DoD's $37.1M sole-source contract for persistent threat detection systems awarded to Lockheed Martin

Contract Overview

Contract Amount: $37,099,834 ($37.1M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2010-01-05

End Date: 2011-01-04

Contract Duration: 364 days

Daily Burn Rate: $101.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: W15P7T-10-C-S406 PROCUREMENT FOR THREE PERSISTENT THREAT DETECTION SYSTEMS (PTDS) AND SPARES.

Place of Performance

Location: AKRON, SUMMIT County, OHIO, 44315

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $37.1 million to LOCKHEED MARTIN CORPORATION for work described as: W15P7T-10-C-S406 PROCUREMENT FOR THREE PERSISTENT THREAT DETECTION SYSTEMS (PTDS) AND SPARES. Key points: 1. The contract was awarded on a sole-source basis, raising questions about potential price competition. 2. The fixed-price contract type suggests that cost overruns are primarily the contractor's responsibility. 3. The duration of the contract is one year, indicating a relatively short-term need for these systems. 4. The procurement includes spares, suggesting an operational deployment rather than just initial acquisition. 5. The North American Industry Classification System (NAICS) code 334511 points to a specialized manufacturing sector. 6. The award was made by the Department of the Army, a major component of the Department of Defense. 7. The contract value of approximately $37.1 million for three systems and spares warrants a value-for-money assessment.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without more detailed specifications of the Persistent Threat Detection Systems (PTDS) and their capabilities. However, a per-unit cost of roughly $12.4 million for the systems alone, excluding spares, appears high, especially given the sole-source nature of the award. Without competitive bidding, it's difficult to ascertain if the government secured the best possible price. Further analysis would require comparing the system's features and performance against commercially available or other government-procured similar systems.

Cost Per Unit: Approximately $12.4M per system (excluding spares), N/A for market comparison due to sole-source and specific system nature.

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Army did not conduct a competitive bidding process. This typically occurs when only one responsible source is available or when a compelling justification for other than full and open competition exists. The lack of competition limits the government's ability to explore alternative solutions and potentially negotiate lower prices. The absence of multiple bidders means price discovery through market forces was not leveraged.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competition. Without a competitive process, there is a reduced incentive for the contractor to offer the lowest possible price, potentially leading to less efficient use of public funds.

Public Impact

The primary beneficiaries are likely military units requiring persistent surveillance and threat detection capabilities. The services delivered include the provision of three advanced detection systems and necessary spare parts. The geographic impact is likely focused on operational theaters where these systems are deployed by the Army. Workforce implications may include training for military personnel to operate and maintain the systems, and potential support roles for the contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in the justification for sole-source procurement.
High per-unit cost for specialized detection systems without competitive benchmarking.
Potential for contractor lock-in if the system is proprietary and lacks interoperability.

Positive Signals

Procurement of advanced technology to enhance military operational capabilities.
Inclusion of spares suggests a commitment to operational readiness and sustainment.
Fixed-price contract type shifts cost risk to the contractor.

Sector Analysis

The contract falls within the aerospace and defense manufacturing sector, specifically focusing on advanced sensor and surveillance systems. The NAICS code 334511, 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing,' encompasses companies that produce sophisticated equipment for military and civilian applications. The market for such systems is characterized by high research and development costs, long product cycles, and significant government procurement. Comparable spending benchmarks would involve analyzing other contracts for similar surveillance or detection platforms within the Department of Defense or allied nations.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, Lockheed Martin Corporation, is a large defense contractor. There is no explicit information regarding subcontracting plans to small businesses within the provided data. Without specific subcontracting goals or reporting, the direct impact on the small business ecosystem is unclear, though large prime contracts often involve a tiered subcontracting structure.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. The contract's fixed-price nature provides some level of financial oversight by limiting the government's exposure to cost overruns. Transparency regarding the justification for the sole-source award would be a key area for oversight. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected during the procurement or execution phases.

Related Government Programs

Persistent Surveillance Systems
Intelligence, Surveillance, and Reconnaissance (ISR) Platforms
Aerospace and Defense Manufacturing
Department of Defense Procurement
Sole-Source Contracts

Risk Flags

Sole-source award raises concerns about price competition and value for money.
Lack of transparency regarding the justification for not competing the award.
High per-unit cost without clear market benchmarks.
Potential for contractor lock-in with specialized technology.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.1 million to LOCKHEED MARTIN CORPORATION. W15P7T-10-C-S406 PROCUREMENT FOR THREE PERSISTENT THREAT DETECTION SYSTEMS (PTDS) AND SPARES.

