DoD awards $45.8M for electronic components, with Lockheed Martin as sole source

Contract Overview

Contract Amount: $45,807,872 ($45.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2025-03-04

End Date: 2029-01-01

Contract Duration: 1,399 days

Daily Burn Rate: $32.7K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DELIVERY ORDER 2 OF 301 VBKS AND 301 PMDS

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $45.8 million to LOCKHEED MARTIN CORPORATION for work described as: DELIVERY ORDER 2 OF 301 VBKS AND 301 PMDS Key points: 1. Value for money is difficult to assess due to sole-source nature, limiting price discovery. 2. Competition dynamics show a sole-source award, raising concerns about potential overpricing. 3. Risk indicators include reliance on a single contractor and potential for cost overruns. 4. Performance context is a delivery order under a larger contract, suggesting ongoing needs. 5. Sector positioning is within electronic component manufacturing, a critical defense supply chain area.

Value Assessment

Rating: questionable

Benchmarking value for this sole-source contract is challenging without competitive bids. The firm fixed-price nature provides some cost certainty, but the absence of competition means the government cannot be assured of obtaining the best possible price. Without comparable contract data or market analysis, it's difficult to definitively state if the $45.8 million represents fair market value. Further analysis would require understanding the specific components and their market prices.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Lockheed Martin Corporation, was considered. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they limit the government's ability to leverage competition to drive down prices and ensure optimal value.

Taxpayer Impact: The lack of competition means taxpayers may not be benefiting from the most cost-effective pricing available in the market. Without competitive pressure, the awarded price might be higher than what could have been achieved through an open bidding process.

Public Impact

The Department of Defense benefits through the acquisition of critical electronic components. Services delivered include the supply of specialized electronic components essential for defense systems. Geographic impact is primarily within Florida, where the contract is being performed. Workforce implications may include support for specialized manufacturing roles within Lockheed Martin and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential taxpayer savings.
Lack of transparency in the procurement process due to non-competitive nature.
Potential for cost creep if market prices for components fluctuate significantly.

Positive Signals

Firm fixed-price contract provides some cost predictability.
Award to a major defense contractor suggests established capabilities.
Delivery order structure implies integration into existing defense programs.

Sector Analysis

The contract falls within the 'Other Electronic Component Manufacturing' (NAICS 334419) sector. This sector is vital for the defense industry, supplying specialized components for a wide range of military systems. The market is often characterized by high barriers to entry due to technological complexity, stringent quality requirements, and long development cycles. Spending in this area is significant, driven by the continuous need for advanced electronics in defense applications.

Small Business Impact

This contract does not appear to involve a small business set-aside, as indicated by 'sb': false. There is no explicit information regarding subcontracting plans for small businesses. The sole-source nature of the award further reduces the likelihood of direct small business participation through set-asides. Future analysis could explore if Lockheed Martin has existing subcontracting relationships with small businesses for similar components.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. As a delivery order under a larger contract, existing oversight mechanisms for the parent contract would likely apply. Transparency is limited due to the sole-source award. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Department of Defense Procurement
Electronic Component Manufacturing
Lockheed Martin Contracts
Sole Source Procurements
Defense Supply Chain

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for overpricing
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $45.8 million to LOCKHEED MARTIN CORPORATION. DELIVERY ORDER 2 OF 301 VBKS AND 301 PMDS

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 $45.8 million.

What is the period of performance?

Start: 2025-03-04. End: 2029-01-01.

What is the historical spending pattern for electronic components by the Department of Defense, particularly with Lockheed Martin?

Analyzing historical spending patterns for electronic components by the Department of Defense (DoD) and specifically with Lockheed Martin requires access to comprehensive contract databases. Generally, the DoD is a significant purchaser of electronic components, with spending fluctuating based on program needs, technological advancements, and geopolitical factors. Lockheed Martin, as a major defense contractor, consistently receives substantial funding across various defense systems, which often include complex electronic sub-assemblies and components. To provide precise historical data, one would need to query databases like FPDS or USAspending for contracts categorized under relevant NAICS codes (e.g., 334419) and filter by agency (DoD) and contractor (Lockheed Martin). This analysis would reveal trends in contract values, types (e.g., fixed-price, cost-plus), and the specific types of electronic components procured over time, helping to contextualize the current $45.8 million award.

How does the firm fixed-price (FFP) contract type impact the value proposition for the government in this sole-source scenario?

The Firm Fixed-Price (FFP) contract type offers a degree of cost certainty for the government, as the price is set and generally not subject to upward adjustment, regardless of the contractor's actual costs. This is advantageous in mitigating cost overrun risks for the buyer. However, in a sole-source context, the value proposition is inherently weakened. While the government is protected from cost increases, the absence of competition means the initial FFP price may not reflect the lowest achievable market rate. The contractor bears the risk of cost overruns, but they may build in a larger contingency premium into the FFP price to account for this risk, especially when competition is absent. Therefore, while FFP provides cost predictability, its value is diminished when not coupled with competitive pricing.

What are the potential risks associated with relying on a sole-source provider for critical electronic components?

Relying on a sole-source provider for critical electronic components introduces several significant risks. Firstly, there is a heightened risk of paying inflated prices due to the lack of competitive pressure, which can lead to inefficient use of taxpayer funds. Secondly, the government becomes dependent on a single supplier, potentially creating vulnerabilities in the supply chain. If the sole-source contractor experiences production issues, financial instability, or decides to discontinue a product line, the government may face severe disruptions. Thirdly, innovation may be stifled, as the sole-source provider may have less incentive to invest in improving products or processes when faced with no competition. Finally, the government's negotiating leverage is significantly reduced, making it harder to secure favorable terms or address performance issues effectively.

What specific types of electronic components are likely being procured under this contract, and what is their typical market value?

The provided data indicates the contract is for 'Other Electronic Component Manufacturing' (NAICS 334419) and is a delivery order for 'VBKS and PMDS'. Without further specifics on 'VBKS' and 'PMDS', it's challenging to pinpoint the exact electronic components. However, this NAICS code encompasses a broad range of items such as semiconductors, integrated circuits, resistors, capacitors, connectors, and other specialized electronic parts. The market value for these components varies immensely based on complexity, volume, and technological sophistication. For instance, standard resistors might cost cents, while highly specialized microprocessors or custom-designed integrated circuits could cost hundreds or thousands of dollars each. The $45.8 million total award suggests either a very large quantity of components or the procurement of high-value, complex electronic assemblies critical for defense systems.

Are there any alternative suppliers or technologies that could have been considered to foster competition for these electronic components?

Determining if alternative suppliers or technologies could have been considered requires a deeper dive into the specific 'VBKS and PMDS' components and their technical specifications. In a sole-source situation, the justification often hinges on unique capabilities, proprietary technology, or essential compatibility with existing systems. However, a thorough market research phase should ideally precede any sole-source determination to confirm the absence of viable alternatives. This research would involve identifying other manufacturers capable of producing similar components, assessing the feasibility of alternative technologies, and evaluating the cost and time implications of switching suppliers or adopting new solutions. Without this information, it's difficult to definitively state whether competition was overlooked or if the sole-source justification is robust.

Industry Classification

NAICS: Manufacturing › Semiconductor and Other Electronic Component Manufacturing › Other Electronic Component Manufacturing

Product/Service Code: VEHICULAR EQUIPMENT COMPONENTS

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, 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: $45,807,872

Exercised Options: $45,807,872

Current Obligation: $45,807,872

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56HZV24D0016

IDV Type: IDC

Timeline