget certainty for the Department of the Navy.
Contract duration of over a year (406 days) indicates a sustained need for these services.

Sector Analysis

This contract falls within the defense electronics maintenance and repair sector. This is a critical but often specialized area within the broader defense industrial base, supporting the operational readiness of military hardware. The market for such services is often dominated by original equipment manufacturers or large defense contractors due to the proprietary nature of the technology and the need for specialized expertise and certifications. Comparable spending benchmarks are difficult to establish without more specific details on the equipment being serviced.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, there is no explicit mention of subcontracting requirements for small businesses. This suggests that the primary contract was awarded directly to Lockheed Martin without specific provisions to ensure small business participation. Consequently, the direct impact on the small business ecosystem for this particular award is likely minimal, unless Lockheed Martin voluntarily engages small businesses as subcontractors.

Oversight & Accountability

Oversight mechanisms for this contract are not detailed in the provided data. As a Department of Defense contract, it would typically fall under the purview of the Department of Defense's internal audit and oversight bodies, potentially including the Defense Contract Audit Agency (DCAA) and the Inspector General. Transparency is limited due to the sole-source nature and lack of publicly available performance reports. Accountability would primarily rest on the contractual terms and the contractor's adherence to them, with potential for audits and reviews by DoD oversight entities.

Related Government Programs

Defense Logistics Agency (DLA) Maintenance, Repair, and Overhaul (MRO) Services
Naval Sea Systems Command (NAVSEA) Repair Contracts
Air Force Sustainment Center (AFSC) Equipment Maintenance
Department of Defense Electronic Warfare Systems Support

Risk Flags

Sole-source award raises concerns about price reasonableness and competition.
Lack of detailed performance data hinders assessment of value for money.
Broad NAICS code limits understanding of specific services rendered.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.6 million to LOCKHEED MARTIN CORPORATION. PBL CSP SERVICE

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 $19.6 million.

What is the period of performance?

Start: 2006-11-20. End: 2007-12-31.

What specific types of electronic and precision equipment were covered under this contract?

The provided data classifies the contract under NAICS code 811219, 'Other Electronic and Precision Equipment Repair and Maintenance.' This broad category encompasses a wide range of services, from repairing communication equipment and navigation systems to maintaining specialized electronic warfare components or precision measurement devices. Without further details from the contract award documents or associated statements of work, it is impossible to specify the exact equipment. However, given the contractor (Lockheed Martin) and the awarding agency (Department of the Navy), it is likely related to naval aviation, surface vessels, or other platforms requiring sophisticated electronic systems.

How does the $19.6 million cost compare to similar repair contracts for electronic equipment within the DoD?

Direct comparison of the $19.6 million cost is difficult without knowing the specific equipment and scope of services. However, sole-source contracts often carry a higher price tag than competitively awarded ones due to the lack of market pressure. For similar broad categories of electronic equipment repair, competitively bid contracts might range significantly based on complexity and volume. For instance, a contract for depot-level maintenance of a specific avionics suite might be in the tens of millions, while routine repair of standard communication gear could be much less. The firm-fixed-price nature here means the $19.6 million is the ceiling, but without competition, its reasonableness is unverified against market alternatives.

What are the potential risks associated with awarding a contract of this size on a sole-source basis?

The primary risk of a sole-source award for a $19.6 million contract is the potential for overpayment. Without competition, the government lacks a benchmark to ensure it's receiving the best value. This can lead to inflated prices, as the contractor faces no pressure to be cost-efficient. Additionally, sole-source awards can indicate a lack of market research or planning by the agency, potentially signaling deeper systemic issues. There's also a risk that critical maintenance or repair services might not be performed optimally if the contractor isn't incentivized by competition to deliver superior quality or faster turnaround times.

What performance metrics or quality standards were likely included in this contract?

While the specific performance metrics are not detailed in the provided summary data, typical contracts for electronic equipment repair include standards related to turnaround time (e.g., Mean Time To Repair - MTTR), defect rates after repair, adherence to technical specifications, and delivery schedules. For a firm-fixed-price contract, the emphasis might be on meeting defined service levels. However, the lack of public reporting on these metrics makes it impossible to assess the contractor's actual performance against any established standards for this specific $19.6 million award.

How has the Department of the Navy's spending on electronic equipment repair evolved over time, and does this contract fit historical patterns?

Historical spending patterns for the Department of the Navy (DoN) on electronic equipment repair are extensive, given the vast array of platforms and systems requiring maintenance. The DoN consistently allocates significant funds to sustain its readiness. Contracts like this one, for specialized repair services, are a regular part of the budget. However, the trend towards sole-source awards versus competitive procurements in this specific sub-category would be a key area for analysis. If sole-source awards are increasing, it could indicate a shrinking industrial base for certain repairs or a shift in procurement strategy, potentially impacting long-term costs and innovation.

What is Lockheed Martin Corporation's track record in providing similar electronic repair and maintenance services to the DoD?

Lockheed Martin Corporation is a major defense contractor with extensive experience in maintaining and repairing complex electronic systems across various military branches. They are known for their work on aircraft, ships, and command-and-control systems, many of which involve sophisticated electronics. Their track record generally includes the capability to handle large, technically demanding contracts. However, the specifics of their performance on past contracts, including adherence to schedules, quality of work, and cost management, would require a deeper dive into contract performance reports and historical data, which are not fully available in this summary.

Industry Classification

NAICS: Other Services (except Public Administration) › Electronic and Precision Equipment Repair and Maintenance › Other Electronic and Precision Equipment Repair and Maintenance

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 12506 LAKE UNDERHILL RD, ORLANDO, FL, 90

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $19,569,060

Exercised Options: $19,569,060

Current Obligation: $19,569,060

Contract Characteristics

Cost or Pricing Data: YES

Timeline