DoD's $23.4M Radio Improvement Program contract awarded to Lockheed Martin raises value concerns

Contract Overview

Contract Amount: $23,445,114 ($23.4M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2008-12-01

End Date: 2017-06-30

Contract Duration: 3,133 days

Daily Burn Rate: $7.5K/day

Competition Type: NOT COMPETED

Pricing Type: TIME AND MATERIALS

Sector: Defense

Official Description: ECP 2738, UNDEFINITIZED CONTRACTUAL ACTION - RADIO IMPROVEMENT PROGRAM FINAL BUY BLOCK 40/42/50/52

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $23.4 million to LOCKHEED MARTIN CORPORATION for work described as: ECP 2738, UNDEFINITIZED CONTRACTUAL ACTION - RADIO IMPROVEMENT PROGRAM FINAL BUY BLOCK 40/42/50/52 Key points: 1. The contract's value-for-money is questionable due to its undefinitized nature and lack of competition. 2. Competition dynamics were limited, with the contract being 'NOT COMPETED'. 3. Risk indicators include the undefinitized contractual action (UCA) status, suggesting potential for cost overruns. 4. Performance context shows a long duration (3133 days) for an engineering services contract. 5. Sector positioning is within Defense engineering services, a critical but often high-cost area.

Value Assessment

Rating: questionable

The contract's undefinitized nature (UCA) raises concerns about initial pricing and potential for cost growth. Without a competitive bidding process, it's difficult to benchmark the pricing against market rates or similar contracts. The 'time and materials' pricing structure, especially for a long-duration contract, can lead to unpredictable costs if not managed tightly. The lack of a defined ceiling or fixed price makes a definitive value assessment challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was explicitly marked as 'NOT COMPETED', indicating a sole-source award. This severely limits price discovery and negotiation leverage for the government. Without exploring alternative vendors or solutions, the government may not have secured the most cost-effective option. The absence of a competitive process means there's no benchmark of how many other firms could have performed this work or at what price.

Taxpayer Impact: A sole-source award means taxpayers did not benefit from the cost savings typically achieved through competitive bidding, potentially leading to a higher overall expenditure for this program.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Air Force, receiving engineering services for radio improvements. The services delivered are related to engineering and technical support for radio systems, crucial for military communications. The contract is associated with Texas (TX), indicating a potential geographic impact on local workforce or facilities. Workforce implications may include specialized engineering roles within Lockheed Martin and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Undefinitized Contractual Action (UCA) status increases risk of cost overruns and scope creep.
Lack of competition limits price discovery and potentially inflates costs for taxpayers.
Time and Materials (T&M) contract type can lead to unpredictable spending without strong oversight.
Long contract duration (over 8 years) for engineering services may indicate scope creep or inefficiencies.
No small business subcontracting noted, potentially missing opportunities to leverage smaller innovative firms.

Positive Signals

Awarded to a major defense contractor (Lockheed Martin) with extensive experience in aerospace and defense.
Contract addresses critical radio improvement needs for the Department of Defense.
The contract was awarded by the Department of the Air Force, a key branch of the DoD.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting the Defense industry. The market for defense engineering services is substantial, driven by the need for advanced technological solutions and system upgrades. Comparable spending benchmarks are difficult to establish without knowing the specific nature of the radio improvements, but large-scale defense contracts often involve significant investment. This contract represents a portion of the DoD's broader investment in maintaining and modernizing its communication infrastructure.

Small Business Impact

The data indicates this contract was not competed and does not specify any small business set-aside or subcontracting goals. This suggests that opportunities for small businesses to participate in this specific contract may have been limited. Without a competitive process that includes small business participation requirements, the potential for engaging innovative small businesses in this defense project is reduced.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve the Department of Defense's contracting officers and potentially Inspector General's office, especially given its UCA status. Accountability measures would focus on ensuring the delivered engineering services meet the specified requirements and that costs are reasonable, though the T&M structure complicates this. Transparency is limited due to the sole-source nature and lack of public competition details.

