DoD's $101.5M Missile Radio Link Redesign Contract Awarded to Lockheed Martin Without Competition

Contract Overview

Contract Amount: $101,483,124 ($101.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2016-01-21

End Date: 2024-04-15

Contract Duration: 3,007 days

Daily Burn Rate: $33.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: MISSILE SEGMENT MULTI-BAND RADIO FREQUENCY DATA LINK (MRFDL) OBSOLESCENCE REDESIGN PROGRAM

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35898

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $101.5 million to LOCKHEED MARTIN CORPORATION for work described as: MISSILE SEGMENT MULTI-BAND RADIO FREQUENCY DATA LINK (MRFDL) OBSOLESCENCE REDESIGN PROGRAM Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. Significant contract duration of over 8 years suggests a long-term need for the obsolescence redesign. 3. The 'Cost Plus Incentive Fee' contract type may incentivize cost overruns if not closely monitored. 4. Focus on obsolescence redesign indicates a proactive approach to maintaining critical defense capabilities. 5. The contract's value is substantial within the Guided Missile and Space Vehicle Manufacturing sector. 6. Awarded to a single, large defense contractor, potentially limiting opportunities for smaller, innovative firms.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specific technical focus on obsolescence redesign. Without competitive bids, it's difficult to ascertain if the $101.5 million represents a fair market price. The Cost Plus Incentive Fee (CPIF) structure requires rigorous oversight to ensure costs remain controlled and that the incentive aligns with genuine value for the government. Comparing it to similar obsolescence redesign programs for complex defense systems would be necessary for a more robust assessment, but such data is not readily available.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Army did not conduct a competitive bidding process. This typically occurs when a specific contractor possesses unique capabilities or when the need is urgent and only one source can fulfill it. The lack of competition means there was no opportunity for multiple companies to bid, which could have driven down the price through market forces. This approach limits price discovery and may result in a higher cost to the government compared to a competed contract.

Taxpayer Impact: The absence of competition means taxpayers did not benefit from potential cost savings that could have arisen from a bidding war among defense contractors. The government is reliant on the awarded contractor's proposed pricing and cost controls.

Public Impact

The primary beneficiaries are the Department of the Army and potentially other branches of the DoD that utilize the Missile Segment Multi-Band Radio Frequency Data Link (MRFDL). The contract delivers critical updates and redesigns to ensure the continued operational effectiveness of the MRFDL system, mitigating risks associated with obsolete components. The geographic impact is primarily within the United States, supporting defense manufacturing and potentially research and development activities. Workforce implications include employment for engineers, technicians, and manufacturing personnel at Lockheed Martin and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs for taxpayers.
Cost Plus Incentive Fee (CPIF) contract type requires diligent oversight to prevent cost overruns.
Long contract duration (over 8 years) increases exposure to potential scope creep or evolving requirements.
Lack of transparency in pricing due to non-competitive nature.
Reliance on a single contractor for a critical component could pose supply chain risks.

Positive Signals

Addresses critical obsolescence issues, ensuring the continued functionality of vital defense systems.
Awarded to a major defense contractor with a proven track record in complex systems.
The incentive fee structure, if well-defined, can align contractor performance with government objectives.
Focus on redesign suggests a commitment to modernizing existing military hardware.

Sector Analysis

The Guided Missile and Space Vehicle Manufacturing sector is a highly specialized and capital-intensive segment of the aerospace and defense industry. Companies in this space focus on the design, development, production, and sustainment of advanced weaponry and space systems. Spending in this sector is often characterized by long-term contracts, significant R&D investment, and a high degree of government oversight due to national security implications. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of each program, but multi-year contracts for complex system redesigns can easily reach tens to hundreds of millions of dollars.

Small Business Impact

This contract was not competed and there is no indication of small business set-asides or subcontracting plans mentioned in the provided data. As a sole-source award to a large prime contractor, it is less likely to directly benefit small businesses through competitive subcontracting opportunities unless explicitly mandated. The primary focus appears to be on the prime contractor's capabilities for this specific redesign effort.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Army's contracting and program management offices. As a Cost Plus Incentive Fee (CPIF) contract, there should be specific performance metrics and cost targets that are monitored to ensure the contractor meets objectives and stays within budget. Transparency may be limited due to the sole-source nature, but contract modifications, performance reports, and financial audits would be key accountability measures. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Missile Systems Modernization Programs
Defense Communication Systems
Aerospace Manufacturing Contracts
Obsolescence Management Programs
Guided Missile Production

Risk Flags

Sole Source Award
Cost Plus Contract Type
Long Contract Duration
Potential for Cost Overruns
Lack of Competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $101.5 million to LOCKHEED MARTIN CORPORATION. MISSILE SEGMENT MULTI-BAND RADIO FREQUENCY DATA LINK (MRFDL) OBSOLESCENCE REDESIGN PROGRAM

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 $101.5 million.