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 Army).

What is the total obligated amount?

The obligated amount is $37.1 million.

What is the period of performance?

Start: 2010-01-05. End: 2011-01-04.

What is the specific capability and intended use of the three Persistent Threat Detection Systems (PTDS)?

The Persistent Threat Detection Systems (PTDS) are designed to provide continuous aerial surveillance and threat detection capabilities. While specific technical details are not provided in the award abstract, such systems typically employ advanced sensors, including electro-optical/infrared (EO/IR) cameras, radar, and potentially signals intelligence (SIGINT) payloads. Their intended use is likely for intelligence, surveillance, and reconnaissance (ISR) missions, offering persistent monitoring of areas of interest to identify potential threats, track enemy movements, and provide real-time situational awareness to ground forces. The 'three systems and spares' suggests an operational deployment requiring redundancy and maintenance support.

What was the justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED,' signifying a sole-source award. The specific justification for this determination is not detailed in the abstract. Typically, sole-source awards are justified under circumstances such as: only one responsible source being available; urgent and compelling needs that preclude full and open competition; or when the system is a unique, proprietary product for which no adequate alternatives exist. Without further documentation, such as a Justification and Approval (J&A) document, the precise rationale remains unknown. This lack of competition raises concerns about potential price inflation and limited market exploration.

How does the per-unit cost of these PTDS compare to similar systems in the market or other government procurements?

The approximate per-unit cost for the PTDS, excluding spares, is around $12.4 million ($37.1M / 3 systems). Benchmarking this figure is difficult without knowing the exact specifications, capabilities, and technology generation of these specific systems. However, advanced ISR platforms, especially those offering persistent surveillance, can range significantly in price. If these PTDS are high-altitude, long-endurance (HALE) or medium-altitude, long-endurance (MALE) unmanned aerial systems (UAS) with sophisticated sensor suites, the cost might be within a plausible range for specialized military hardware. Conversely, if they are less complex systems, this price could be considered high, particularly given the sole-source award.

What is Lockheed Martin Corporation's track record with similar defense procurements, particularly in surveillance and detection systems?

Lockheed Martin Corporation is a major defense contractor with extensive experience in developing and producing a wide array of defense systems, including those for intelligence, surveillance, and reconnaissance (ISR). They are known for producing advanced platforms such as the F-35 fighter jet, various missile systems, and numerous sensor and radar technologies. Their portfolio includes unmanned aerial systems (UAS) and related payloads. Given their established presence and capabilities in the aerospace and defense sector, it is plausible they possess the technical expertise and manufacturing capacity to produce sophisticated threat detection systems. However, their track record also includes large, complex contracts where cost and performance have faced scrutiny.

What are the potential risks associated with a sole-source procurement of advanced military technology like PTDS?

The primary risk associated with a sole-source procurement is the potential for inflated pricing due to the absence of competitive pressure. Without multiple bidders vying for the contract, the government may not achieve the best possible value for its investment. Other risks include limited innovation, as the government is reliant on a single provider's offerings; potential for contractor complacency; and difficulties in future procurements if the system becomes proprietary or lacks interoperability with other systems. Furthermore, the justification for sole-source awards can sometimes be opaque, raising concerns about fairness and the efficient use of taxpayer funds.

What is the historical spending pattern for Persistent Threat Detection Systems (PTDS) or similar technologies by the Department of Defense?

Historical spending on Persistent Threat Detection Systems (PTDS) and related Intelligence, Surveillance, and Reconnaissance (ISR) platforms by the Department of Defense (DoD) has been substantial, particularly following the conflicts in Iraq and Afghanistan. The DoD has consistently invested in technologies that provide persistent surveillance capabilities, including various types of unmanned aerial systems (UAS), aerostats, and ground-based sensor networks. Spending in this category often fluctuates based on evolving threats, technological advancements, and strategic priorities. Analyzing historical spending requires examining specific program budgets and contract awards for ISR assets across different military branches, which often run into billions of dollars annually.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 1210 MASSILLON RD, AKRON, OH, 13

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Federally Funded Research and Development Corp, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $37,099,834

Exercised Options: $37,099,834

Current Obligation: $37,099,834

Contract Characteristics

Cost or Pricing Data: YES

Timeline