DoD awards $47.9M undefinitized contract to Lockheed Martin for AH-64 sensor support

Contract Overview

Contract Amount: $47,886,624 ($47.9M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2013-03-01

End Date: 2018-06-30

Contract Duration: 1,947 days

Daily Burn Rate: $24.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THE PURPOSE OF THIS LETTER CONTRACT IS TO ISSUE AN UNDEFINITIZED CONTRACTUAL ACTION FOR ARIZONA SUPPORT CENTER RESET SERVICES FOR THE AH-64 MODERNIZED TARGET ACQUISITION DESIGNATION SIGHT/PILOT NIGHT VISION SENSOR.

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $47.9 million to LOCKHEED MARTIN CORPORATION for work described as: THE PURPOSE OF THIS LETTER CONTRACT IS TO ISSUE AN UNDEFINITIZED CONTRACTUAL ACTION FOR ARIZONA SUPPORT CENTER RESET SERVICES FOR THE AH-64 MODERNIZED TARGET ACQUISITION DESIGNATION SIGHT/PILOT NIGHT VISION SENSOR. Key points: 1. Contract awarded for critical AH-64 Apache helicopter sensor system modernization. 2. Significant duration of over 5 years suggests long-term support needs. 3. Sole-source award raises questions about price competition and value. 4. Contractor has extensive experience in aircraft manufacturing and defense systems. 5. Geographic location of service delivery in Florida may impact local economies. 6. Firms Fixed Price contract type aims to control costs, but initial award was undefinitized.

Value Assessment

Rating: questionable

The contract value of $47.9 million for AH-64 sensor support over nearly five years appears substantial. However, without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The undefinitized nature of the initial award also introduces risk, as final terms and pricing were not established upfront. Further analysis would be needed to determine if the final negotiated price represents good value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder was solicited. This approach is typically used when a specific contractor possesses unique capabilities or when urgency dictates. The lack of competition means that the government did not benefit from a range of proposals or price negotiations that could have potentially driven down costs. This limits the government's ability to ensure it is receiving the best possible price.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing offers, there is less incentive for the contractor to offer the lowest possible price.

Public Impact

The U.S. Army benefits from continued support and modernization of its AH-64 Apache helicopter fleet. This contract ensures the operational readiness of a key component of the Army's attack helicopter capabilities. Services are to be performed in Florida, potentially impacting the local aerospace and defense workforce. The AH-64 Apache is a critical asset for national defense, and its targeting systems are vital for mission success.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Undefinitized contractual action (UCA) carries inherent risk until definitization, potentially leading to cost overruns.
Long contract duration without initial competition may obscure true market value.
Lack of transparency in the initial award process hinders public scrutiny.

Positive Signals

Contractor, Lockheed Martin, is a major defense contractor with extensive experience in aerospace and defense.
Firm Fixed Price contract type, once definitized, provides cost certainty.
Focus on modernizing critical targeting systems for a key military platform (AH-64 Apache).

Sector Analysis

The aerospace and defense sector is characterized by high R&D costs, complex supply chains, and significant government procurement. This contract falls within the aircraft manufacturing sub-sector, specifically supporting a major military platform. Spending in this area is driven by defense modernization needs and the lifecycle support of existing fleets. Comparable spending benchmarks would typically involve other sustainment and modernization contracts for similar rotary-wing aircraft.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, Lockheed Martin, is a large defense corporation. While large prime contractors often have subcontracting plans that include small businesses, the direct award to a large entity suggests limited direct opportunities for small businesses on this specific contract. The impact on the small business ecosystem would depend on the extent to which Lockheed Martin utilizes small business subcontractors for specialized services or components.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army and the Department of Defense. As an undefinitized contractual action initially, it would require close monitoring during the definitization process to ensure fair and reasonable pricing. Subsequent oversight would focus on performance against the contract terms. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

AH-64 Apache Helicopter Program
Aircraft Component Manufacturing
Defense Logistics and Sustainment
Targeting and Navigation Systems

Risk Flags

Sole-source award
Undefinitized Contractual Action (UCA)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.9 million to LOCKHEED MARTIN CORPORATION. THE PURPOSE OF THIS LETTER CONTRACT IS TO ISSUE AN UNDEFINITIZED CONTRACTUAL ACTION FOR ARIZONA SUPPORT CENTER RESET SERVICES FOR THE AH-64 MODERNIZED TARGET ACQUISITION DESIGNATION SIGHT/PILOT NIGHT VISION SENSOR.

