DoD awards $33.6M contract for engineering services to Lockheed Martin, raising competition concerns
Contract Overview
Contract Amount: $33,596,705 ($33.6M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2006-10-01
End Date: 2008-09-30
Contract Duration: 730 days
Daily Burn Rate: $46.0K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST NO FEE
Sector: Defense
Official Description: SPARES OTHER (3400G) (CR)
Place of Performance
Location: GOODYEAR, MARICOPA County, ARIZONA, 85338
State: Arizona Government Spending
Plain-Language Summary
Department of Defense obligated $33.6 million to LOCKHEED MARTIN CORPORATION for work described as: SPARES OTHER (3400G) (CR) Key points: 1. Significant contract value of $33.6 million for engineering services. 2. Sole-source award to Lockheed Martin limits competitive pricing. 3. Long contract duration of 730 days may indicate potential for cost overruns. 4. The 'SPARES OTHER' designation suggests a need for specialized support.
Value Assessment
Rating: questionable
The contract's 'COST NO FEE' pricing structure, combined with a lack of competition, makes a direct pricing assessment difficult. Benchmarking against similar sole-source engineering service contracts is challenging due to the unique nature of 'SPARES OTHER'.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, indicating a lack of competitive bidding. This significantly limits price discovery and potentially leads to higher costs for the government.
Taxpayer Impact: The absence of competition for a $33.6 million contract likely results in a higher taxpayer burden than if multiple bids were solicited.
Public Impact
Taxpayers may be overpaying for engineering services due to the lack of competition. The long-term nature of the contract could lock the DoD into a potentially suboptimal solution. Dependence on a single contractor for critical spares support poses a risk to Air Force readiness.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Lack of competition
- Potential for cost overruns due to 'COST NO FEE' structure
Positive Signals
- Award to established contractor (Lockheed Martin)
- Contract addresses a specific need for engineering services
Sector Analysis
Engineering services are crucial for defense operations, encompassing design, development, and maintenance. The benchmark for such services varies widely based on complexity and duration, but competitive bidding typically ensures better value.
Small Business Impact
This contract was awarded to Lockheed Martin Corporation, a large prime contractor. There is no indication that small businesses were involved as subcontractors or partners in this specific award.
Oversight & Accountability
The sole-source nature of this award warrants scrutiny to ensure the Department of Defense received fair pricing and that competition was appropriately waived. Further review of the justification for sole-source procurement is recommended.
Related Government Programs
- Engineering Services
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Lack of competition
- Potential for inflated costs
- Limited oversight on 'COST NO FEE' structure
- Vendor lock-in risk
- No small business participation indicated
Tags
engineering-services, department-of-defense, az, do, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $33.6 million to LOCKHEED MARTIN CORPORATION. SPARES OTHER (3400G) (CR)
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 Air Force).
What is the total obligated amount?
The obligated amount is $33.6 million.
What is the period of performance?
Start: 2006-10-01. End: 2008-09-30.
What was the specific justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?
The justification for a sole-source award typically involves unique capabilities, urgent needs, or lack of market availability. Without specific documentation, it's impossible to confirm if alternative competitive strategies were explored. However, the absence of competition for a contract of this magnitude raises questions about whether a more open bidding process could have yielded better value and innovation for the Department of Defense.
How does the 'COST NO FEE' pricing structure impact the government's ability to control costs and ensure contractor efficiency?
A 'COST NO FEE' contract means the contractor is reimbursed for allowable costs but receives no fee or profit. This structure can incentivize cost control by the contractor, as any savings directly benefit them. However, it can also reduce transparency and make it harder for the government to benchmark performance or identify inefficiencies, especially when combined with a sole-source award.
What is the long-term strategic implication of awarding a significant spares support contract solely to one large corporation?
Solely awarding significant spares support to one large corporation can create vendor lock-in and reduce the government's flexibility. It may also stifle innovation from smaller, specialized firms. While it can ensure a single point of contact and potentially streamline logistics, it also concentrates risk and limits competitive pressure on pricing and service quality over the contract's lifecycle.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: COST NO FEE (S)
Evaluated Preference: NONE
Contractor Details
Parent Company: Lockheed Martin Corp (UEI: 834951691)
Address: 1300 SOUTH LITCHFIELD ROAD, GOODYEAR, AZ, 09
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $33,596,705
Exercised Options: $33,596,705
Current Obligation: $33,596,705
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: F0960403D0026
IDV Type: IDC
Timeline
Start Date: 2006-10-01
Current End Date: 2008-09-30
Potential End Date: 2008-09-30 00:00:00
Last Modified: 2011-07-06
More Contracts from Lockheed Martin Corporation
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Department of Defense)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Department of Defense)
- THE Purpose of This Modification IS to Award F-35A Lrip 15 Usaf Aircraft* Long Lead Funding — $30.1B (Department of Defense)
- THE Purpose of This Contract IS to Award Long Lead Funding for F-35A, F-35B, and F-35C Aircraft for U.S. Services, Non-Dod Partners, and FMS Customers — $24.5B (Department of Defense)
- Lrip 11 AAC — $12.3B (Department of Defense)
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)