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Nick Wakeman

Lockheed dealt $700M blow with lost Air Force contract

Lockheed Martin’s 15-year run managing the Cheyenne Mountain complex for the Air Force is coming to an end.

The company has lost its bid protest over an award to Raytheon Co. for the five-year, $700 million contract.

The contract has gone through two rounds of protests. When Raytheon first won in March, Lockheed protested and the Air Force decided to take another look at its evaluations. And on May 8, it awarded the contract to Raytheon for a second time.

Lockheed filed a second protest just days later with the Government Accountability Office but this time the Air Force decided to stand behind its choice.

Late last week, GAO released its decision supporting the Air Force’s choice of Raytheon as the prime contractor to provide a wide range of support services through the North America Aerospace Defense Command Cheyenne Mountain Complex-Integrated Tactical Warning/Attack Assessment and Space Support contract. That’s a mouthful.

In reading the GAO decision, it looks like Lockheed failed to provide enough information that supported the reduction in staffing levels and other efficiency gains it was promising in its proposal. For some tasks, Lockheed estimated that its reductions would be 69 percent.

Because of the lack of details, the Air Force deemed Lockheed’s technical proposal to be high risk. The Air Force found 20 deficiencies, seven significant weaknesses and 20 weaknesses under the sustainment activities subfactor and nine deficiencies, eight significant weaknesses and four weaknesses under the systems engineering/projects subfactor, according to the GAO decision.

The Air Force and Lockheed Martin went through several rounds of evaluation notices, where the Air Force described its concerns, but in the end the score only improved to Acceptable/Moderate Risk, which Raytheon was evaluated as Good/Low Risk.

The companies submitted proposals for seven initial task orders and Raytheon’s price of $199.7 million for those tasks was higher than Lockheed’s $178.3 million bid.

But the lower price was not enough to overcome the Air Force’s concerns about risk.

One area where it appears Lockheed Martin fell short was during the rounds of evaluation notices. The company apparently failed to go beyond the specific examples the Air Force gave it about problems with its proposal.

“The agency concluded that although Lockheed had provided additional justification concerning the specific examples given by the government, it still had not adequately responded to all of the agency’s concerns,” the decision states.

In other words, it appears that Lockheed only addressed the specific examples given by the Air Force and didn’t understand that the Air Force wanted more explanations wherever Lockheed proposed reduced labor hours in its proposal and not just for the example’s the Air Force provided.

The big question that Lockheed failed to answer was how its reduced labor hours could meet the requirements of the Air Force.

So what’s next for Lockheed? 

"Despite this disappointing outcome, Lockheed Martin maintains a strong partnership and a track record of success with the Air Force across a broad program portfolio. We will continue to work with the Government to ensure an efficient transition on the program," a spokesman said in an email.

Time to go home and gather some lessons learned.

Posted by Nick Wakeman on Oct 26, 2015 at 12:08 PM


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