DoD awards $19.7M for Apache helicopter sight support, raising questions on competition and value

Contract Overview

Contract Amount: $19,710,277 ($19.7M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2020-04-01

End Date: 2027-03-31

Contract Duration: 2,555 days

Daily Burn Rate: $7.7K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: UNITED KINGDOM POST PRODUCTION SUPPORT SERVICES(PPSS) FOR THE MODERNIZED TARGET ACQUISITION DESIGNATION SIGHT/PILOT NIGHT VISION SENSOR (M-TADS/PNVS) SYSTEMS, FOR THE APACHE ATTACK HELICOPTER (AH-64D/E)

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $19.7 million to LOCKHEED MARTIN CORPORATION for work described as: UNITED KINGDOM POST PRODUCTION SUPPORT SERVICES(PPSS) FOR THE MODERNIZED TARGET ACQUISITION DESIGNATION SIGHT/PILOT NIGHT VISION SENSOR (M-TADS/PNVS) SYSTEMS, FOR THE APACHE ATTACK HELICOPTER (AH-64D/E) Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Limited competition raises concerns about achieving best value for taxpayer funds. 3. Long-term contract duration (2020-2027) requires ongoing scrutiny for performance and cost-effectiveness. 4. Focus on specialized engineering services for critical defense systems highlights the need for reliable support. 5. Contract value is moderate within the broader defense procurement landscape. 6. Lack of small business participation noted, with no set-aside provisions. 7. Geographic concentration in Florida for contract performance.

Value Assessment

Rating: fair

The contract's value of $19.7 million for post-production support services for the M-TADS/PNVS system is difficult to benchmark without comparable sole-source awards. Given the lack of competition, it is challenging to definitively assess if the pricing represents fair market value. The fixed-price nature provides some cost certainty, but the absence of competitive pressure means the government may not be realizing the lowest possible price. Further analysis of historical pricing for similar support services would be beneficial.

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 unique capability or proprietary technology is involved, or when there is an urgent need that cannot be met through competition. The lack of multiple bidders means there was no competitive pressure to drive down prices or encourage innovative solutions. This limits the government's ability to ensure it is obtaining the best possible value.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive bidding process to ensure the lowest price. This contract's value could be higher than if it had been competed.

Public Impact

The U.S. Army benefits from continued operational readiness of the Apache attack helicopter fleet. Specialized engineering and post-production support services ensure the functionality of critical targeting systems. The primary geographic impact is in Florida, where the contractor is located. The contract supports specialized technical roles within the defense industry, potentially sustaining a skilled workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and value for money.
Lack of transparency in pricing due to no competitive bidding.
Long-term contract duration may not adapt to evolving technological needs or cost efficiencies.
No small business participation, missing opportunities for economic inclusion.

Positive Signals

Contract ensures continued support for a critical defense system, maintaining operational readiness.
Firm fixed-price contract provides cost certainty for the government.
Contractor is a known entity with established expertise in the system.
Long duration allows for stable planning and execution of support services.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting defense aerospace systems. The market for specialized post-production support for complex military platforms like the Apache helicopter is often dominated by original equipment manufacturers or highly specialized firms due to proprietary technology and extensive knowledge requirements. Comparable spending benchmarks are difficult to establish for sole-source contracts, but the overall defense engineering services market is substantial, with significant government investment in maintaining and upgrading its fleet.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses. This represents a missed opportunity to engage the small business industrial base in supporting critical defense systems. The absence of small business participation means that the economic benefits of this contract are not being distributed to smaller enterprises within the defense sector.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver specified services at an agreed-upon price. 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

Apache Attack Helicopter Program
M-TADS/PNVS Systems Support
Department of Defense Engineering Services
Aerospace Defense Procurement

Risk Flags

Sole-source award raises concerns about fair pricing and value for money.
Lack of competition limits transparency and potential for cost savings.
Long contract duration requires ongoing monitoring for performance and cost efficiency.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.7 million to LOCKHEED MARTIN CORPORATION. UNITED KINGDOM POST PRODUCTION SUPPORT SERVICES(PPSS) FOR THE MODERNIZED TARGET ACQUISITION DESIGNATION SIGHT/PILOT NIGHT VISION SENSOR (M-TADS/PNVS) SYSTEMS, FOR THE APACHE ATTACK HELICOPTER (AH-64D/E)

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 $19.7 million.

What is the period of performance?

Start: 2020-04-01. End: 2027-03-31.

What is Lockheed Martin Corporation's track record with providing post-production support for the M-TADS/PNVS system?

