DoD's $25.9M sole-source award for server and workstation equipment raises questions about competition and value
Contract Overview
Contract Amount: $25,949,290 ($25.9M)
Contractor: Lockheed Martin Corp
Awarding Agency: Department of Defense
Start Date: 2007-12-20
End Date: 2008-10-31
Contract Duration: 316 days
Daily Burn Rate: $82.1K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: QTY. 2 AN/USQ-148D/USQ-153(V)8 COMMON SERVER QTY. 2 AN/USQ-148D(V)2 SINGLE WORKSTATION
Place of Performance
Location: JOHNSTOWN, CAMBRIA County, PENNSYLVANIA, 15904
Plain-Language Summary
Department of Defense obligated $25.9 million to LOCKHEED MARTIN CORP for work described as: QTY. 2 AN/USQ-148D/USQ-153(V)8 COMMON SERVER QTY. 2 AN/USQ-148D(V)2 SINGLE WORKSTATION Key points: 1. The contract was awarded on a sole-source basis, limiting competitive pressure and potentially impacting price. 2. The value-for-money assessment is challenging without competitive benchmarks or detailed cost breakdowns. 3. Risk indicators include the lack of competition and the potential for overpayment on specialized equipment. 4. Performance context is limited due to the sole-source nature and lack of publicly available performance metrics. 5. This contract falls within the 'Other Electronic Parts and Equipment' category, suggesting a niche market. 6. The award was made to a single, large defense contractor, indicating a concentration of business.
Value Assessment
Rating: questionable
Benchmarking the value of this contract is difficult due to its sole-source nature and the specific nature of the equipment. Without competitive bids, it's hard to determine if the $25.9 million price reflects fair market value. The lack of transparency in pricing negotiations for sole-source awards makes a definitive value assessment challenging. Further analysis would require access to cost data and comparisons with similar sole-source procurements for specialized electronic components.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded using a sole-source justification, meaning only one vendor was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. The lack of competition means there was no opportunity for price discovery through market forces, potentially leading to higher costs for the government. The rationale for sole-sourcing, if provided, would be crucial to understanding why other vendors were not considered.
Taxpayer Impact: Sole-source awards limit taxpayer value by preventing the government from benefiting from competitive pricing. This can result in higher overall spending for essential equipment and services.
Public Impact
The Department of the Navy is the primary beneficiary, receiving critical server and workstation hardware. The equipment is essential for supporting various naval operations and command and control systems. The geographic impact is likely concentrated within naval facilities where the equipment is deployed. Workforce implications are minimal, as this contract focuses on hardware procurement rather than services requiring specialized personnel.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to inflated prices.
- Sole-source awards can reduce transparency in government spending.
- Dependence on a single contractor for specialized equipment can create supply chain risks.
Positive Signals
- Award to a major defense contractor suggests potential for reliable delivery.
- Firm Fixed Price contract type provides cost certainty for the government.
Sector Analysis
This contract falls under the broader 'Other Electronic Parts and Equipment Merchant Wholesalers' category. The market for specialized military-grade servers and workstations can be niche, often dominated by a few large defense contractors capable of meeting stringent specifications. Comparable spending benchmarks are difficult to establish without more specific details on the technology and its intended use. The overall defense electronics market is substantial, but individual component procurements like this represent specific segments.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The award was made directly to a large prime contractor. There is no information provided regarding subcontracting plans or opportunities for small businesses within this specific procurement. Therefore, the direct impact on the small business ecosystem from this particular award is likely minimal.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of Defense's internal procurement review processes and the Department of the Navy's contracting command. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected. Transparency is limited due to the sole-source nature and the lack of publicly available performance data or detailed cost breakdowns. Accountability rests with the contracting officers and program managers responsible for the award and execution.
Related Government Programs
- Department of Defense IT Procurement
- Naval Command and Control Systems
- Electronic Equipment Procurement
- Sole-Source Defense Contracts
Risk Flags
- Sole-source award
- Lack of competition
- Potential for inflated pricing
- Limited transparency
Tags
defense, department-of-defense, department-of-the-navy, sole-source, firm-fixed-price, large-contract, electronic-parts, servers, workstations, lockheed-martin, pennsylvania, other-electronic-parts-and-equipment-merchant-wholesalers
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $25.9 million to LOCKHEED MARTIN CORP. QTY. 2 AN/USQ-148D/USQ-153(V)8 COMMON SERVER QTY. 2 AN/USQ-148D(V)2 SINGLE WORKSTATION
Who is the contractor on this award?
The obligated recipient is LOCKHEED MARTIN CORP.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Navy).
What is the total obligated amount?
The obligated amount is $25.9 million.
What is the period of performance?
Start: 2007-12-20. End: 2008-10-31.
What specific technical requirements necessitated a sole-source award for these servers and workstations?
