DoD awards $47M for sensor spares, a sole-source contract for critical threat detection systems

Contract Overview

Contract Amount: $47,032,288 ($47.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2011-12-14

End Date: 2012-12-13

Contract Duration: 365 days

Daily Burn Rate: $128.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THE PURPOSE OF THIS CONTRACT, W15P7T-12-C-C001, IS TO PROCURE TWENTY-TWO (22) MX-20 LITE SENSOR SPARES AND TWENTY-FOUR (24) SITE SPARES FOR THE PERSISTENT THREAT DETECTION SYSTEMS IN SUPPORT OF OPERATION ENDURING FREEDOM.

Place of Performance

Location: AKRON, SUMMIT County, OHIO, 44306

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $47.0 million to LOCKHEED MARTIN CORPORATION for work described as: THE PURPOSE OF THIS CONTRACT, W15P7T-12-C-C001, IS TO PROCURE TWENTY-TWO (22) MX-20 LITE SENSOR SPARES AND TWENTY-FOUR (24) SITE SPARES FOR THE PERSISTENT THREAT DETECTION SYSTEMS IN SUPPORT OF OPERATION ENDURING FREEDOM. Key points: 1. The contract supports persistent threat detection systems vital for Operation Enduring Freedom. 2. Sole-source procurement indicates a lack of readily available alternatives or specialized needs. 3. The firm-fixed-price contract type aims to control costs by establishing a set price. 4. The award was made to Lockheed Martin Corporation, a major defense contractor. 5. The contract duration is one year, suggesting a focus on immediate supply needs. 6. The specific part numbers (MX-20 LITE Sensor Spares) highlight a niche requirement.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without comparable sole-source procurements for the specific MX-20 LITE sensor spares. The total award of $47,032,288 for 22 sensor spares and 24 site spares suggests a high per-unit cost, but the exact value proposition is obscured by the lack of competitive bidding. The firm-fixed-price structure provides some cost certainty, but the absence of competition raises concerns about whether the government achieved the best possible price.

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 Corporation, was solicited. This approach is typically used when a product or service is unique, proprietary, or when there is an urgent need that cannot be met through competitive means. The lack of competition limits the government's ability to leverage market forces to drive down prices and ensure the most cost-effective solution.

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

Public Impact

Personnel involved in Operation Enduring Freedom benefit from enhanced threat detection capabilities. The contract ensures the operational readiness of critical surveillance and reconnaissance systems. The geographic impact is primarily in operational theaters where these systems are deployed. The contract supports specialized manufacturing and logistics roles within Lockheed Martin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Lack of transparency in the justification for sole-source procurement.
Reliance on a single contractor for critical spares could create supply chain vulnerabilities.
High per-unit cost is implied but not explicitly benchmarked due to lack of competition.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Ensures availability of critical spares for ongoing military operations.
Award to an established defense contractor with a track record in similar systems.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on the manufacturing and supply of specialized sensor components for military systems. The market for such niche defense electronics is often characterized by limited suppliers and long development cycles. Spending in this area is driven by the need for advanced surveillance and intelligence gathering capabilities, with contracts often being sole-source due to proprietary technology or specific system integration requirements.

Small Business Impact

This contract does not appear to involve a small business set-aside. As a sole-source award to a large prime contractor, Lockheed Martin Corporation, there are no direct subcontracting opportunities for small businesses explicitly detailed in this award notice. The primary impact on the small business ecosystem would be indirect, through potential Tier 2 or Tier 3 supply chain opportunities with the prime contractor.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management structures. Accountability measures are inherent in the firm-fixed-price contract type, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency is limited by the sole-source nature of the award; however, contract award data is publicly available through federal procurement databases.

