Naval Sea Systems Command awards $339M contract for electronics and communication equipment to Lockheed Martin
Contract Overview
Contract Amount: $33,902,518 ($33.9M)
Contractor: Lockheed Martin Integrated Systems, LLC
Awarding Agency: Department of Defense
Start Date: 2005-09-30
End Date: 2012-07-31
Contract Duration: 2,496 days
Daily Burn Rate: $13.6K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: 200512!053220!1700!N00024!NAVAL SEA SYSTEMS COMMAND !N0002405C6327 !A!N! !N! ! !20050930!20100330!022204072!805258373!834951691!N!LOCKHEED MARTIN INTEGRATED SYS!ELECTRONICS PKWY, BLDG 7, !SYRACUSE !NY!13221!60975!099!12!RIVIERA BEACH !PALM BEACH !FLORIDA !+000014569800!N!N!000156100000!2090!MISCELLANEOUS SHIP AND MARINE EQUIPMENT !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !* !334511!E! !1! ! ! ! ! !20200930!B! ! !A! !D!N!J!1!001!N!1G!A!N!F! ! !N!C!N! ! ! !A!A!A!A!000!A!C!Y! ! ! !Y!1724!N00024!0001! !
Place of Performance
Location: RIVIERA BEACH, PALM BEACH County, FLORIDA, 33404
State: Florida Government Spending
Plain-Language Summary
Department of Defense obligated $33.9 million to LOCKHEED MARTIN INTEGRATED SYSTEMS, LLC for work described as: 200512!053220!1700!N00024!NAVAL SEA SYSTEMS COMMAND !N0002405C6327 !A!N! !N! ! !20050930!20100330!022204072!805258373!834951691!N!LOCKHEED MARTIN INTEGRATED SYS!ELECTRONICS PKWY, BLDG 7, !SYRACUSE !NY!13221!60975!099!12!RIVIERA BEACH !PALM… Key points: 1. Contract awarded for electronics and communication equipment, a critical component for naval operations. 2. The contract was not competed, raising questions about potential price discovery and value for money. 3. Long contract duration of approximately 7 years suggests a need for sustained support and integration. 4. The award to a single large contractor may limit opportunities for smaller, specialized firms. 5. Firm Fixed Price contract type aims to control costs, but the lack of competition is a risk indicator.
Value Assessment
Rating: fair
The contract value of $339 million over approximately seven years represents a significant investment in naval electronics. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The firm fixed-price structure provides some cost certainty, but the absence of competition means taxpayers may not have received the best possible price. Further analysis would be needed to assess if the awarded price aligns with industry standards for similar systems and support.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning it was not open to competition from multiple bidders. This approach is typically used when a specific contractor possesses unique capabilities, proprietary technology, or when urgency precludes a full and open competition. The lack of competition limits the government's ability to leverage market forces to drive down prices and ensure the most cost-effective solution.
Taxpayer Impact: The sole-source nature of this award means taxpayers may have paid a premium, as there was no competitive pressure to ensure the lowest possible price. This could represent a missed opportunity for cost savings.
Public Impact
The primary beneficiary is the U.S. Navy, which will receive essential electronics and communication equipment for its vessels. This contract supports the modernization and operational readiness of naval fleets. The contract's impact is primarily national, focusing on defense capabilities rather than specific geographic regions. It sustains jobs within Lockheed Martin and potentially its supply chain, particularly in areas related to advanced electronics manufacturing and integration.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to higher costs for taxpayers.
- Sole-source awards can reduce innovation by limiting market entry for alternative solutions.
- Long-term contracts can sometimes lead to cost overruns if not managed effectively.
Positive Signals
- Firm Fixed Price contract type provides cost certainty.
- Award to a large, established defense contractor suggests a focus on reliability and proven technology.
- Contract supports critical national defense infrastructure.
Sector Analysis
This contract falls within the 'Electronics and Communication Equipment' sector, a vital part of the broader defense industrial base. The market for such specialized naval systems is often concentrated among a few large defense contractors due to high barriers to entry, including technological expertise, security clearances, and established relationships with the military. Spending in this category is driven by the need for advanced surveillance, communication, and navigation systems to maintain military superiority.
Small Business Impact
The contract was awarded directly to Lockheed Martin, a large prime contractor, and there is no explicit indication of small business set-asides or subcontracting plans within the provided data. This suggests that small businesses may not have directly benefited from this specific award, although they could potentially be part of Lockheed Martin's supply chain. Further investigation into subcontracting requirements would be necessary to determine the full impact on the small business ecosystem.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of Defense's contract management and inspection agencies, such as the Defense Contract Management Agency (DCMA). Accountability is managed through contract clauses, performance metrics, and payment schedules. Transparency is generally limited for sole-source awards, with details often restricted due to proprietary or national security concerns. The Inspector General's office within the DoD would have jurisdiction to investigate any potential fraud, waste, or abuse.