Lockheed Martin Corporation, as the prime contractor for the M-TADS/PNVS system, possesses the inherent knowledge and technical data required for its post-production support. Their track record is intrinsically linked to the development and sustainment of the system itself. While specific performance metrics for this particular contract (2020-2027) are not publicly detailed, the company's long-standing involvement with the Apache program suggests a deep understanding of the system's complexities and support needs. The government relies on this established relationship and expertise, which is a key justification for sole-source awards in specialized defense areas. However, without competitive benchmarks, assessing the efficiency and effectiveness of their support solely relies on internal government evaluations and performance reviews.

How does the $19.7 million contract value compare to similar support contracts for advanced targeting systems?

Direct comparison of the $19.7 million contract value for post-production support of the M-TADS/PNVS system is challenging due to its sole-source nature and the specific technological niche it serves. Typically, competitive solicitations for similar advanced targeting system support would yield a range of pricing, allowing for robust benchmarking. However, sole-source awards, by definition, lack this competitive data. To assess value, one would need to compare this contract's unit costs or overall price against historical sole-source awards for comparable systems, or against internal cost estimates developed by the Department of Defense. Without such specific comparative data, it's difficult to definitively state whether $19.7 million represents a fair market price or if it is inflated due to the lack of competition.

What are the primary risks associated with a sole-source award for critical defense system support?

The primary risks associated with a sole-source award for critical defense system support, such as the M-TADS/PNVS, revolve around cost and innovation. Without competition, there is a reduced incentive for the sole contractor to offer the most competitive pricing, potentially leading to higher costs for taxpayers. Price discovery is limited, making it harder for the government to ensure it is receiving the best value. Furthermore, the absence of multiple bidders can stifle innovation, as there is less pressure to develop more efficient or advanced support methodologies. There's also a risk of vendor lock-in, where the government becomes overly reliant on a single provider, potentially limiting future flexibility and negotiation power. Finally, sole-source awards can sometimes face public scrutiny regarding the justification for not competing the requirement.

How effective is the firm fixed-price contract type in managing costs for this type of specialized engineering service?

The firm fixed-price (FFP) contract type is generally considered effective in managing costs for specialized engineering services like post-production support for the M-TADS/PNVS system, especially when the scope of work is well-defined. Under an FFP contract, the contractor assumes the majority of the risk for cost overruns, providing the government with cost certainty. This means the price is set and generally not subject to adjustment unless there are changes to the contract's scope. For specialized services where performance requirements are clear, FFP incentivizes the contractor to control costs efficiently to maximize profit. However, if the scope is not perfectly defined or unforeseen technical challenges arise, the contractor might be less willing to absorb additional costs, potentially leading to disputes or a reluctance to go beyond the minimum requirements, which could impact long-term system sustainment if not managed carefully.

What are the historical spending patterns for M-TADS/PNVS system support by the Department of the Army?

Analyzing historical spending patterns for M-TADS/PNVS system support by the Department of the Army is crucial for understanding the long-term financial commitment to this critical defense capability. While the specific data for this $19.7 million contract spans from 2020 to 2027, previous spending on the M-TADS/PNVS system would likely show significant investment, reflecting its importance to the Apache helicopter's mission effectiveness. Historical data would ideally reveal trends in contract values, the number of contracts awarded, and whether these were competed or sole-sourced. A review of past contracts could indicate if spending has been consistent, increasing, or decreasing, and whether the Army has historically relied on Lockheed Martin for this support. Understanding these patterns provides context for the current award and helps in forecasting future sustainment costs.

What is the justification for awarding this contract to Lockheed Martin Corporation on a sole-source basis?

The justification for awarding this contract to Lockheed Martin Corporation on a sole-source basis likely stems from the proprietary nature of the M-TADS/PNVS system and Lockheed Martin's role as the original equipment manufacturer (OEM). Defense procurement regulations often allow for sole-source awards when only one responsible source can provide the required supplies or services. This is typically due to factors such as unique technical expertise, possession of proprietary data or intellectual property, or the need for compatibility with existing systems that only the OEM can guarantee. For complex, high-technology defense systems like the M-TADS/PNVS, the OEM often holds the exclusive rights to the design, manufacturing data, and specialized tooling necessary for effective post-production support and sustainment. Without this proprietary information, other potential contractors would face prohibitive costs and timelines to develop the necessary capabilities.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

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: $19,710,277

Exercised Options: $19,710,277

Current Obligation: $19,710,277

Subaward Activity

Number of Subawards: 11

Total Subaward Amount: $584,570

Contract Characteristics

Commercial Item: PRODUCTS OR SERVICES PURSUANT TO FAR 12.102(F)

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W52P1J19D0006

IDV Type: IDC

Timeline