Lockheed Martin awarded $11M for Apache helicopter sensor support, a sole-source contract

Contract Overview

Contract Amount: $11,028,128 ($11.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2021-12-16

End Date: 2027-05-31

Contract Duration: 1,992 days

Daily Burn Rate: $5.5K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: POST PRODUCTION SUPPORT SERVICES (PPSS)TO SUPPORT THE SUSTAINMENT PROGRAM FOR THE EGYPTIAN AIR FORCE AH-64 APACHE MODERNIZED TARGET ACQUISITION DESIGNATION SIGHT/PILOT NIGHT VISION SENSOR (M-TADS/PNVS) SYSTEMS.

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $11.0 million to LOCKHEED MARTIN CORPORATION for work described as: POST PRODUCTION SUPPORT SERVICES (PPSS)TO SUPPORT THE SUSTAINMENT PROGRAM FOR THE EGYPTIAN AIR FORCE AH-64 APACHE MODERNIZED TARGET ACQUISITION DESIGNATION SIGHT/PILOT NIGHT VISION SENSOR (M-TADS/PNVS) SYSTEMS. Key points: 1. Contract awarded to a single vendor, raising questions about competitive pricing. 2. Focus on sustainment and support for critical defense technology. 3. Long contract duration suggests a need for ongoing specialized expertise. 4. Geographic concentration in Florida for service delivery. 5. Firm Fixed Price contract type aims to control costs, but competition is absent. 6. No small business set-aside indicates potential exclusion of smaller firms.

Value Assessment

Rating: questionable

The contract value of $11.03 million for post-production support services for the AH-64 Apache M-TADS/PNVS systems is difficult to benchmark without comparable sole-source contracts. Given the lack of competition, it is challenging to assess if the pricing represents fair market value. The firm fixed-price structure is a positive indicator for cost control, but the absence of competitive bidding limits the ability to determine optimal value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Lockheed Martin Corporation. The absence of a competitive process means there were no other bidders, and the government did not solicit proposals from multiple vendors. This approach is typically used when a specific vendor possesses unique capabilities or intellectual property essential for the service.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. The lack of transparency in the bidding process makes it harder to ensure the best possible deal is secured.

Public Impact

The Egyptian Air Force benefits from continued operational readiness of its Apache helicopter sensor systems. Services provided ensure the sustainment and modernization of critical defense technology. The contract has a geographic impact primarily in Florida, where the services will be performed. This contract supports specialized engineering and technical roles within Lockheed Martin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in inflated costs for taxpayers.
Sole-source nature limits opportunities for other qualified businesses to compete.
Long-term reliance on a single contractor could reduce flexibility and innovation.

Positive Signals

Firm Fixed Price contract type provides cost certainty.
Focus on sustainment ensures continued operational capability of essential defense assets.
Contract awarded to a known entity with presumed expertise in the specific system.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on the sustainment and support of advanced avionics and sensor systems for military aircraft. The market for such specialized support is often dominated by original equipment manufacturers due to proprietary knowledge and complex integration requirements. Comparable spending benchmarks are difficult to establish for sole-source sustainment contracts, but the overall defense electronics market is substantial.

Small Business Impact

The contract was not competed and did not include a small business set-aside. This means that opportunities for small businesses to participate in this specific contract, either as prime contractors or through subcontracting, were not explicitly prioritized or mandated. The absence of set-asides suggests that the primary contractor, Lockheed Martin, will likely manage the entire scope of work, potentially limiting subcontracting avenues for small businesses in this instance.

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 within the agreed-upon price. Transparency is limited due to the sole-source nature of the award, but contract performance data and financial expenditures would likely be subject to internal government review and potentially Inspector General audits if performance issues arise.