The provided data does not specify the technical requirements that led to a sole-source award. Typically, sole-source justifications are based on factors such as unique capabilities, urgent needs where competition is impractical, or when only one responsible source can provide the required supplies or services. For specialized military hardware like servers and workstations, requirements might include specific security certifications, environmental hardening, compatibility with existing legacy systems, or unique performance specifications that only one contractor can meet. Without the official justification document (e.g., Justification and Approval or J&A), the precise reasons remain speculative. This lack of transparency is a common concern with sole-source procurements.
How does the $25.9 million price compare to similar sole-source procurements for electronic parts and equipment by the DoD?
Direct comparison of the $25.9 million price to similar sole-source procurements is challenging without more granular data on the specific components, quantities, and technical specifications. The data indicates the award was for 'QTY. 2 AN/USQ-148D/USQ-153(V)8 COMMON SERVER QTY. 2 AN/USQ-148D(V)2 SINGLE WORKSTATION'. The 'AN/USQ' designation suggests military-specific equipment, which often carries a premium due to ruggedization, security features, and specialized testing. To assess value, one would need to compare this price against other sole-source awards for comparable military-grade computing hardware, factoring in differences in model numbers, configurations, and the specific branch of service. Publicly available contract databases can offer some comparative data, but often lack the detailed technical context needed for a precise benchmark.
What are the potential risks associated with awarding a contract of this size on a sole-source basis?
The primary risk associated with awarding a $25.9 million contract on a sole-source basis is the potential for reduced value for taxpayer money. Without competition, the government loses the benefit of price negotiation driven by market forces, which could lead to paying a premium. There's also a risk of vendor lock-in, where the government becomes dependent on a single supplier for critical components, potentially limiting future options and flexibility. Furthermore, sole-source awards can sometimes indicate a lack of adequate market research or planning, or potentially favor incumbent contractors without a thorough evaluation of alternatives. Transparency is also reduced, making it harder to scrutinize the fairness of the price and the necessity of the sole-source approach.
What is the historical spending pattern for this type of equipment by the Department of the Navy?
The provided data snippet focuses on a single contract award from 2007-2008. To understand historical spending patterns for this type of equipment by the Department of the Navy, a broader analysis of contract data over multiple years would be necessary. This would involve searching for contracts with similar Product Service Codes (PSCs) or North American Industry Classification System (NAICS) codes, particularly those related to electronic parts, servers, and workstations, awarded to the Navy. Examining trends in contract values, quantities, competition levels (competed vs. sole-source), and key contractors over time would reveal patterns. Without this broader dataset, it's impossible to characterize the historical spending for this specific equipment category.
How does the contractor, Lockheed Martin Corp, typically perform on similar government contracts?
Lockheed Martin Corporation is a major defense contractor with a vast portfolio of government contracts across various domains, including aerospace, defense, and IT. Their performance on similar government contracts is generally extensive and varied. While specific performance metrics for this particular $25.9 million award are not detailed in the provided data, Lockheed Martin is known for handling large, complex defense procurements. Government contract performance is often evaluated through systems like the Contractor Performance Assessment Reporting System (CPARS), which provides feedback on technical performance, schedule, cost control, and management. A comprehensive assessment would require reviewing CPARS data and other performance evaluations for Lockheed Martin's relevant contracts with the Department of Defense and other agencies.
Industry Classification
NAICS: Wholesale Trade › Household Appliances and Electrical and Electronic Goods Merchant Wholesalers › Other Electronic Parts and Equipment Merchant Wholesalers
Product/Service Code: ELECTRICAL/ELECTRONIC EQPT COMPNTS
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
Address: 3333 PILOT KNOB RD, SAINT PAUL, MN, 04
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $27,111,586
Exercised Options: $27,111,586
Current Obligation: $25,949,290
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: N0002405D5130
IDV Type: IDC
Timeline
Start Date: 2007-12-20
Current End Date: 2008-10-31
Potential End Date: 2008-10-31 00:00:00
Last Modified: 2009-04-27
More Contracts from Lockheed Martin Corp
- Federal Contract — $48.1B (Department of Energy)
- TAS::80 0124::TAS Design, Development, Test&evaluation of Project Orion — $15.5B (National Aeronautics and Space Administration)
- 200207!000021!5700!CZ62 !smc/Pkj LOS Angeles AFB !F0470102C0002 !A!N! !N! !20011116!20070630!872978978!196596688!834951691!n!lockheed Martin Corporation !1111 Lockheed Martin WAY !sunnyvale !ca!94089!77000!085!06!sunnyvale !santa Clara !california!+000012250000!n!n!000000000000!ar92!rdte/Space - Other - Applied Research !A2 !missile and Space Systems !3gfk!milstar !541710!E! !1! ! ! ! ! !99990909!B! ! !B! !d!n!j!2!001!n!2a!z!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! ! ! ! !0001! — $9.0B (Department of Defense)
- Next Generation Overhead Persistent Infrared Geosynchronous Earth Orbit Space Vehicle 1-3 Phase 1 — $7.3B (Department of Defense)
- Federal Contract — $7.3B (Department of Defense)
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)