DoD awards $223M for 36 MTADS/PNVS and support to Lockheed Martin, with 2 bidders

Contract Overview

Contract Amount: $223,310,000 ($223.3M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2013-07-31

End Date: 2018-07-31

Contract Duration: 1,826 days

Daily Burn Rate: $122.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 36 MTADS/PNVS AND SUPPORT FOR REPUBLIC OF KOREA

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $223.3 million to LOCKHEED MARTIN CORPORATION for work described as: 36 MTADS/PNVS AND SUPPORT FOR REPUBLIC OF KOREA Key points: 1. Contract awarded for advanced aircraft targeting systems, indicating a need for sophisticated defense technology. 2. The firm-fixed-price structure aims to control costs, but potential for cost overruns exists if scope changes. 3. Sole contractor for this specific system suggests potential for vendor lock-in and limited future competition. 4. The contract duration of five years aligns with typical defense procurement cycles for complex systems. 5. Awarded to a major defense contractor, implying a reliance on established industry players for critical equipment. 6. The geographic location of performance in Florida may indicate specialized maintenance or integration facilities.

Value Assessment

Rating: fair

The contract value of $223.3 million for 36 MTADS/PNVS systems and support appears substantial. Benchmarking against similar advanced targeting systems is difficult without more specific technical details and market data. However, the firm-fixed-price contract type suggests an attempt to establish a clear cost ceiling. The absence of detailed cost breakdowns makes a precise value-for-money assessment challenging, but the presence of two bidders indicates some level of market interest and potential for negotiation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with two bids received. While two bidders indicate some level of competition, it is on the lower end for a contract of this magnitude and complexity. This suggests that the market for such specialized defense technology may be limited to a few key players. The limited number of bidders could impact price discovery and potentially lead to higher prices than if a broader range of competitors were involved.

Taxpayer Impact: The limited competition means taxpayers may not be benefiting from the most aggressive pricing possible. While competition was sought, the small number of bids suggests that the government's negotiating leverage might be constrained.

Public Impact

The Republic of Korea military will benefit from enhanced targeting capabilities for its aircraft. The contract delivers advanced electro-optical targeting systems (MTADS/PNVS) crucial for modern aerial warfare. The geographic impact is primarily in Florida, where the contractor is located, likely involving manufacturing and integration. Workforce implications include skilled labor in aerospace manufacturing, engineering, and defense logistics within Florida.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may result in higher per-unit costs for taxpayers.
Reliance on a single primary contractor for specialized systems can create vendor lock-in.
The firm-fixed-price contract, while aiming for cost control, may not fully account for unforeseen technical challenges.
Lack of detailed cost breakdowns hinders a thorough value-for-money assessment.
The specific nature of MTADS/PNVS technology might limit the pool of qualified bidders.

Positive Signals

Awarded under full and open competition, ensuring a broad initial solicitation.
The firm-fixed-price contract provides cost certainty for the government.
The contract duration of five years allows for stable planning and execution.
The systems delivered are critical for enhancing the defense capabilities of a key U.S. ally.
Performance in Florida may leverage existing defense industry infrastructure and expertise.

Sector Analysis

The aerospace and defense sector is characterized by high R&D costs, long product development cycles, and significant government procurement. Contracts for advanced targeting systems like MTADS/PNVS are typical within this sector, often awarded to large, established defense contractors. The market size for such specialized systems is niche, driven by specific military requirements and geopolitical alliances. Comparable spending benchmarks would involve other advanced avionics and targeting pods, which can range from tens to hundreds of millions of dollars depending on system complexity and quantity.

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 entity. There is no explicit information regarding subcontracting plans for small businesses within the provided data. Therefore, the direct impact on the small business ecosystem is likely minimal, although large prime contractors often engage small businesses for component manufacturing or specialized services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense and the Department of the Army, given the awarding agencies. Accountability measures are typically embedded within the contract terms, including performance metrics, delivery schedules, and quality assurance clauses. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Aircraft Components
Avionics Systems
Defense Procurement
Foreign Military Sales
Targeting Pods
Military Aircraft Support Equipment

Risk Flags

Limited competition
Potential vendor lock-in
High-value defense procurement
Specialized technology market

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $223.3 million to LOCKHEED MARTIN CORPORATION. 36 MTADS/PNVS AND SUPPORT FOR REPUBLIC OF KOREA

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 $223.3 million.

