DoD awards $114.5M for radar support, with Lockheed Martin as sole contractor

Contract Overview

Contract Amount: $114,514,169 ($114.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2022-03-31

End Date: 2027-01-24

Contract Duration: 1,760 days

Daily Burn Rate: $65.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MDE IV SUPPORT FOR Q-53 RADARS

Place of Performance

Location: LIVERPOOL, ONONDAGA County, NEW YORK, 13088

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $114.5 million to LOCKHEED MARTIN CORPORATION for work described as: MDE IV SUPPORT FOR Q-53 RADARS Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Significant duration of over 4 years suggests a long-term need. 3. Cost-plus-fixed-fee structure may incentivize cost increases. 4. No small business set-aside indicates potential exclusion of smaller firms. 5. Contractor has a strong track record in defense systems. 6. Geographic location in New York may impact local economic benefits.

Value Assessment

Rating: fair

The contract's value of $114.5 million over approximately 4.7 years requires careful benchmarking against similar sole-source procurements for radar support. Without competitive bids, it's challenging to definitively assess if the pricing represents optimal value for the government. The cost-plus-fixed-fee (CPFF) contract type, while allowing flexibility, can sometimes lead to higher overall costs compared to fixed-price contracts if not managed rigorously. Further analysis of the fixed fee and estimated costs is needed to benchmark against industry standards for similar services.

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 among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or security clearances. The lack of competition means the government did not benefit from a bidding process that could drive down prices through market forces. While justified for specialized needs, sole-source awards warrant scrutiny to ensure fair pricing and prevent potential overspending.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive bidding. Without multiple offers, the government has less leverage to negotiate the lowest possible price, potentially leading to less efficient use of public funds.

Public Impact

The Department of the Army benefits from continued support for Q-53 radars. This contract ensures the operational readiness of critical radar systems. The primary beneficiary is the U.S. military's intelligence, surveillance, and reconnaissance capabilities. Work is anticipated to be performed in New York, potentially impacting the local workforce and economy.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus-fixed-fee structure may not be the most cost-efficient for taxpayers.
Lack of small business participation could limit broader economic impact.

Positive Signals

Contract awarded to a major defense contractor with established expertise.
Long-term contract duration suggests a stable and predictable support arrangement.
Focus on critical radar systems supports national security objectives.

Sector Analysis

The defense sector, particularly systems manufacturing and support, is characterized by high barriers to entry due to specialized technology, security requirements, and extensive R&D investment. This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' industry. Spending in this area is often driven by national security imperatives and technological advancements. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of radar systems and sole-source awards, but significant investments are typical for advanced defense platforms.

Small Business Impact

This contract does not appear to include a small business set-aside. The award to Lockheed Martin Corporation, a large prime contractor, suggests that subcontracting opportunities may arise for small businesses. However, the absence of a specific set-aside means that small businesses are not guaranteed a portion of the prime contract value. The extent of small business involvement will depend on Lockheed Martin's subcontracting plan and the availability of qualified small businesses for specific components or services.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Army contracting officers and program managers. The Cost-Plus-Fixed-Fee (CPFF) structure necessitates robust oversight to monitor costs, ensure efficiency, and verify that the fixed fee is earned appropriately. Transparency may be limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected or reported.

Related Government Programs

DoD Radar Systems Procurement
Defense Intelligence, Surveillance, and Reconnaissance (ISR) Programs
Lockheed Martin Defense Contracts
Army Aviation and Missile Command Contracts

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of small business set-aside

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $114.5 million to LOCKHEED MARTIN CORPORATION. MDE IV SUPPORT FOR Q-53 RADARS

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 $114.5 million.

What is the period of performance?

Start: 2022-03-31. End: 2027-01-24.

What is Lockheed Martin Corporation's track record with similar sole-source radar support contracts for the Department of Defense?

