DoD's $18.8M contract for THAAD software support awarded to Lockheed Martin without competition

Contract Overview

Contract Amount: $18,826,442 ($18.8M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2011-08-01

End Date: 2012-07-31

Contract Duration: 365 days

Daily Burn Rate: $51.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: TO PROVIDE FY11 POST DEPLOYMENT SOFTWARE SUPPORT TO THE THAAD PROGRAM.

Place of Performance

Location: EL PASO, EL PASO County, TEXAS, 79912

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $18.8 million to LOCKHEED MARTIN CORP for work described as: TO PROVIDE FY11 POST DEPLOYMENT SOFTWARE SUPPORT TO THE THAAD PROGRAM. Key points: 1. The contract's value of $18.8 million for a single year of post-deployment software support appears high, warranting a closer look at the services provided. 2. Awarded on a Cost Plus Fixed Fee basis, this contract type can lead to cost overruns if not closely managed. 3. The absence of competition raises concerns about potential overpricing and the lack of market-driven cost discovery. 4. This contract is for post-deployment software support, indicating a need for ongoing maintenance and updates for a critical defense system. 5. The Missile Defense Agency's reliance on a single contractor for essential software support highlights a potential single point of failure risk. 6. The contract duration of 365 days suggests a need for continuous support, but the lack of competition limits options for future cost savings.

Value Assessment

Rating: questionable

The $18.8 million contract price for one year of post-deployment software support for the THAAD program is substantial. Without comparable contract data or detailed service breakdowns, it is difficult to benchmark the value for money. The Cost Plus Fixed Fee (CPFF) contract type, while allowing for flexibility, can sometimes lead to higher costs compared to fixed-price contracts if cost controls are not stringent. The lack of competition further complicates a direct value assessment, as there's no market pressure to ensure competitive pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when only one contractor possesses the necessary specialized skills, technology, or security clearances required for the work. The lack of competition means that the government did not receive bids from multiple vendors, which can limit price discovery and potentially lead to higher costs than if the contract had been competed.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without competing the requirement, the Missile Defense Agency may not have secured the most cost-effective solution available in the market.

Public Impact

The primary beneficiary of this contract is the U.S. Army, which operates the THAAD system, ensuring its continued functionality and readiness. The services delivered include essential post-deployment software support, crucial for maintaining the operational effectiveness of the Terminal High Altitude Area Defense system. The geographic impact is national, as the THAAD system is a strategic defense asset deployed to protect against ballistic missile threats. Workforce implications include the employment of specialized software engineers and technical support personnel at Lockheed Martin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Cost Plus Fixed Fee contract type can incentivize higher spending if not managed tightly.
Lack of competition raises concerns about contractor performance incentives and innovation.
Dependence on a single contractor for critical software support poses a risk to system availability.

Positive Signals

Contract ensures continued operational readiness of a critical national defense asset (THAAD).
Lockheed Martin is a known entity with extensive experience in defense systems.
Post-deployment support is essential for maintaining software integrity and security.

Sector Analysis

The defense sector, particularly within missile defense, requires highly specialized and often proprietary software. Contracts for such systems are frequently awarded to prime contractors who developed the original systems due to the deep integration and unique knowledge required. The market for THAAD software support is likely concentrated among a few entities with the requisite security clearances and technical expertise, making full and open competition challenging.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information suggesting significant subcontracting opportunities for small businesses. The nature of specialized defense software support often favors large, established prime contractors with the necessary clearances and infrastructure, potentially limiting the direct involvement of small businesses in this specific award.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices, including the Missile Defense Agency. Accountability measures would be tied to the Cost Plus Fixed Fee structure, requiring detailed cost reporting and performance metrics. Transparency may be limited due to the sole-source nature and the sensitive defense context of the THAAD program.

Related Government Programs

Missile Defense Systems
Ballistic Missile Defense
THAAD Program
Department of Defense Software Support Contracts
Cost Plus Fixed Fee Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competition
Critical defense system support

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.8 million to LOCKHEED MARTIN CORP. TO PROVIDE FY11 POST DEPLOYMENT SOFTWARE SUPPORT TO THE THAAD PROGRAM.

