DoD awards $32.7M to Lockheed Martin for Apache helicopter radar support, raising value-for-money questions

Contract Overview

Contract Amount: $32,721,742 ($32.7M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2020-09-11

End Date: 2025-02-28

Contract Duration: 1,631 days

Daily Burn Rate: $20.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: &#57361 MODERNIZED RADAR FREQUENCY INTERFEROMETER (M-RFI) PRODUCTION, SUSTAINMENT HARDWARE, AND TECHNICAL, LOGISTICAL, TEST AND ENGINEERING SUPPORT ON THE APACHE HELICOPTER.

Place of Performance

Location: OWEGO, TIOGA County, NEW YORK, 13827

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $32.7 million to LOCKHEED MARTIN CORPORATION for work described as: &#57361 MODERNIZED RADAR FREQUENCY INTERFEROMETER (M-RFI) PRODUCTION, SUSTAINMENT HARDWARE, AND TECHNICAL, LOGISTICAL, TEST AND ENGINEERING SUPPORT ON THE APACHE HELICOPTER. Key points: 1. Contract awarded on a sole-source basis, limiting price competition and potentially increasing costs. 2. Long-term sustainment contract raises concerns about potential for cost overruns and vendor lock-in. 3. Fixed-price incentive contract type aims to control costs but requires careful monitoring of performance metrics. 4. Focus on critical hardware and technical support for the Apache helicopter highlights its strategic importance. 5. Contract duration of over 4 years suggests a significant, ongoing need for these services. 6. Lack of competition may hinder innovation and the adoption of more cost-effective solutions.

Value Assessment

Rating: questionable

The contract's value of $32.7 million for radar frequency interferometer support on Apache helicopters warrants scrutiny due to its sole-source nature. Without competitive bidding, it is difficult to benchmark the pricing against market rates or alternative providers. While the fixed-price incentive structure attempts to align contractor and government interests, the absence of competition inherently reduces the government's leverage to secure the best possible value. Further analysis of historical spending on similar sustainment contracts and the specific technical requirements would be needed to provide a more definitive value assessment.

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 proprietary knowledge. The lack of competition means that the government did not benefit from the price discovery mechanisms that typically occur in a competitive bidding process, potentially leading to higher costs than if multiple offers had been considered.

Taxpayer Impact: Taxpayers may be paying a premium for this service due to the absence of competitive pressure to drive down prices. The government's ability to negotiate favorable terms is diminished without alternative sources.

Public Impact

Directly benefits the U.S. Army's aviation fleet by ensuring the operational readiness of Apache helicopters. Provides critical hardware, technical, logistical, and engineering support, maintaining the effectiveness of advanced radar systems. Geographic impact is national, supporting Army aviation units across various installations. Workforce implications include sustaining specialized technical jobs within Lockheed Martin and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential for cost savings.
Long-term sustainment contract could lead to vendor lock-in and reduced flexibility.
Fixed-price incentive contracts can be complex to manage and may still result in cost overruns if not closely monitored.
Lack of transparency in pricing due to non-competitive award.

Positive Signals

Addresses a critical need for sustainment of advanced radar systems on a key military platform.
Fixed-price incentive contract type, if managed well, can incentivize performance and cost control.
Long contract duration indicates a stable, ongoing requirement, providing predictability for sustainment efforts.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft parts and auxiliary equipment manufacturing. The market for military aircraft sustainment is often characterized by long-term relationships between prime contractors and the government, driven by the complexity and specialized nature of the equipment. Spending in this area is substantial, reflecting the ongoing need to maintain the operational readiness of aging and advanced military platforms. Comparable spending benchmarks would typically involve other sustainment contracts for major weapon systems.

Small Business Impact

This contract does not appear to include specific small business set-aside provisions. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely limited unless Lockheed Martin actively engages small business subcontractors for specific components or services. Further investigation into Lockheed Martin's subcontracting plan would be necessary to assess the broader impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily reside within the Department of the Army's contracting and program management offices. Accountability measures are embedded in the fixed-price incentive contract type, which links contractor profit to performance and cost targets. Transparency may be limited due to the sole-source nature of the award, but contract modifications, performance reports, and payment data are typically subject to internal review and potentially Inspector General oversight if specific concerns arise.

