DoD awards $35.2M for TADS/PNVS production, a sole-source contract to Lockheed Martin

Contract Overview

Contract Amount: $35,188,196 ($35.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2023-07-14

End Date: 2027-10-30

Contract Duration: 1,569 days

Daily Burn Rate: $22.4K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: TARGET ACQUISITION DESIGNATION SIGHT / PILOT NIGHT VISION SYSTEM (TADS/PNVS) PRODUCTION

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $35.2 million to LOCKHEED MARTIN CORPORATION for work described as: TARGET ACQUISITION DESIGNATION SIGHT / PILOT NIGHT VISION SYSTEM (TADS/PNVS) PRODUCTION Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. The contract type is Cost Plus Fixed Fee, which may incentivize cost overruns. 3. Performance period spans over 3 years, indicating a long-term need. 4. The acquisition is for a critical component of military aircraft. 5. No small business set-aside was utilized for this procurement.

Value Assessment

Rating: questionable

Benchmarking the value of this Cost Plus Fixed Fee contract is challenging due to its sole-source nature. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value. The fixed fee component provides some cost control for the government, but the cost-reimbursement aspect leaves room for potential overspending if not rigorously managed. Further analysis would require access to historical pricing data for similar systems and detailed cost breakdowns from the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This typically occurs when a specific contractor possesses unique capabilities or intellectual property essential for the product. The lack of competition means the government did not benefit from a bidding process that could drive down prices or encourage innovative solutions from multiple vendors. The justification for sole-source procurement would need to be thoroughly reviewed to ensure it was appropriate.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to ensure the lowest possible price. This necessitates strong government oversight to manage costs effectively.

Public Impact

The U.S. Army benefits from the continued production of critical night vision systems. This contract ensures the supply of advanced targeting and navigation equipment for military aircraft. The primary geographic impact is within the United States, supporting defense manufacturing. The contract supports a specialized workforce within Lockheed Martin's defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs.
Cost Plus Fixed Fee contract type carries inherent risks of cost overruns.
Lack of transparency in sole-source justification requires careful review.
Limited visibility into contractor's cost structure without competition.

Positive Signals

Ensures continued availability of critical defense technology.
Long-term contract provides stability for production and supply chain.
Fixed fee component offers some level of cost predictability.

Sector Analysis

The defense sector, particularly aerospace and defense manufacturing, relies on specialized components like the TADS/PNVS. This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' industry. The market for such advanced military systems is often characterized by high barriers to entry, proprietary technology, and significant government investment. Comparable spending benchmarks would typically be found within other sole-source or limited-competition procurements for similar high-tech military hardware.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award to a large prime contractor like Lockheed Martin suggests that the primary focus is on specialized, large-scale production capabilities. This means that opportunities for small businesses to directly participate in this specific contract may be limited, though they could potentially be involved further down the supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army and the Department of Defense. Given the Cost Plus Fixed Fee structure and sole-source nature, rigorous oversight of contractor costs, performance, and adherence to contract terms is crucial. Transparency would be enhanced through regular reporting requirements and potentially audits by the Defense Contract Audit Agency (DCAA). Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Night Vision Systems
Avionics Equipment
Military Aircraft Components
Targeting Systems
Defense Production Contracts

Risk Flags

Sole-source procurement
Cost Plus Fixed Fee contract type
Lack of small business participation noted

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.2 million to LOCKHEED MARTIN CORPORATION. TARGET ACQUISITION DESIGNATION SIGHT / PILOT NIGHT VISION SYSTEM (TADS/PNVS) PRODUCTION

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 $35.2 million.

What is the period of performance?

Start: 2023-07-14. End: 2027-10-30.

What is the historical spending trend for TADS/PNVS production with Lockheed Martin?

Analyzing historical spending for the TADS/PNVS program with Lockheed Martin is crucial for understanding cost trends and value over time. While the current award is $35.2 million, prior contracts for this system would provide context. Without specific historical data, it's difficult to determine if costs have increased, decreased, or remained stable. A comprehensive review would involve examining previous contract values, contract types (e.g., FFP, CPFF), and any modifications or change orders. Understanding these patterns can help identify potential cost efficiencies or areas where spending has escalated, informing future procurement strategies and negotiations.

How does the pricing of this sole-source contract compare to similar systems procured competitively?

Directly comparing the pricing of this sole-source TADS/PNVS contract to competitively procured systems is challenging due to the inherent differences in the procurement process. Sole-source awards lack the price discovery mechanism of open competition, which typically drives down costs. To assess value, one would need to identify comparable systems (e.g., similar sensor suites, integration complexity) that *were* competed. Then, a detailed analysis of unit costs, total contract values, and performance metrics would be necessary. If competitively sourced systems offer similar capabilities at a lower price point, it would indicate potential overpricing in this sole-source award, highlighting the importance of robust justification for non-competitive procurements.

What are the specific risks associated with a Cost Plus Fixed Fee (CPFF) contract for this type of equipment?

The Cost Plus Fixed Fee (CPFF) contract type for TADS/PNVS production presents several risks. While the fixed fee provides the contractor with a defined profit margin, the 'cost-plus' element means the government reimburses the contractor's allowable costs. This can incentivize the contractor to incur higher costs, as their fee remains constant regardless of the final cost. Risks include potential cost overruns, less stringent cost control by the contractor, and the need for intensive government oversight to scrutinize incurred costs. For complex, high-tech equipment like night vision systems, where development and production costs can be unpredictable, the CPFF structure requires diligent administration to ensure value for money and prevent excessive government expenditure.

What is the track record of Lockheed Martin in delivering complex defense systems on time and within budget?

Lockheed Martin is a major defense contractor with a long history of delivering complex systems, including those related to aerospace and defense electronics. Their track record generally includes successful delivery of numerous high-profile programs, such as fighter jets, missile systems, and surveillance platforms. However, like many large defense contractors, they have also faced challenges with cost overruns, schedule delays, and performance issues on certain programs. Assessing their specific track record for TADS/PNVS would require examining past performance metrics, delivery schedules, and budget adherence on previous related contracts. A thorough review would involve consulting contract performance reports and potentially program executive office assessments.

What are the potential implications of this contract on the broader market for night vision technology?

This sole-source award to Lockheed Martin for TADS/PNVS production could have several implications for the broader night vision technology market. Firstly, it reinforces Lockheed Martin's position as a key supplier for critical military systems, potentially limiting opportunities for competitors in this specific niche. Secondly, the significant government investment in this program may drive innovation within Lockheed Martin's R&D efforts related to night vision. However, the lack of open competition means that advancements or cost reductions achieved by other companies in the market might not be leveraged for this specific DoD requirement. It also highlights the government's reliance on established prime contractors for specialized, high-value defense components.

Industry Classification

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

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: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 5600 W SAND LAKE RD, 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: $44,320,523

Exercised Options: $35,188,196

Current Obligation: $35,188,196

Subaward Activity

Number of Subawards: 22

Total Subaward Amount: $1,991,466

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W58RGZ23D0011

IDV Type: IDC

Timeline