What is the period of performance?

Start: 2016-01-21. End: 2024-04-15.

What is Lockheed Martin Corporation's track record with similar sole-source, cost-plus contracts for defense systems?

Lockheed Martin Corporation, as one of the largest defense contractors globally, has extensive experience with sole-source and cost-plus contracts across various defense platforms. Historically, such contracts are utilized for highly specialized, proprietary, or urgent requirements where competition is not feasible or beneficial. While cost-plus contracts can offer flexibility for evolving requirements or R&D-intensive projects, they also carry a higher risk of cost overruns if not managed with stringent oversight. Lockheed Martin's performance on similar contracts would typically be assessed through contract performance reports, past performance evaluations, and audits. The specific details of their track record on comparable sole-source CPIF contracts for missile system components would require access to detailed government contract databases and performance reviews.

How does the $101.5 million value compare to other missile radio frequency data link redesign programs?

Direct comparison of the $101.5 million value for this specific Missile Segment Multi-Band Radio Frequency Data Link (MRFDL) obsolescence redesign program is challenging without access to data on similar, independently competed programs. Obsolescence redesigns for complex military hardware are highly specialized, and costs can vary significantly based on the system's complexity, the extent of redesign required, the technology involved, and the duration of the effort. Given the contract's duration of over 8 years (3007 days), the annual expenditure averages around $12.5 million. This figure needs to be evaluated against the criticality of the MRFDL system and the potential costs of system failure or inability to operate due to obsolescence. Without competitive benchmarks, it's difficult to definitively state if this value represents optimal 'value-for-money'.

What are the primary risks associated with a sole-source, Cost Plus Incentive Fee (CPIF) contract for a critical defense component?

The primary risks associated with a sole-source, CPIF contract for a critical defense component like the MRFDL are multifaceted. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher prices and reduced incentive for the contractor to innovate or optimize costs. Secondly, the CPIF structure, while designed to incentivize performance, can lead to cost overruns if the target costs are set too high or if the incentive structure is not properly aligned with desired outcomes. This requires robust government oversight to monitor expenditures and ensure the contractor is meeting performance metrics efficiently. Thirdly, reliance on a single contractor for a critical component can create supply chain vulnerabilities and reduce flexibility if requirements change significantly. Finally, the long duration increases the risk of scope creep and potential for the contractor to leverage their sole-source position.

How effective is the 'Cost Plus Incentive Fee' structure in ensuring program effectiveness for obsolescence redesigns?

The effectiveness of the Cost Plus Incentive Fee (CPIF) structure for obsolescence redesigns hinges on the precise definition of the target cost, the incentive targets, and the sharing ratios. When well-structured, CPIF can motivate the contractor to control costs while achieving specific performance objectives, such as meeting technical specifications, delivery schedules, or reliability standards. For obsolescence redesigns, the incentive could be tied to successfully integrating new components, ensuring backward compatibility, and achieving a certain operational lifespan for the redesigned system. However, if the target cost is too high, the incentive may not be strong enough to drive significant cost savings. Conversely, if targets are too aggressive, it could compromise quality or lead to disputes. Effective implementation requires clear metrics, rigorous monitoring, and a strong government program management team to ensure the contractor is incentivized towards both cost efficiency and technical success.

What are the historical spending patterns for missile segment radio frequency data link systems within the Department of Defense?

Historical spending patterns for Missile Segment Multi-Band Radio Frequency Data Link (MRFDL) systems are not explicitly detailed in the provided data. However, general trends in defense spending indicate consistent investment in communication systems for missile platforms due to their critical role in command, control, and targeting. Obsolescence redesign programs are a recurring necessity as technology evolves and components reach end-of-life. Such programs typically involve significant investment, often in the tens to hundreds of millions of dollars, spread over several years, reflecting the complexity and long service life of military hardware. The Department of Defense, and specifically the Army, allocates substantial budgets to sustain and modernize its missile capabilities, including the communication links that are vital for their operation.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Address: 1701 W MARSHALL DR, GRAND PRAIRIE, TX, 75051

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: $101,483,124

Exercised Options: $101,483,124

Current Obligation: $101,483,124

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W31P4Q12G0001

IDV Type: BOA

Timeline