Related Government Programs

Apache AH-64 Helicopter Program
Aviation Systems Sustainment
Defense Logistics Agency (DLA) Support Contracts
Military Aircraft Parts Manufacturing

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for cost overruns
Long-term sustainment dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $32.7 million to LOCKHEED MARTIN CORPORATION. &#57361 MODERNIZED RADAR FREQUENCY INTERFEROMETER (M-RFI) PRODUCTION, SUSTAINMENT HARDWARE, AND TECHNICAL, LOGISTICAL, TEST AND ENGINEERING SUPPORT ON THE APACHE HELICOPTER.

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 $32.7 million.

What is the period of performance?

Start: 2020-09-11. End: 2025-02-28.

What is Lockheed Martin's track record with similar sustainment contracts for military aircraft?

Lockheed Martin has an extensive history of providing sustainment, logistics, and technical support for various military aircraft platforms, including the F-35, C-130, and previously the F-16. Their experience with the Apache program itself, given its long operational history, suggests a deep understanding of the platform's sustainment needs. However, the track record for specific contracts can vary, with some facing scrutiny over cost growth or performance issues, while others are considered successful. Analyzing past performance metrics, contract modifications, and any associated audits or reviews for similar Lockheed Martin sustainment contracts would provide a more nuanced view of their reliability and efficiency in managing such complex agreements.

How does the pricing of this contract compare to similar radar sustainment efforts for other military aircraft?

Directly comparing the pricing of this $32.7 million contract for Apache M-RFI sustainment to similar efforts is challenging without access to detailed cost breakdowns and market intelligence. The sole-source nature of this award further complicates benchmarking, as competitive bids typically establish a clearer market price. However, general industry knowledge suggests that sustainment contracts for complex avionics systems, especially those involving proprietary technology and long-term support, can represent a significant portion of the total system cost over its lifecycle. Factors such as the number of aircraft supported, the scope of services (hardware, software, logistics, engineering), and the specific technological advancements of the radar system would influence per-unit or total contract costs. A comparative analysis would ideally look at contracts for radar or electronic warfare system sustainment on platforms like the F/A-18, F-15, or other rotary-wing aircraft, adjusting for differences in system complexity and contract duration.

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

The primary risks associated with a sole-source award for critical defense hardware sustainment include inflated pricing due to lack of competition, potential for vendor lock-in where the government becomes overly reliant on a single provider, and reduced incentives for the contractor to innovate or improve efficiency. Without competitive pressure, the contractor may have less motivation to reduce costs or enhance service delivery. Furthermore, if the sole-source provider experiences financial difficulties or strategic shifts, it could jeopardize the continuity of essential support for the warfighter. There's also a risk that the government may not be aware of or able to access more cost-effective or technologically superior alternatives that might exist in the market.

How effective is the fixed-price incentive (FPI) contract type in controlling costs for long-term sustainment?

The Fixed-Price Incentive (FPI) contract type aims to control costs by establishing target costs, target profits, and price ceilings, with the final price and profit adjusted based on actual costs incurred. This structure incentivizes the contractor to manage costs effectively to achieve a higher profit margin, while the price ceiling protects the government from excessive expenditures. For long-term sustainment, FPI can be effective if the performance metrics and cost drivers are well-defined and measurable. However, its effectiveness hinges on robust government oversight to ensure accurate cost reporting and performance evaluation. If targets are set too high or too low, or if scope creep occurs without proper adjustments, the FPI contract may not yield the intended cost savings and could still lead to cost overruns or disputes.

What is the historical spending trend for Apache helicopter radar sustainment, and how does this contract fit?

Historical spending on Apache helicopter radar sustainment has been substantial, reflecting the platform's long service life and the complexity of its avionics. The M-RFI program represents a modernization and sustainment effort for a critical component. Over the years, the Army has awarded numerous contracts for various aspects of Apache sustainment, including airframe, engines, weapons systems, and avionics. This $32.7 million contract, spanning from September 2020 to February 2025, is a significant, albeit not the sole, component of the overall sustainment budget for the Apache's radar systems during this period. Analyzing historical spending patterns would reveal trends in modernization investments versus routine maintenance and support, and how funding has shifted across different Apache variants and subsystems over time.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 1801 STATE RT 17 C, OWEGO, NY, 13827

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: $32,721,742

Exercised Options: $32,721,742

Current Obligation: $32,721,742

Subaward Activity

Number of Subawards: 60

Total Subaward Amount: $11,633,373

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W52P1J18D0061

IDV Type: IDC

Timeline