Related Government Programs

Apache Helicopter Modernization Programs
Foreign Military Sales Support Contracts
Defense Avionics and Sensor Sustainment
Aerospace Engineering Services

Risk Flags

Sole-source award lacks competitive pricing pressure.
Potential for cost overruns not fully mitigated by FFP in a non-competitive environment.
Limited transparency in contract negotiation and pricing.
No small business participation opportunities explicitly included.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.0 million to LOCKHEED MARTIN CORPORATION. POST PRODUCTION SUPPORT SERVICES (PPSS)TO SUPPORT THE SUSTAINMENT PROGRAM FOR THE EGYPTIAN AIR FORCE AH-64 APACHE MODERNIZED TARGET ACQUISITION DESIGNATION SIGHT/PILOT NIGHT VISION SENSOR (M-TADS/PNVS) SYSTEMS.

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 $11.0 million.

What is the period of performance?

Start: 2021-12-16. End: 2027-05-31.

What is Lockheed Martin's track record with supporting the AH-64 Apache M-TADS/PNVS systems?

Lockheed Martin Corporation is the original equipment manufacturer (OEM) for the M-TADS/PNVS system, also known as the 'Arrowhead' system, for the AH-64 Apache helicopter. As the OEM, they possess the inherent design, manufacturing, and sustainment knowledge for this complex technology. Their track record is intrinsically linked to the development and ongoing support of this critical sensor suite. Given the sole-source nature of this contract, the government is relying on Lockheed Martin's established expertise and historical performance in maintaining and supporting these systems to ensure the operational readiness of the Egyptian Air Force's Apache fleet.

How does the $11.03 million contract value compare to similar sustainment contracts for advanced military sensor systems?

Direct comparison of this $11.03 million contract value to similar sustainment contracts is challenging due to its sole-source nature and specific application to the AH-64 Apache M-TADS/PNVS systems for a foreign military sale. Sustainment contracts for complex defense systems can vary significantly based on the technology's age, criticality, required support levels (e.g., depot maintenance, field support, spare parts), and the number of systems in operation. Sole-source contracts, by definition, lack competitive benchmarking, making it difficult to ascertain if the price is optimal. However, the value appears to be for a defined period (December 2021 to May 2027), suggesting an annual expenditure of approximately $2.2 million, which is not inherently excessive for specialized defense sustainment but warrants scrutiny due to the lack of competition.

What are the primary risks associated with this sole-source contract?

The primary risk associated with this sole-source contract is the potential for inflated costs due to the absence of competitive bidding. Without competing offers, there is less pressure on the contractor to offer the most cost-effective solution. Another risk is vendor lock-in, where the government becomes overly reliant on a single provider, potentially limiting future flexibility or the ability to transition to alternative solutions. Performance risk also exists, although mitigated by the contractor's OEM status; any degradation in support quality could impact the operational readiness of the Egyptian Air Force's Apache fleet. Finally, there's a risk of reduced transparency in pricing and service delivery compared to a competed contract.

How effective is the firm fixed-price (FFP) contract type in managing costs for this type of service?

The Firm Fixed Price (FFP) contract type is generally considered effective for managing costs when the scope of work is well-defined and the risks of performance are relatively low or can be reasonably estimated. For post-production support services like this, FFP provides cost certainty to the government, as the contractor assumes the risk of cost overruns. This structure incentivizes the contractor to perform efficiently to maximize profit. However, the effectiveness of FFP in this sole-source scenario is somewhat diminished because the baseline price is not established through competition. While it controls costs against the agreed-upon price, it doesn't guarantee that the agreed-upon price represents the best possible value achievable through market forces.

What are the historical spending patterns for AH-64 Apache M-TADS/PNVS system support, and how does this contract fit?

Historical spending data specifically for the AH-64 Apache M-TADS/PNVS system support, particularly for foreign military sales like Egypt's, is not publicly detailed in a way that allows for direct comparison with this $11.03 million contract. However, sustainment and modernization of major defense platforms like the Apache are typically long-term, multi-year endeavors involving significant investment. This contract, spanning from late 2021 to mid-2027, represents a continuation of support for an established, critical system. It aligns with the general pattern of ongoing investment required to maintain the operational readiness and technological relevance of advanced military hardware throughout its lifecycle. The sole-source nature suggests this is likely a continuation of support previously provided by Lockheed Martin.

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: $11,028,128

Exercised Options: $11,028,128

Current Obligation: $11,028,128

Subaward Activity

Number of Subawards: 7

Total Subaward Amount: $239,170

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