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Missile Defense Agency).

What is the total obligated amount?

The obligated amount is $18.8 million.

What is the period of performance?

Start: 2011-08-01. End: 2012-07-31.

What is the specific breakdown of services provided under this $18.8 million contract for THAAD software support?

The provided data indicates the contract is for 'POST DEPLOYMENT SOFTWARE SUPPORT TO THE THAAD PROGRAM.' However, a detailed breakdown of specific services such as software maintenance, bug fixes, security patching, system updates, performance tuning, or technical consultation is not available in the summary data. Understanding the exact nature and scope of these services is crucial for assessing the reasonableness of the $18.8 million cost. Without this granular detail, it's challenging to compare the value proposition against industry standards or alternative support models. Further investigation into the contract's statement of work (SOW) would be necessary to ascertain the precise deliverables and associated effort.

Why was this contract awarded on a sole-source basis instead of being competed?

The data indicates this contract was 'NOT COMPETED,' implying a sole-source award. Sole-source awards are typically justified when only one responsible source is available or capable of meeting the government's needs. For a critical defense system like THAAD, this could be due to Lockheed Martin's proprietary knowledge of the system's software architecture, unique security clearances required for access, or the need for continuity of support from the original developer. The Missile Defense Agency would have had to document the justification for this sole-source determination, likely citing factors such as technical expertise, existing infrastructure, and the time constraints that preclude a competitive process. Without access to that justification, the specific reasons remain speculative but are generally rooted in the specialized nature of defense technology.

How does the Cost Plus Fixed Fee (CPFF) contract type impact cost control and potential overruns for this THAAD software support?

The Cost Plus Fixed Fee (CPFF) contract type means the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. While the 'fixed fee' part provides some predictability for the contractor's profit, the 'cost-plus' element means the total cost to the government can fluctuate based on actual expenses. This structure can incentivize contractors to incur costs, as their profit is fixed regardless of the total cost. Effective cost control relies heavily on robust government oversight, detailed cost tracking, and stringent auditing of incurred expenses. Without diligent management and clear performance metrics, CPFF contracts carry a higher risk of cost overruns compared to fixed-price contracts, as the government bears the brunt of unexpected cost increases.

What are the potential risks associated with relying on a single contractor (Lockheed Martin) for critical THAAD software support?

Relying on a single contractor, especially for critical defense systems like THAAD, presents several risks. Firstly, there's a 'single point of failure' risk; if the contractor experiences financial difficulties, operational disruptions, or decides to discontinue support, the program could be severely impacted. Secondly, the lack of competition can lead to complacency and reduced incentives for innovation or efficiency improvements. Thirdly, pricing power shifts heavily to the contractor, potentially resulting in higher costs over time as the government has limited alternatives. Lastly, knowledge transfer and succession planning can be challenging, potentially creating long-term dependencies and hindering future flexibility in managing the THAAD software lifecycle.

Are there any benchmarks or comparable contracts that can help assess the value for money of this $18.8 million award?

Assessing the value for money for this specific $18.8 million contract without more detailed information is challenging. Benchmarking requires comparable data, such as the cost of similar post-deployment software support for other complex defense systems, or historical spending trends for THAAD software maintenance. Factors like the scope of work, number of software modules supported, complexity of the system, and the specific services included (e.g., 24/7 support, cybersecurity updates, feature enhancements) significantly influence cost. Given this was a sole-source award, direct comparisons to competitively bid contracts for similar services are difficult. A thorough value analysis would necessitate reviewing the contract's detailed statement of work and potentially consulting with industry experts on typical support costs for advanced missile defense software.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Process, Physical Distribution, and Logistics Consulting Services

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 1111 LOCKHEED MARTIN WAY BLDG 157, SUNNYVALE, CA, 17

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $18,826,442

Exercised Options: $18,826,442

Current Obligation: $18,826,442

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HQ014710D0001

IDV Type: IDC

Timeline