DoD's $20.7M server support contract awarded to Lockheed Martin raises questions on competition and value

Contract Overview

Contract Amount: $20,669,848 ($20.7M)

Contractor: Lockheed Martin Integrated Systems, LLC

Awarding Agency: Department of Defense

Start Date: 2011-11-01

End Date: 2012-10-31

Contract Duration: 365 days

Daily Burn Rate: $56.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: IT

Official Description: R0I0830, S12-0002 SERVER SUPPORT

Place of Performance

Location: VICKSBURG, WARREN County, MISSISSIPPI, 39180

State: Mississippi Government Spending

Plain-Language Summary

Department of Defense obligated $20.7 million to LOCKHEED MARTIN INTEGRATED SYSTEMS, LLC for work described as: R0I0830, S12-0002 SERVER SUPPORT Key points: 1. The contract's value of over $20 million for server support services warrants scrutiny regarding cost-effectiveness. 2. Awarded on a sole-source basis, the lack of competition limits price discovery and potentially inflates costs. 3. The contract duration of one year with a single delivery order suggests a short-term need, but the award mechanism is unclear. 4. Performance context is limited due to the sole-source nature, making it difficult to benchmark against other providers. 5. The IT sector, specifically computer facilities management, is a critical area for defense operations. 6. The absence of small business set-aside flags indicates this contract was not specifically targeted for small business participation.

Value Assessment

Rating: questionable

Benchmarking the value of this $20.7 million contract is challenging without comparable sole-source awards for similar server support services. The pricing structure, 'COST NO FEE', typically implies that the government reimburses the contractor for allowable costs plus a fixed fee, which can sometimes lead to less cost control compared to fixed-price contracts. Without detailed cost breakdowns, it's difficult to definitively assess if the price reflects fair market value. However, the lack of competition inherently raises concerns about potential overpricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, Lockheed Martin Integrated Systems, LLC, was solicited. The data does not provide a justification for this sole-source award, such as a specific urgent need or the unavailability of other qualified sources. The lack of competition means there were no other bidders to compare against, limiting the government's ability to secure the best possible price and terms.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from competitive bidding, which typically drives down prices. This can result in higher costs for government services and potentially less innovation.

Public Impact

The primary beneficiary of this contract is the Department of Defense, specifically the Department of the Army, which receives essential server support services. These services are critical for maintaining the operational readiness and data management capabilities of military systems. The geographic impact is centered in Mississippi, where the contract is being performed. The contract supports IT infrastructure, indirectly impacting the workforce by ensuring the tools they need to perform their duties are functional.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competitive bidding may lead to higher costs for taxpayers.
Sole-source award raises concerns about justification and potential lack of market research.
Absence of performance metrics in the provided data makes it difficult to assess service quality.
The 'COST NO FEE' contract type can sometimes incentivize higher spending by the contractor.

Positive Signals

Awarded to a large, established defense contractor (Lockheed Martin) which may imply a certain level of reliability.
Contract supports critical IT infrastructure for the Department of the Army.
The contract was performed within the specified timeframe (one year).

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically under Computer Facilities Management Services. This is a broad category encompassing the maintenance, operation, and support of computer systems and infrastructure. The market for these services is highly competitive, with numerous providers ranging from large system integrators to specialized IT support firms. The value of this contract, over $20 million, places it in the mid-to-large tier for IT service contracts within the federal government. Comparable spending benchmarks would typically involve analyzing other IT support contracts awarded by the DoD or other federal agencies for similar scope and duration.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (sb: false) and there is no indication of subcontracting plans for small businesses (ss: false). This suggests that the primary contractor, Lockheed Martin, was expected to perform the majority of the work internally or through large business partners. Consequently, this contract does not appear to directly contribute to the government's small business contracting goals or foster opportunities within the small business IT ecosystem for this specific award.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. As a sole-source award, the justification and execution would be subject to review by relevant procurement authorities. Transparency is limited due to the lack of competition and detailed performance data. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected during the contract's performance or award process.

Related Government Programs

IT Infrastructure Support Services
Cloud Computing Services
Data Center Operations
Network Management Services
Cybersecurity Services

Risk Flags

Sole-source award without clear justification.
Potential for inflated costs due to lack of competition.
Absence of performance metrics in summary data.
Contract type ('COST NO FEE') can reduce cost control incentives.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.7 million to LOCKHEED MARTIN INTEGRATED SYSTEMS, LLC. R0I0830, S12-0002 SERVER SUPPORT

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 (Department of the Army).

What is the total obligated amount?

The obligated amount is $20.7 million.

What is the period of performance?

Start: 2011-11-01. End: 2012-10-31.

What was the specific justification for awarding this contract on a sole-source basis to Lockheed Martin?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are awarded when only one responsible source can provide the required supplies or services, such as in cases of urgent and compelling need, unique capabilities, or when a follow-on contract is required for compatibility. Without this documentation, it is impossible to verify if the award adhered to federal procurement regulations for sole-sourcing. This lack of transparency is a significant concern, as it prevents an assessment of whether competitive procedures were improperly bypassed, potentially leading to suboptimal pricing for the government.

How does the $20.7 million contract value compare to similar server support contracts within the Department of Defense?

Comparing this $20.7 million contract value requires access to a broader dataset of similar IT support contracts. However, as a sole-source award for a one-year period, it is difficult to establish a direct benchmark. If this were a competitively awarded contract for similar services, one might expect a range of bids that would indicate market pricing. The 'COST NO FEE' structure also complicates direct comparisons with fixed-price contracts. Generally, larger, multi-year, competitively bid IT infrastructure support contracts can range from tens to hundreds of millions of dollars, but the specific scope and service level agreements are crucial for accurate comparison. The sole-source nature here suggests a potentially higher cost than a competitive award might have yielded.

What are the potential risks associated with a sole-source award for critical IT infrastructure support?

The primary risk of a sole-source award for critical IT infrastructure support is the lack of price competition, which can lead to the government paying more than necessary. It also reduces the incentive for the contractor to innovate or provide superior service, as there is no direct competition to lose business to. Furthermore, it can stifle market entry for other capable vendors, limiting future competition. If the sole-source provider experiences performance issues or financial instability, the government has limited recourse without potentially disrupting critical operations, especially if switching providers is complex and costly.

What performance metrics or deliverables were associated with this contract?

The provided data summary does not include specific performance metrics, deliverables, or service level agreements (SLAs) associated with this contract. For a server support contract, typical performance indicators might include server uptime percentages, response times for issue resolution, patch management compliance, and security vulnerability remediation rates. Without this information, it is impossible to objectively assess the quality of service provided by Lockheed Martin Integrated Systems, LLC under this award. The 'COST NO FEE' contract type often relies heavily on robust oversight and defined performance standards to ensure value.

What is the historical spending pattern for server support services by the Department of the Army, and does this contract align?

The provided data is limited to a single contract award and does not offer insight into historical spending patterns for server support services by the Department of the Army. To analyze historical spending, one would need access to contract databases covering multiple years and various awards within this service category. Such an analysis would reveal trends in contract values, types of services procured, dominant contractors, and the prevalence of competitive versus sole-source awards. Without this broader context, it's impossible to determine if this $20.7 million sole-source contract represents a typical or anomalous expenditure for the Army's server support needs.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Facilities Management Services

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

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: 2001 JEFFERSON DAVIS HWY, STE 900, ARLINGTON, VA, 22202

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $20,669,848

Exercised Options: $20,669,848

Current Obligation: $20,669,848

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W91WMC07D0001

IDV Type: IDC

Timeline