Lockheed Martin Corporation is a major defense contractor with extensive experience in developing, manufacturing, and supporting complex radar systems for various branches of the U.S. military. Their track record with sole-source contracts, particularly for specialized systems like the Q-53 radar, is generally characterized by long-standing relationships and a deep understanding of the technology and operational requirements. While specific data on past sole-source radar support contracts is often proprietary, Lockheed Martin has consistently been awarded significant sole-source or limited-competition contracts for sustainment and upgrades of critical defense platforms due to their unique capabilities and established position in the defense industrial base. This history suggests a pattern of reliance on their expertise for such specialized needs, though it also underscores the ongoing challenge of ensuring competitive pricing in these scenarios.

How does the $114.5 million contract value compare to other radar support contracts awarded by the Department of the Army?

Comparing the $114.5 million contract value requires context regarding the specific type of radar system, its complexity, the duration of support, and the competitive landscape. The Q-53 radar is a significant asset, and its support likely involves sophisticated technical services, maintenance, and potentially upgrades. While $114.5 million over approximately 4.7 years is a substantial sum, it may be within the expected range for sole-source sustainment of advanced military hardware. However, without direct comparisons to competitively bid contracts for similar radar systems or detailed breakdowns of the services included, it's difficult to definitively benchmark this value. Sole-source awards, by their nature, often appear higher than what might be achieved through open competition, making direct value-for-money assessments challenging without further detailed analysis of the contract's cost components and the specific services rendered.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract for radar support?

The primary risks associated with this contract structure are twofold. Firstly, the sole-source nature eliminates competitive pressure, which can lead to less favorable pricing for the government. Without competing bids, there's a reduced incentive for the contractor to offer the lowest possible price. Secondly, the cost-plus-fixed-fee (CPFF) structure, while providing flexibility for evolving requirements, carries inherent risks. The 'cost-plus' component means the government reimburses the contractor for allowable costs, and the 'fixed-fee' is the profit. This can incentivize the contractor to incur higher costs to increase the base upon which the fee is calculated, potentially leading to cost overruns if not meticulously monitored. Effective oversight, stringent cost controls, and clear performance metrics are crucial to mitigate these risks and ensure the government receives good value.

What is the historical spending pattern for Q-53 radar support or similar systems by the Department of the Army?

Historical spending patterns for Q-53 radar support, or similar advanced radar systems, by the Department of the Army are typically characterized by significant, long-term investments. These systems are critical for national defense and require continuous maintenance, upgrades, and operational support throughout their lifecycle. Spending often occurs through a combination of initial procurement contracts, sustainment contracts (like this one), and specific upgrade or modernization efforts. Sole-source or limited-competition awards are common for sustainment due to the specialized knowledge and proprietary nature of the technology. Analyzing historical data would likely reveal consistent, substantial annual expenditures dedicated to ensuring the readiness and effectiveness of these vital assets, reflecting the high cost of maintaining cutting-edge military technology.

How does the geographic location (New York) potentially impact the contract's execution and oversight?

The geographic location of contract performance in New York (ST: NY) can have several implications. For oversight, it means that the contracting officer's representatives (CORs) and potentially government quality assurance personnel will be located in or near New York. This proximity can facilitate more direct and frequent oversight of contractor performance, site visits, and issue resolution. From an execution standpoint, it may leverage existing infrastructure and a skilled workforce in the region familiar with defense contracting or advanced manufacturing. However, it could also mean higher labor costs compared to other regions, potentially impacting the overall cost of the contract. Furthermore, depending on the specific facility, there might be state-specific regulations or economic factors to consider during contract management.

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

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 497 ELECTRONICS PKWY BLDG 5, LIVERPOOL, NY, 13088

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: $114,514,169

Exercised Options: $114,514,169

Current Obligation: $114,514,169

Subaward Activity

Number of Subawards: 41

Total Subaward Amount: $7,470,250

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56KGY22D0001

IDV Type: IDC

Timeline