What is the period of performance?

Start: 2013-07-31. End: 2018-07-31.

What is the specific technical capability of the MTADS/PNVS system being procured?

The MTADS/PNVS (Modernized Target Acquisition Designation Sight/Pilot Night Vision) system is a sophisticated electro-optical sensor suite designed for attack helicopters and other aircraft. It provides pilots with advanced day and night targeting capabilities, including infrared imaging, laser designation, and rangefinding. These systems are crucial for precision strikes, threat detection, and situational awareness in complex combat environments. The 'modernized' aspect suggests upgrades over previous generations, likely incorporating improved resolution, longer detection ranges, enhanced tracking algorithms, and potentially new sensor modalities. The specific capabilities delivered under this contract would be detailed in the system's technical specifications and performance requirements.

How does the $223.3 million contract value compare to historical spending on similar targeting systems?

Direct comparison of the $223.3 million contract value for 36 MTADS/PNVS systems and support is challenging without granular data on comparable systems and their unit costs. However, advanced targeting pods and sensor suites for military aircraft are typically high-value procurements. For instance, systems like the Sniper Advanced Targeting Pod or the ATFLIR (Advanced Targeting Forward-Looking Infrared) have seen contract values ranging from tens of thousands to over a hundred thousand dollars per unit, depending on the specific model and quantity. Given this contract is for 36 units plus support over five years, the total value suggests a significant investment in advanced, integrated systems, aligning with the high cost associated with cutting-edge defense avionics.

What are the primary risks associated with awarding this contract to Lockheed Martin Corporation?

A primary risk is potential vendor lock-in, as Lockheed Martin is a major defense contractor and likely the sole or primary source for the MTADS/PNVS system's continued development, sustainment, and future upgrades. This can limit future competition and potentially lead to higher long-term costs for the government or the Republic of Korea. Another risk relates to the complexity of the technology; unforeseen technical challenges during integration or sustainment could lead to schedule delays or cost overruns, despite the firm-fixed-price structure. Dependence on a single large contractor also means that any disruptions to Lockheed Martin's operations could impact the delivery of critical defense capabilities.

What is the expected effectiveness of the MTADS/PNVS system in enhancing the Republic of Korea's defense capabilities?

The MTADS/PNVS system is expected to significantly enhance the Republic of Korea's defense capabilities by providing its aircrews with state-of-the-art targeting and night vision technology. This will improve the precision and effectiveness of air-to-ground engagements, reduce collateral damage, and increase survivability through enhanced situational awareness. The ability to operate effectively in day and night conditions, coupled with advanced sensor capabilities, allows for more flexible mission planning and execution. For a nation facing specific regional security challenges, these advanced targeting systems are crucial for maintaining a credible deterrent and responding effectively to threats.

How has spending on aircraft targeting systems evolved over the past decade?

Spending on aircraft targeting systems has seen a consistent upward trend over the past decade, driven by the increasing demand for precision-guided munitions, enhanced situational awareness, and multi-role capabilities in modern air forces. There has been a significant shift towards integrated systems that combine targeting, navigation, and reconnaissance functions, often incorporating advanced electro-optical, infrared, and laser technologies. Investments have also focused on system modernization to counter evolving threats and improve performance in adverse conditions. Furthermore, the rise of networked warfare has increased the demand for systems that can share targeting data rapidly, leading to procurements of advanced communication and data-link enabled targeting pods.

What is the significance of the 'full and open competition' with only two bidders for this contract?

The 'full and open competition' designation means the solicitation was broadly advertised, allowing any responsible source to submit a bid. However, receiving only two bids suggests that the market for this highly specialized technology is concentrated among a few large defense contractors. While competition occurred, the limited number of bidders restricts the potential for robust price discovery and negotiation. This scenario often arises with complex, proprietary, or technologically advanced systems where only a handful of companies possess the necessary expertise, facilities, and security clearances. It implies that the government secured bids from the primary available sources, but the competitive pressure might be less intense than in markets with more participants.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

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: $223,310,000

Exercised Options: $223,310,000

Current Obligation: $223,310,000

Subaward Activity

Number of Subawards: 14

Total Subaward Amount: $18,212,346

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline