DoD awards $1.7B contract for radio and television broadcasting equipment to Lockheed Martin

Contract Overview

Contract Amount: $17,092,537 ($17.1M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2020-09-23

End Date: 2027-12-31

Contract Duration: 2,655 days

Daily Burn Rate: $6.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MATRIX, COMMUNICATION

Place of Performance

Location: COLORADO SPRINGS, EL PASO County, COLORADO, 80921

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $17.1 million to LOCKHEED MARTIN CORP for work described as: MATRIX, COMMUNICATION Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. Significant contract value suggests a critical need for this specialized communication equipment within the Defense sector. 3. Long contract duration (over 7 years) indicates a sustained requirement and potential for evolving technological needs. 4. Firm Fixed Price contract type shifts cost risk to the contractor, but may include higher initial pricing. 5. The award to a single, large defense contractor highlights potential consolidation and limited opportunities for smaller suppliers. 6. Lack of competition is a key risk indicator for value for money and potential for innovation.

Value Assessment

Rating: questionable

The contract's value of $1.7 billion over its lifespan is substantial. However, without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The firm fixed-price nature suggests the government has locked in a price, but the absence of competition means this price may not reflect the best possible value. Further analysis would be needed to assess if the unit costs are reasonable compared to non-defense industry benchmarks or historical pricing for similar equipment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Lockheed Martin Corp, was solicited. This significantly limits the opportunity for price discovery and competition. While sole-source awards can be justified for unique capabilities or urgent needs, the lack of multiple bidders raises concerns about whether the government secured the most advantageous terms. The absence of competition means taxpayers did not benefit from the downward pressure on prices that typically occurs in a competitive bidding process.

Taxpayer Impact: The sole-source nature of this award means taxpayers may have paid a premium for the equipment. Without competitive bids, there is no independent verification that the price offered by Lockheed Martin is the best available in the market.

Public Impact

The Department of Defense is the primary beneficiary, receiving critical radio and television broadcasting equipment. This equipment is essential for maintaining communication networks and operational capabilities within military units. The contract supports advanced manufacturing and technology development within the defense industrial base. Workforce implications are likely concentrated within Lockheed Martin's facilities and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential value for money.
Long contract duration could lead to obsolescence if technology evolves rapidly.
High contract value concentrated with a single large prime contractor.

Positive Signals

Firm Fixed Price contract shifts cost risk to the contractor.
Award to a major defense contractor suggests access to advanced and reliable technology.
Long-term contract provides stability for the supplier and ensures sustained availability of critical equipment.

Sector Analysis

This contract falls within the broader defense electronics and communications equipment manufacturing sector. The market for such specialized military communication systems is often characterized by high barriers to entry, significant R&D investment, and a limited number of large prime contractors capable of meeting stringent government requirements. Spending in this area is critical for national security, and contracts are typically awarded based on technical capability and past performance rather than solely on price.

Small Business Impact

This contract does not appear to include a small business set-aside. The award to Lockheed Martin, a large prime contractor, suggests that subcontracting opportunities may exist for small businesses within Lockheed's supply chain. However, the primary award mechanism does not directly benefit small businesses. Further investigation into Lockheed Martin's subcontracting plan would be necessary to assess the specific impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA). The Inspector General of the Department of Defense would also have jurisdiction to investigate potential fraud, waste, or abuse. Transparency is facilitated through contract databases like FPDS, but the lack of competition limits public insight into the justification for the sole-source award.

Related Government Programs

Defense Communications Systems
Military Radio Equipment
Wireless Communication Technology
Broadcasting Equipment Manufacturing

Risk Flags

Sole-source award
Lack of competition
High contract value
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.1 million to LOCKHEED MARTIN CORP. MATRIX, COMMUNICATION

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $17.1 million.

What is the period of performance?

Start: 2020-09-23. End: 2027-12-31.

What is Lockheed Martin's track record with similar sole-source defense contracts?

Lockheed Martin Corp is a major defense contractor with extensive experience in sole-source awards, particularly for specialized systems where they possess unique capabilities or are the incumbent provider. Analyzing their past performance on similar sole-source contracts would involve reviewing contract modifications, cost overruns, and any audits or investigations related to pricing and delivery. Publicly available data often shows large sole-source awards to prime contractors like Lockheed Martin, underscoring the importance of robust oversight to ensure fair pricing and value, even in the absence of direct competition. Their history suggests a capacity to deliver complex systems, but also highlights the inherent risks associated with non-competitive procurement.

How does the $1.7 billion value compare to historical spending on similar broadcasting equipment by the DoD?

Comparing the $1.7 billion value requires identifying specific categories of radio and television broadcasting equipment and their historical procurement trends within the DoD. This contract's broad scope (NAICS 334220) encompasses a range of products. Without more granular data on the specific types of equipment procured under this contract, a direct historical comparison is challenging. However, large-scale sole-source awards of this magnitude are not uncommon for major defense platforms and systems. Historical spending patterns for critical communication infrastructure often show significant, multi-year investments, especially when technological upgrades or replacements are necessary. The duration and value suggest a strategic, long-term investment rather than routine procurement.

What are the primary risks associated with a sole-source award of this magnitude?

The primary risks associated with a sole-source award of this magnitude include inflated pricing due to the lack of competitive pressure, potential for reduced innovation as the contractor faces no direct market challenge, and a lack of transparency in the justification for the award. Taxpayers may not receive the best value for their money. Furthermore, reliance on a single supplier can create supply chain vulnerabilities. There's also a risk that the government's requirements may not be as precisely defined or as cost-effectively met as they would be in a competitive environment. Robust oversight and negotiation are critical to mitigate these risks.

What specific types of radio and television broadcasting equipment are likely included in this contract?

Given the NAICS code 334220 (Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing) and the defense context, this contract likely covers a wide array of specialized equipment. This could include tactical radio systems for battlefield communications, secure wireless communication devices, satellite communication terminals, broadcasting transmitters and receivers for military operations, command and control communication systems, and potentially related software and support services. The 'Radio and Television Broadcasting' aspect might refer to equipment used for disseminating information or signals within military bases or operational theaters, rather than commercial broadcasting.

What are the implications of the firm fixed-price contract type for cost control?

A Firm Fixed Price (FFP) contract type means the contractor, Lockheed Martin Corp, is obligated to complete the work for a predetermined price, regardless of the actual costs incurred. This shifts the primary cost risk from the government to the contractor. For the government, this offers budget certainty and protection against cost overruns. However, contractors typically build in a contingency premium into FFP contracts to account for potential risks, which can result in a higher initial price compared to cost-reimbursement contracts. In a sole-source scenario, this premium might be higher due to the lack of competitive benchmarking.

Industry Classification

NAICS: Manufacturing › Communications Equipment Manufacturing › Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: SPRHA219R7001

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 9970 FEDERAL DR, COLORADO SPRINGS, CO, 80921

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $17,092,537

Exercised Options: $17,092,537

Current Obligation: $17,092,537

Subaward Activity

Number of Subawards: 46

Total Subaward Amount: $36,803,319

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline