Lockheed Martin Corp. lost out on a U.S. Navy patrol plane contract because of problems with past work on the unmanned Predator aircraft it proposed, despite a $5 billion lower life-cycle cost than Northrop Grumman Corp's winning bid.
The nonpartisan Government Accountability Office last week rejected Lockheed Martin's protest and said the Navy rightly handed a contract valued at $3.74 billion to Northrop and its high-altitude unmanned RQ-4N Global Hawk. It released a redacted version of its ruling on Wednesday.
Lockheed had bid the Mariner, a version of the smaller unmanned Predator plane built by privately held General Atomics of San Diego. The GAO said the Navy reasonably downgraded Lockheed's bid due to past problems with General Atomics, the builder of the Predator.
In its ruling, the congressional agency in charge of contract disputes said the overall performance of the Lockheed team on 11 of 26 contract efforts was only marginal, which resulted in a high risk rating and substantial doubt that the team could perform the proposed contract effort.
Customer feedback on other General Atomics contracts was consistently negative, focusing on problems with workload, executing systems engineering tasks and staffing, the GAO said.
Lockheed had generally demonstrated high quality technical performance on its past contracts, but even it had experienced problems with adequate staffing for a contract to upgrade Taiwan's F-16 fighter jets, the GAO said. That made Navy evaluators concerned that the Lockheed team would encounter significant schedule delays and be required to make technical tradeoffs in order to produce the Mariner.
The GAO put the total cost of the Northrop bid at just over $21 billion, including $1.95 billion in development and initial production costs, $6.6 billion in longer-term production, and $12.4 billion for long-term operations and maintenance costs.
The Lockheed Martin bid would have cost far less, including $1.2 billion for development and low-rate production, $2.1 billion for production, and $12.5 billion for operations and maintenance.