DoD's $29.9M Lockheed Martin IFF contract for engineering services shows limited competition and potential value concerns

Contract Overview

Contract Amount: $29,925,826 ($29.9M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2009-07-22

End Date: 2017-06-30

Contract Duration: 2,900 days

Daily Burn Rate: $10.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: INTEGRATION OF MODE 5 IDENTIFICATION FRIEND OR FOE (IFF) APX-113-60 COMBINED INTERROGATOR/TRANSPONDER (CIT) PROGRAM

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $29.9 million to LOCKHEED MARTIN CORPORATION for work described as: INTEGRATION OF MODE 5 IDENTIFICATION FRIEND OR FOE (IFF) APX-113-60 COMBINED INTERROGATOR/TRANSPONDER (CIT) PROGRAM Key points: 1. Contract awarded to a single, large defense contractor, raising questions about competitive pricing. 2. The 'not competed' award type suggests a lack of market exploration for this critical system. 3. Cost-plus contract structure may incentivize spending rather than cost efficiency. 4. Long performance period (2009-2017) indicates a sustained need for these engineering services. 5. The contract supports a vital defense identification system, crucial for operational safety and effectiveness. 6. Focus on engineering services highlights the complexity and specialized nature of the IFF system.

Value Assessment

Rating: questionable

Benchmarking the value of this $29.9 million contract is challenging due to the 'not competed' award and cost-plus structure. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value. The cost-plus incentive fee (CPIF) structure, while intended to motivate performance, can sometimes lead to higher overall costs if not tightly managed. Comparing this to similar sole-source engineering services contracts for defense systems would be necessary for a more robust value assessment, but such data is not readily available in this context.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not openly competed. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or when urgency dictates a direct award. The lack of competition means potential bidders were not given an opportunity to offer their services, which can limit price discovery and potentially lead to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without multiple bids, the government lacked the leverage to negotiate the lowest possible price for these essential engineering services.

Public Impact

The primary beneficiaries are the Department of the Air Force and the broader Department of Defense, ensuring the functionality of the Identification Friend or Foe (IFF) system. Services delivered include critical engineering support for the APX-113-60 Combined Interrogator/Transponder (CIT) program. The geographic impact is primarily within the defense sector's operational theaters, ensuring secure airspace and identification of friendly forces. Workforce implications include specialized engineering roles within Lockheed Martin, contributing to the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs.
Cost-plus contract type can incentivize higher spending without strict cost controls.
Lack of transparency in the procurement process due to non-competitive award.
Long contract duration without clear performance metrics in the provided data.

Positive Signals

Awarded to a major defense contractor with established expertise in aerospace and defense systems.
Supports a critical national security system (IFF) essential for military operations.
Contract structure includes incentive fees, aiming to align contractor performance with government objectives.

Sector Analysis

The defense engineering services sector is characterized by high barriers to entry, specialized technical expertise, and significant government investment. Contracts often involve complex systems integration, research and development, and sustainment. This contract for the IFF APX-113-60 system fits within this landscape, supporting a critical component of air traffic control and combat identification. Comparable spending benchmarks are difficult to establish without more specific details on the system's complexity and the scope of engineering services, but defense engineering services represent a substantial portion of the DoD's overall procurement budget.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. The award to Lockheed Martin, a large prime contractor, suggests that any small business involvement would likely be through subcontracting opportunities. The extent of small business participation is not detailed here, but large sole-source awards can sometimes limit direct opportunities for small businesses to compete for prime contracts.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Air Force's contracting and program management offices. The Inspector General's office within the DoD would have jurisdiction to investigate potential fraud, waste, or abuse. Transparency is limited by the sole-source nature of the award; however, contract modifications, performance reports, and financial audits would be subject to internal government review and oversight.

Related Government Programs

DoD Identification Friend or Foe (IFF) Systems
Air Force Avionics and Radar Programs
Defense Engineering Services Procurement
Lockheed Martin Defense Contracts
Aerospace Systems Integration

Risk Flags

Sole-source award
Cost-plus contract type
Limited competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.9 million to LOCKHEED MARTIN CORPORATION. INTEGRATION OF MODE 5 IDENTIFICATION FRIEND OR FOE (IFF) APX-113-60 COMBINED INTERROGATOR/TRANSPONDER (CIT) PROGRAM

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 $29.9 million.

What is the period of performance?

Start: 2009-07-22. End: 2017-06-30.

What is the specific technical function of the APX-113-60 Combined Interrogator/Transponder (CIT) and why was it deemed a sole-source requirement?