Related Government Programs

Persistent Threat Detection Systems (PTDS)
Operation Enduring Freedom Support Contracts
Defense Intelligence, Surveillance, and Reconnaissance (ISR) Equipment

Risk Flags

Sole-source award lacks competitive justification.
Potential for inflated pricing due to lack of competition.
Limited transparency regarding the necessity of sole-source procurement.
Dependency on a single supplier for critical components.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.0 million to LOCKHEED MARTIN CORPORATION. THE PURPOSE OF THIS CONTRACT, W15P7T-12-C-C001, IS TO PROCURE TWENTY-TWO (22) MX-20 LITE SENSOR SPARES AND TWENTY-FOUR (24) SITE SPARES FOR THE PERSISTENT THREAT DETECTION SYSTEMS IN SUPPORT OF OPERATION ENDURING FREEDOM.

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 $47.0 million.

What is the period of performance?

Start: 2011-12-14. End: 2012-12-13.

What is the historical spending pattern for MX-20 LITE sensor spares and related components?

Analyzing historical spending for MX-20 LITE sensor spares specifically is challenging without access to detailed procurement histories beyond this single award. However, broader spending on Persistent Threat Detection Systems (PTDS) and related intelligence, surveillance, and reconnaissance (ISR) equipment by the Department of Defense has been substantial over the past two decades, particularly during active conflict periods like Operation Enduring Freedom. This contract, valued at $47 million, represents a specific replenishment or sustainment effort for a particular component within a larger ISR architecture. Without prior awards for these exact spares, it's difficult to establish a trend, but the need for such systems implies recurring sustainment costs.

What is Lockheed Martin Corporation's track record with similar sensor systems?

Lockheed Martin Corporation has a significant and extensive track record in developing, manufacturing, and supporting advanced sensor systems and integrated platforms for military and intelligence applications. They are a major player in the aerospace and defense industry, known for producing a wide range of ISR assets, including radar systems, electro-optical/infrared (EO/IR) sensors, and communication systems. Their involvement in programs like the F-35 fighter jet, various satellite systems, and numerous classified projects demonstrates a deep capability in complex sensor technology. Therefore, their ability to supply spares for the MX-20 LITE sensor system is consistent with their established expertise and market position.

How does the per-unit cost of these spares compare to market rates for similar defense electronics?

Determining the precise per-unit cost and comparing it to market rates is difficult for this specific contract due to its sole-source nature and the proprietary classification of the MX-20 LITE sensor spares. The total award of $47,032,288 for 22 sensor spares and 24 site spares implies a significant cost per item. However, without competitive bids or publicly available pricing data for comparable military-grade sensor components, a direct market benchmark is not feasible. Sole-source procurements often do not reflect competitive market pricing, and specialized defense electronics can command premium prices due to R&D investment, stringent quality requirements, and limited production runs.

What are the primary risks associated with this sole-source contract?

The primary risks associated with this sole-source contract include potential cost overruns if the negotiated price is not truly representative of fair market value, and a lack of incentive for the contractor to innovate or improve efficiency due to the absence of competition. There is also a risk of supply chain disruption if Lockheed Martin faces production issues, as there are no immediate alternative suppliers. Furthermore, the government's long-term reliance on a single source for critical spares could lead to vendor lock-in and reduced negotiating leverage in future procurements.

What is the strategic importance of the MX-20 LITE sensor system to ongoing military operations?

The MX-20 LITE sensor system is strategically important as it is part of the Persistent Threat Detection Systems (PTDS) used in support of Operation Enduring Freedom. These systems are crucial for providing real-time intelligence, surveillance, and reconnaissance (ISR) capabilities, enabling commanders to monitor areas of interest, detect potential threats, and enhance situational awareness. The ability to detect and track adversaries, identify improvised explosive devices (IEDs), and provide overwatch is vital for force protection and mission success in complex operational environments. Ensuring the availability of spares for these systems is critical for maintaining their operational readiness and effectiveness.

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 MASSILLIN RD, AKRON, OH, 13

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

Financial Breakdown

Contract Ceiling: $47,032,288

Exercised Options: $47,032,288

Current Obligation: $47,032,288

Contract Characteristics

Cost or Pricing Data: YES

Timeline