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 $47.9 million.

What is the period of performance?

Start: 2013-03-01. End: 2018-06-30.

What is the track record of Lockheed Martin Corporation in delivering similar support services for military aircraft?

Lockheed Martin Corporation is a global leader in the aerospace, defense, and security industries, with a long and extensive track record of supporting complex military aircraft programs. They are a primary contractor for numerous U.S. military platforms, including the F-35 fighter jet, the C-130 transport aircraft, and various helicopter programs. Their experience encompasses not only manufacturing but also sustainment, upgrades, and modernization of avionics, weapons systems, and airframes. For the AH-64 Apache program specifically, Lockheed Martin has been involved in its development and upgrades, including the Modernized Target Acquisition Designation Sight/Pilot Night Vision (M-TADS/PNVS) system, which this contract addresses. Their history suggests a strong capability to deliver on such requirements, though the scale and specifics of past performance on similar undefinitized contracts would require deeper investigation.

How does the awarded value compare to similar contracts for AH-64 support or modernization?

Directly comparing the $47.9 million awarded value for this undefinitized contract is challenging without knowing the final definitized price and the specific scope of work. However, the AH-64 Apache program involves significant sustainment and modernization efforts. Contracts for similar upgrades, such as avionics modernization or component overhauls for attack helicopters, can range from tens to hundreds of millions of dollars, depending on the system's complexity, the number of aircraft affected, and the duration of the support period. Given that this contract covers modernization and support for a critical targeting system over nearly five years, the value appears within a plausible range for such specialized defense work, especially considering the sole-source nature which typically bypasses the cost-saving pressures of competition.

What are the primary risks associated with an undefinitized contractual action (UCA)?

An Undefinitized Contractual Action (UCA) is a contract where the contractor begins work before a final agreement on all contract terms, including price and delivery schedules, is reached. The primary risks associated with a UCA include: 1. **Cost Overruns:** The government may end up paying more than anticipated if the final negotiated price is higher than the initial estimate. 2. **Lack of Price Competition:** Since work begins before full definitization, the government's leverage to negotiate a competitive price is diminished. 3. **Schedule Delays:** Disputes during definitization can lead to delays in the overall project timeline. 4. **Scope Creep:** Without clearly defined terms upfront, there's a risk of the scope expanding beyond the original intent. 5. **Contract Disputes:** Disagreements over terms can lead to formal disputes, impacting contractor performance and government oversight. For this specific contract, the risk is that the final negotiated price for the AH-64 sensor support may exceed what would have been achieved through a fully competed, definitized contract.

What is the expected program effectiveness or impact of this contract on AH-64 Apache operations?

This contract is intended to provide essential support services for the modernization of the Target Acquisition Designation Sight/Pilot Night Vision (TADS/PNVS) system on the AH-64 Apache helicopter. The TADS/PNVS is a critical component that enables pilots to identify targets, navigate, and engage threats in various conditions, including day, night, and adverse weather. By ensuring the continued modernization and support of this system, the contract directly contributes to the operational effectiveness and readiness of the AH-64 fleet. Improved targeting capabilities enhance the aircraft's lethality and survivability, allowing Apache crews to perform their missions more successfully. This modernization is crucial for maintaining the Apache's role as a premier attack helicopter in the U.S. Army's arsenal.

How has federal spending on AH-64 Apache sustainment and modernization evolved over the past five years?

Federal spending on AH-64 Apache sustainment and modernization has been a consistent and significant part of the Department of the Army's budget. Over the past five years, there has been a continuous focus on upgrading the fleet to maintain its combat effectiveness against evolving threats. This includes investments in various modernization programs, such as the AH-64E Apache Guardian upgrade, which incorporates enhanced sensors, engines, and digital connectivity. Spending also covers routine maintenance, component repairs, spare parts, and upgrades to key systems like the M-TADS/PNVS. While specific annual figures fluctuate based on program priorities and budget allocations, the overall trend indicates sustained investment in keeping the Apache fleet technologically relevant and operationally ready. This particular contract, valued at approximately $47.9 million, represents a portion of that ongoing investment in critical system support.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: MAINT/REPAIR SHOP EQPT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W58RGZ12R0143

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 5600 W SAND LAKE RD # MP-265, ORLANDO, FL, 32819

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: $47,903,664

Exercised Options: $47,903,664

Current Obligation: $47,886,624

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $52,000

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline