DoD's $724M Lockheed Martin Contract for Navigation Systems: A Deep Dive into Value and Competition
Contract Overview
Contract Amount: $724,062,462 ($724.1M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2006-09-26
End Date: 2015-05-31
Contract Duration: 3,169 days
Daily Burn Rate: $228.5K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Defense
Place of Performance
Location: LIVERPOOL, ONONDAGA County, NEW YORK, 13088
State: New York Government Spending
Plain-Language Summary
Department of Defense obligated $724.1 million to LOCKHEED MARTIN CORPORATION for work described as: Key points: 1. Significant investment in critical defense navigation technology. 2. Sole awardee, raising questions about competitive pricing. 3. Long contract duration (9 years) may impact adaptability. 4. Focus on high-tech manufacturing sector.
Value Assessment
Rating: questionable
The contract value of $724M over 9 years is substantial. Without competitive benchmarks, assessing its value for money is difficult. The Cost Plus Incentive Fee structure aims to control costs, but transparency is key.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
Despite being awarded under full and open competition, only one awardee, Lockheed Martin, was selected. This suggests potential barriers to entry or a highly specialized market, impacting price discovery.
Taxpayer Impact: Taxpayer funds are directed towards a single, large defense contractor for essential navigation systems, highlighting the need for robust oversight to ensure fair pricing.
Public Impact
Enhances national security through advanced defense technology. Supports high-skilled jobs in the aerospace and defense sector. Potential for technological advancements in navigation systems. Long-term commitment to a specific vendor may limit future innovation options.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of demonstrated competition for this large award.
- Extended contract duration.
- Cost-plus contract type can lead to cost overruns.
- No small business participation noted.
Positive Signals
- Awarded to a reputable defense contractor.
- Contract aims to fulfill critical national security needs.
- Incentive fee structure encourages performance.
Sector Analysis
This contract falls within the Defense sector, specifically manufacturing navigation and guidance systems. Spending in this area is crucial for military readiness, but often involves high R&D costs and limited competition due to specialized requirements.
Small Business Impact
The data indicates no small business participation in this contract. This is common for large, complex defense systems where prime contractors often manage subcontracts internally or with other large entities.
Oversight & Accountability
The contract's long duration and sole awardee status warrant close oversight from the Defense Contract Management Agency to ensure cost control, performance, and adherence to contract terms.
Related Government Programs
- Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Potential lack of price competition.
- Long contract duration may lead to technological obsolescence.
- Cost-plus contracts can be susceptible to cost growth.
- No small business participation.
Tags
search-detection-navigation-guidance-aer, department-of-defense, ny, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $724.1 million to LOCKHEED MARTIN CORPORATION. See the official description on USAspending.
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 $724.1 million.
What is the period of performance?
Start: 2006-09-26. End: 2015-05-31.
What was the competitive landscape like that led to a single awardee for this significant contract?
While the contract was advertised as 'full and open competition,' the outcome was a sole award to Lockheed Martin. This suggests that either only one bidder met the stringent technical requirements, or other potential bidders were deterred by the complexity or perceived difficulty of winning. Further analysis of the solicitation and bidding process would be needed to fully understand the competitive dynamics.
How does the Cost Plus Incentive Fee (CPIF) structure mitigate risks associated with this long-term, high-value contract?
The CPIF structure aims to incentivize Lockheed Martin to control costs by setting target costs and fee percentages. If the final cost is below the target, both the contractor and the government share in the savings. Conversely, if costs exceed the target, the contractor's fee is reduced. This aligns the contractor's financial interests with cost efficiency, though effective government oversight is still crucial to monitor performance and prevent cost overruns.
What is the long-term strategic implication of awarding such a critical system to a single vendor for nearly a decade?
Awarding a critical navigation system to a single vendor for an extended period like nine years can lead to vendor lock-in, potentially stifling future innovation and limiting the government's flexibility to adopt newer technologies. While it ensures continuity and deep expertise with Lockheed Martin, it also poses a risk if the vendor's technology becomes obsolete or if alternative, more cost-effective solutions emerge elsewhere.
Industry Classification
NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Product/Service Code: COMM/DETECT/COHERENT RADIATION
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 3
Pricing Type: COST PLUS INCENTIVE FEE (V)
Evaluated Preference: NONE
Contractor Details
Parent Company: Lockheed Martin Corp (UEI: 834951691)
Address: 497 ELECTRONICS PKWY # 5 #, LIVERPOOL, NY, 13088
Business Categories: Category Business, Not Designated a Small Business
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2006-09-26
Current End Date: 2015-05-31
Potential End Date: 2015-05-31 00:00:00
Last Modified: 2020-10-07
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