Related Government Programs
- Naval Ship Systems
- Defense Electronics
- Communication Systems
- Marine Equipment Manufacturing
Risk Flags
- Sole-source award
- Potential for cost overruns
- Risk of technological obsolescence
- Limited transparency
Tags
defense, department-of-defense, naval-sea-systems-command, lockheed-martin, electronics-and-communication-equipment, definitive-contract, firm-fixed-price, sole-source, florida, large-contractor, miscellaneous-ship-and-marine-equipment
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $33.9 million to LOCKHEED MARTIN INTEGRATED SYSTEMS, LLC. 200512!053220!1700!N00024!NAVAL SEA SYSTEMS COMMAND !N0002405C6327 !A!N! !N! ! !20050930!20100330!022204072!805258373!834951691!N!LOCKHEED MARTIN INTEGRATED SYS!ELECTRONICS PKWY, BLDG 7, !SYRACUSE !NY!13221!60975!099!12!RIVIERA BEACH !PALM BEACH !FLORIDA !+000014569800!N!N!000156100000!2090!MISCELLANEOUS SHIP AND MARINE EQUIPMENT !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !* !334511!E! !1! ! ! ! ! !202
Who is the contractor on this award?
The obligated recipient is LOCKHEED MARTIN INTEGRATED SYSTEMS, LLC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $33.9 million.
What is the period of performance?
Start: 2005-09-30. End: 2012-07-31.
What is Lockheed Martin's track record with similar naval electronics contracts?
Lockheed Martin has a long and extensive history of providing complex electronic systems and integrated solutions to the U.S. Navy and other military branches. They are a major defense contractor involved in numerous large-scale programs, including combat systems, radar, sonar, and communication suites for various naval platforms. Their track record generally indicates a capacity to deliver sophisticated technology, though like any large contractor, they have faced scrutiny on specific program costs and timelines. Analyzing their past performance on contracts with similar scope, duration, and technical requirements would provide further insight into their reliability and cost-effectiveness for this specific award.
How does the $339 million value compare to other naval electronics procurements?
The $339 million value for this contract, spanning approximately seven years, is substantial but falls within the typical range for major defense electronics systems procurements for naval platforms. Large-scale integration, research, development, and sustainment of advanced electronics for warships often run into hundreds of millions, and sometimes billions, of dollars. To provide a precise comparison, one would need to identify contracts for similar types of equipment (e.g., radar, sonar, command and control systems) awarded to comparable naval platforms (e.g., destroyers, aircraft carriers, submarines) around the same period. Benchmarking against these specific, comparable contracts would reveal whether this award represents a particularly high or reasonable investment for the capabilities acquired.
What are the primary risks associated with a sole-source award of this magnitude?
The primary risks associated with a sole-source award of this magnitude include potential overpricing due to the lack of competitive pressure, reduced incentive for the contractor to innovate or improve efficiency, and a lack of transparency in the procurement process. Taxpayers may not be receiving the best value for their money. Furthermore, reliance on a single supplier can create long-term dependencies and vulnerabilities if that supplier faces financial difficulties, changes strategic direction, or experiences production issues. Without competition, the government has less leverage to negotiate favorable terms or explore alternative, potentially more cost-effective solutions.
How effective are firm fixed-price contracts in managing costs for complex electronics?
Firm Fixed Price (FFP) contracts are generally considered effective in managing costs for complex electronics when the scope of work is well-defined and the risks are understood. Under an FFP contract, the contractor assumes most of the cost risk, agreeing to a set price regardless of their actual costs. This provides cost certainty for the buyer. However, for highly complex or developmental electronics where requirements may evolve or unforeseen technical challenges arise, FFP contracts can sometimes lead to contractors cutting corners on quality or scope to protect their profit margin, or conversely, lead to costly change orders if the initial scope was poorly defined. Effective management and clear specifications are crucial for FFP success in complex procurements.
What is the historical spending trend for 'Miscellaneous Ship and Marine Equipment' by NAVSEA?
Historical spending data for 'Miscellaneous Ship and Marine Equipment' by NAVSEA (Naval Sea Systems Command) would likely show a consistent and significant investment over the years, reflecting the ongoing need to procure, upgrade, and maintain the U.S. Navy's fleet. This category often encompasses a wide range of items, including specialized electronics, propulsion components, hull materials, and auxiliary systems. Spending trends are influenced by shipbuilding programs, modernization efforts, maintenance cycles, and overall defense budgets. Analyzing multi-year spending patterns within this specific Product Service Code (PSC) would reveal fluctuations based on strategic priorities and fiscal constraints, highlighting the sustained importance of this equipment category to naval readiness.
What are the implications of the contract duration (approx. 7 years) for sustainment and obsolescence?
A contract duration of approximately seven years for complex electronics implies a need for long-term sustainment, maintenance, and potential upgrades. This extended period helps ensure that the systems remain operational and supported throughout a significant portion of their lifecycle. However, it also raises concerns about technological obsolescence. Electronics technology evolves rapidly, and systems designed or procured seven years ago may be nearing obsolescence by the end of the contract term. The contract should ideally include provisions for managing obsolescence, such as upgrade paths, technology refresh initiatives, or clear end-of-life support plans to prevent critical systems from becoming outdated or unsupportable.
Industry Classification
NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Product/Service Code: SHIP AND MARINE EQUIPMENT
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Lockheed Martin Corp (UEI: 834951691)
Address: ELECTRONICS PKWY, BLDG 7,, SYRACUSE, NY, 13221
Business Categories: Category Business, Not Designated a Small Business
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2005-09-30
Current End Date: 2012-07-31
Potential End Date: 2012-07-31 00:00:00
Last Modified: 2018-01-10
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