DoD awards $39.2M to Lockheed Martin for electrical signal testing instruments, with no competition

Contract Overview

Contract Amount: $39,255,330 ($39.3M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2004-07-02

End Date: 2009-07-31

Contract Duration: 1,855 days

Daily Burn Rate: $21.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: NOVATION TO CORRECT DUNS NUMBER

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32825

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $39.3 million to LOCKHEED MARTIN CORPORATION for work described as: NOVATION TO CORRECT DUNS NUMBER Key points: 1. Contract awarded to a single, large defense contractor, raising questions about competitive pricing. 2. Long contract duration of over 5 years suggests a need for sustained support. 3. Fixed-price contract type shifts risk to the contractor, potentially impacting cost certainty. 4. No small business participation noted, indicating a missed opportunity for smaller firms. 5. Geographic concentration in Florida for contract performance. 6. The contract's purpose is for specialized instrument manufacturing, critical for defense testing.

Value Assessment

Rating: questionable

The contract value of $39.2 million for electrical signal testing instruments appears substantial. Without comparable contract data or detailed cost breakdowns, it is difficult to definitively assess value for money. The lack of competition suggests that pricing may not have been rigorously tested against market alternatives. Benchmarking against similar instrument manufacturing contracts, if available, would be necessary for a more robust evaluation of cost-effectiveness.

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. This approach is typically used when only one source is capable of meeting the requirement, or in specific circumstances where full and open competition is not feasible. The lack of competition means that potential cost savings that could arise from a competitive bidding process were not realized. This raises concerns about whether the government obtained the best possible price.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing the award, there is less assurance that the price reflects fair market value.

Public Impact

The Department of Defense benefits from the acquisition of specialized instruments for testing and measurement. These instruments are crucial for ensuring the reliability and performance of electrical systems within defense equipment. The contract supports advanced manufacturing capabilities within the defense industrial base. Workforce implications are likely concentrated within Lockheed Martin's facilities, potentially in Florida.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source awards can reduce transparency and accountability in the procurement process.
Absence of small business involvement limits opportunities for economic diversification.

Positive Signals

Fixed-price contract type provides cost certainty to the government.
Award to a major defense contractor suggests access to advanced technological capabilities.
Long-term nature of the contract indicates a stable and ongoing requirement.

Sector Analysis

The contract falls within the broader Defense Industrial Base sector, specifically focusing on the manufacturing of specialized electronic test and measurement equipment. This is a critical niche within the defense supply chain, supporting the development, production, and maintenance of advanced military hardware. The market for such specialized instruments is often characterized by high barriers to entry due to technological complexity and stringent quality requirements, which can favor established prime contractors.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there an indication of significant subcontracting opportunities for small businesses. The award to a large prime contractor like Lockheed Martin often means that the bulk of the work remains in-house or is subcontracted to other large entities. This represents a missed opportunity to leverage the capabilities of the small business sector and foster innovation within that ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with terms and conditions. The fixed-price nature of the contract provides a degree of accountability by capping government liability. However, the lack of competition limits the ability to scrutinize pricing through market comparisons, and transparency is reduced compared to a competed award.

Related Government Programs

Defense Instrumentation Programs
Electronic Warfare Systems Manufacturing
Aerospace and Defense Manufacturing
Test and Measurement Equipment Procurement

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns due to lack of price discovery

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $39.3 million to LOCKHEED MARTIN CORPORATION. NOVATION TO CORRECT DUNS NUMBER

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $39.3 million.

What is the period of performance?

Start: 2004-07-02. End: 2009-07-31.

What is the historical spending pattern for this specific type of instrument manufacturing within the Department of Defense?

Analyzing historical spending for instrument manufacturing for measuring and testing electricity and electrical signals within the Department of Defense reveals a consistent need for such capabilities. While specific dollar amounts fluctuate year-to-year based on program requirements and technological advancements, the overall trend indicates sustained investment in this area. Contracts of this nature are often long-term due to the complexity and specialized requirements of the equipment. Without access to detailed historical contract databases, it's challenging to pinpoint exact figures, but the existence of a $39.2 million award suggests a significant and ongoing requirement that aligns with broader defense modernization and maintenance efforts.

How does the awarded price compare to similar contracts for electrical signal testing instruments?

Direct comparison of the awarded price of $39.2 million to similar contracts for electrical signal testing instruments is challenging without access to a comprehensive database of comparable procurements. The 'sole-source' nature of this award further complicates benchmarking, as competitive pressures that typically drive down prices are absent. To perform a robust comparison, one would need to identify contracts with similar scope, technical specifications, duration, and contractor capabilities. Factors such as inflation, technological obsolescence, and specific performance requirements would also need to be accounted for. Given the lack of competition, it is plausible that the price may be higher than what could have been achieved through a competitive process.

What are the primary risks associated with a sole-source award for critical defense instrumentation?

The primary risks associated with a sole-source award for critical defense instrumentation include potential cost overruns, reduced innovation, and a lack of vendor accountability. Without competition, the government has limited leverage to negotiate favorable pricing, potentially leading to higher costs for taxpayers. Furthermore, a sole-source provider may have less incentive to innovate or improve efficiency, as there is no immediate threat of losing the contract to a competitor. This can also lead to vendor lock-in, making it difficult and costly to switch providers in the future. Ensuring robust oversight and performance metrics becomes even more critical in sole-source situations to mitigate these risks.

What is Lockheed Martin Corporation's track record in manufacturing similar defense-related instrumentation?

Lockheed Martin Corporation has a well-established and extensive track record in manufacturing a wide array of defense-related systems and components, including complex electronic and instrumentation systems. As one of the largest defense contractors globally, the company possesses significant expertise, advanced manufacturing capabilities, and a deep understanding of military requirements. While specific details on their past performance in manufacturing electrical signal testing instruments would require a deeper dive into contract histories, their overall profile suggests a high level of technical competence and experience in delivering sophisticated defense hardware. Their history includes numerous large-scale, complex programs across various defense domains.

What are the implications of the contract's fixed-price type for program effectiveness?

The fixed-price contract type (PT: FIRM FIXED PRICE) has significant implications for program effectiveness by shifting the primary cost risk from the government to the contractor, Lockheed Martin Corporation. This means the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. For program effectiveness, this can incentivize the contractor to manage costs efficiently and adhere to the schedule to maximize profit. However, it can also lead to potential issues if the initial cost estimate was inaccurate or if unforeseen challenges arise, potentially impacting the quality or scope of deliverables if the contractor seeks to cut corners to maintain profitability. Clear performance standards and quality assurance clauses are crucial to ensure effectiveness under this contract type.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Instrument Manufacturing for Measuring and Testing Electricity and Electrical Signals

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

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: YES

Timeline