The APX-113-60 is a critical component of the Identification Friend or Foe (IFF) system, which allows military aircraft and air traffic control to identify friendly, hostile, or neutral aircraft. The 'Combined Interrogator/Transponder' aspect means it can both send interrogation signals and receive/respond to transponder signals. Sole-source awards for such systems often stem from proprietary technology, unique integration requirements with existing platforms, or the need for specialized sustainment and upgrade capabilities that only the original equipment manufacturer (like Lockheed Martin, in this case) can provide. Without specific documentation justifying the sole-source nature, it's presumed that Lockheed Martin held unique intellectual property or demonstrated unparalleled expertise essential for this specific system's continued development and support, making competitive procurement impractical or detrimental to program continuity.

How does the Cost Plus Incentive Fee (CPIF) contract structure potentially impact the final cost compared to a fixed-price contract for these engineering services?

A Cost Plus Incentive Fee (CPIF) contract allows the contractor (Lockheed Martin) to be reimbursed for allowable costs plus a fee that is adjusted based on meeting or exceeding certain performance targets. For engineering services, these targets might relate to technical milestones, delivery schedules, or specific performance metrics. While CPIF aims to incentivize efficiency and performance, it differs significantly from a fixed-price contract where the total cost is predetermined. In a CPIF, the government bears the risk of cost overruns if targets are missed, but the contractor is motivated to control costs to achieve a higher fee. However, if targets are easily met or the baseline cost estimates are inaccurate, the final cost could exceed what might have been achieved under a competitive fixed-price bid, especially in a sole-source scenario where the initial cost baseline might not be as rigorously challenged.

What are the potential risks associated with a sole-source award for a critical defense system like the IFF APX-113-60?

The primary risk of a sole-source award is the lack of competitive pressure, which can lead to inflated pricing and reduced incentive for the contractor to innovate or optimize costs. Taxpayers may end up paying more than necessary for the services and technology. Another risk is vendor lock-in, where the government becomes overly reliant on a single supplier, making it difficult and expensive to switch providers or introduce alternative solutions in the future. Furthermore, without competition, there's less opportunity for new entrants or smaller businesses to gain a foothold in this critical defense technology area. Oversight becomes paramount to mitigate these risks, ensuring rigorous justification for the sole-source decision and diligent monitoring of performance and costs.

Can we assess the 'value for money' of this contract given the limited data and sole-source nature?

Assessing 'value for money' for this $29.9 million contract is inherently difficult due to the sole-source award and the cost-plus incentive fee structure. Value for money typically implies achieving desired outcomes at the lowest possible cost, often realized through robust competition. In this case, the absence of competing bids means we cannot benchmark against market alternatives. The CPIF structure introduces complexity; while it incentivizes performance, the ultimate cost is variable and dependent on achieving specific targets. Without detailed performance reports, cost breakdowns, or comparisons to similar sole-source contracts for comparable systems, a definitive value-for-money assessment is speculative. The government likely relied on internal cost estimates and negotiation expertise, but the lack of market validation remains a significant limitation.

What is Lockheed Martin's track record with similar DoD engineering services contracts, particularly for avionics and identification systems?

Lockheed Martin Corporation is a major defense contractor with extensive experience in providing engineering, integration, and sustainment services for a wide array of complex defense systems, including avionics, radar, and identification technologies. They are a primary developer and manufacturer of IFF systems and related components for various military branches. Their track record generally includes successful delivery of large-scale, technologically advanced programs. However, like many large defense contractors, they have also faced scrutiny regarding contract costs, schedule adherence, and sole-source awards on specific programs. A comprehensive review of their performance on similar DoD contracts would involve analyzing past performance evaluations, contract audit reports, and any publicly available data on cost overruns or performance issues related to their IFF and avionics portfolios.

How has spending on IFF systems and related engineering services evolved within the Department of Defense over the contract's performance period (2009-2017)?

Spending on Identification Friend or Foe (IFF) systems and related engineering services within the Department of Defense (DoD) during the 2009-2017 period was substantial, reflecting the critical need for secure and reliable aircraft identification in military operations. This era saw ongoing modernization efforts across all branches, including upgrades to existing IFF systems and integration into new platforms. While specific aggregate spending figures for IFF engineering services are not readily available without deep dives into DoD budget documents and procurement databases, it's understood that such systems are integral to air command and control, airspace management, and force protection. The trend likely involved sustained investment, potentially increasing with the development of more advanced IFF capabilities (like Mode 5) and the need to ensure interoperability across allied forces. This contract with Lockheed Martin represents a portion of that broader investment.

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

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

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: $36,995,872

Exercised Options: $36,995,872

Current Obligation: $29,925,826

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