Related Government Programs

Department of Defense Communications Systems Modernization
Air Force Radio and Network Infrastructure
Defense Engineering Services Contracts
Undefinitized Contractual Actions (UCAs) in DoD
Lockheed Martin Defense Contracts

Risk Flags

Undefinitized Contractual Action (UCA)
Not Competed / Sole Source
Time and Materials Pricing
Long Contract Duration
Lack of Small Business Participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.4 million to LOCKHEED MARTIN CORPORATION. ECP 2738, UNDEFINITIZED CONTRACTUAL ACTION - RADIO IMPROVEMENT PROGRAM FINAL BUY BLOCK 40/42/50/52

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 Air Force).

What is the total obligated amount?

The obligated amount is $23.4 million.

What is the period of performance?

Start: 2008-12-01. End: 2017-06-30.

What specific radio systems were improved under this contract, and what was the intended operational benefit?

The provided data does not specify the exact radio systems improved or the precise operational benefits. However, 'Radio Improvement Program' suggests upgrades to existing communication hardware, software, or network integration to enhance performance, security, or capabilities. For the Department of the Air Force, such improvements are critical for command and control, situational awareness, and interoperability across various units and platforms. The long duration implies a complex, multi-faceted upgrade rather than a simple replacement.

How did the 'time and materials' pricing structure impact the final cost compared to a fixed-price contract?

A 'time and materials' (T&M) contract allows the government to pay the contractor for direct labor hours at specified hourly rates and for the actual cost of materials used. This structure can lead to higher final costs than a fixed-price contract if the scope of work is not well-defined or if labor hours and material usage exceed initial estimates. Without a defined ceiling or competitive bidding, the government bears more risk of cost overruns. The final cost of $23.4 million reflects the cumulative hours and materials expended over the contract's lengthy period, the exact efficiency of which is hard to gauge without comparison.

What are the typical risks associated with Undefinitized Contractual Actions (UCAs) in defense contracting?

Undefinitized Contractual Actions (UCAs) are contracts where the government authorizes a contractor to begin work before a definitive contract, including all terms and conditions, has been finalized. The primary risks include potential cost growth, as the contractor may incur costs without the government having agreed to all terms, leading to higher final prices than anticipated. There's also a risk of scope creep and difficulties in negotiating a fair final price. UCAs are generally used in urgent situations, but their prolonged use, as suggested by the contract's duration, can indicate poor planning or management, increasing financial risk for the government.

Can the $23.4 million expenditure be benchmarked against similar radio improvement projects within the DoD or other federal agencies?

Benchmarking this $23.4 million expenditure is challenging without more specific details about the scope, complexity, and technological advancements involved in the radio improvements. The fact that it was a sole-source, undefinitized contract awarded over a period of more than eight years further complicates direct comparisons. Typically, competitive bids for similar, well-defined projects would provide a clearer market price. However, given the specialized nature of defense communications and the long duration, this figure might be within a broad range for such undertakings, though the lack of competition prevents a definitive value assessment.

What is Lockheed Martin Corporation's track record with similar sole-source, undefinitized contracts?

Lockheed Martin Corporation, as a major defense contractor, has a long history of working with the U.S. government, including on sole-source and undefinitized contracts. While specific data on their track record with UCAs isn't provided here, such contracts are often awarded to prime contractors for complex systems integration, upgrades, or urgent requirements where they are the sole or primary source of expertise or technology. Their extensive experience suggests a capacity to manage such contracts, but the inherent risks of UCAs and sole-sourcing remain a concern regardless of the contractor's size or reputation.

What oversight mechanisms were in place to manage the 'time and materials' aspect of this long-duration contract?

For a 'time and materials' contract, especially one lasting over eight years, robust oversight is crucial. This typically involves regular audits of labor hours and material costs, verification of contractor personnel qualifications, and strict adherence to pre-negotiated hourly rates. Contracting Officer Representatives (CORs) are usually assigned to monitor performance and costs closely. The Department of Defense would also have internal review processes and potentially utilize the Defense Contract Audit Agency (DCAA) to scrutinize expenditures. However, the effectiveness of these mechanisms depends heavily on resource allocation and diligence.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 1 LOCKHEED BLVD, FORT WORTH, TX, 76108

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $23,445,114

Exercised Options: $23,445,114

Current Obligation: $23,445,114

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F4262001D0058

IDV Type: IDC

Timeline