Lockheed Martin awarded $945.7M for aerospace component development, with a significant portion for R&D

Contract Overview

Contract Amount: $11,440,793 ($11.4M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2003-03-31

End Date: 2010-03-31

Contract Duration: 2,557 days

Daily Burn Rate: $4.5K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200306!000110!5700!GR13 !AFRL/SNKE AEROSPACE COMPONENTS !F3361503C1400 !A!N! !N! !20030331!20071119!945757268!945757268!834951691!N!LOCKHEED MARTIN CORPORATION !1210 MASSILLON ROAD !AKRON !OH!44315!01000!153!39!AKRON !SUMMIT !OHIO !+000001001000!N!N!000008032000!AC63!RDTE/ELECTRONICS & COMMUNICATION EQ-ADV TECH DEV !A7 !ELECTRONICS AND COMMUNICATION !3000!NOT DISCERNABLE OR CLASSIFIED !541710!E! !3! ! ! ! ! !99990909!B! ! !A! !A!N!U!2!002!E! !Z!N!Z! ! !N!C!N! ! ! !C!C!A!A!000!A!C!N! ! ! !Y! ! !0001! !

Place of Performance

Location: AKRON, SUMMIT County, OHIO, 44315

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $11.4 million to LOCKHEED MARTIN CORPORATION for work described as: 200306!000110!5700!GR13 !AFRL/SNKE AEROSPACE COMPONENTS !F3361503C1400 !A!N! !N! !20030331!20071119!945757268!945757268!834951691!N!LOCKHEED MARTIN CORPORATION !1210 MASSILLON ROAD !AKRON !OH!44315!01000!153!39!AKRON !SUMMI… Key points: 1. Contract focused on advanced technology development for aerospace components. 2. Significant R&D investment indicates a focus on innovation and future capabilities. 3. The contract duration of over 7 years suggests a long-term strategic need. 4. Competition was full and open after exclusion of sources, implying a structured procurement process. 5. The contractor, Lockheed Martin, is a major defense industry player with extensive experience. 6. The contract value represents a substantial commitment to a specific technological area.

Value Assessment

Rating: good

The contract value of $945.7 million over approximately 7.6 years for aerospace component development appears reasonable given the contractor's expertise and the R&D focus. Benchmarking against similar advanced technology development contracts is challenging due to the specialized nature of the work, but the cost-plus-fixed-fee structure suggests that costs were managed within an agreed-upon framework. The contract's duration and scope imply a significant investment in innovation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition after exclusion of sources.' This indicates that while the competition was broad, there were specific criteria or reasons for excluding certain potential sources, suggesting a targeted approach to finding the best fit for specialized requirements. The number of bidders is not explicitly stated, but the 'full and open' nature implies multiple interested parties were considered.

Taxpayer Impact: This procurement method aims to ensure fair pricing and access to the best available technology for taxpayers, even with specific source exclusions, by allowing a wide range of qualified contractors to compete.

Public Impact

The primary beneficiaries are the Department of Defense and the Air Force, receiving advanced aerospace components. The contract supports the development of cutting-edge electronics and communication equipment. The geographic impact is primarily within Ohio, where Lockheed Martin's facility is located. This contract likely supports a specialized workforce in aerospace engineering and research.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in cost-plus-fixed-fee contracts.
The 'exclusion of sources' in competition could limit broader market engagement.
Long contract duration may lead to evolving technological requirements not fully captured initially.

Positive Signals

Award to a reputable contractor with a strong track record in aerospace.
Focus on R&D suggests investment in future technological superiority.
Structured competition, even with exclusions, aims for best value.

Sector Analysis

This contract falls within the Aerospace and Defense sector, specifically focusing on Research and Development for advanced electronic components. The market for such specialized components is characterized by high barriers to entry, significant R&D investment, and a concentration of major players like Lockheed Martin. Spending in this area is critical for maintaining technological advantage and national security.

Small Business Impact

The contract does not indicate any specific small business set-asides. Given the nature of advanced aerospace component development and the prime contractor, it is likely that any small business involvement would be through subcontracting opportunities, the extent of which is not detailed here.

Oversight & Accountability

Oversight would typically be managed by the contracting officer and program management within the Department of the Air Force. The cost-plus-fixed-fee structure necessitates close monitoring of costs and performance. Inspector General involvement would be standard for investigating any potential fraud, waste, or abuse.

Related Government Programs

Aerospace Component Development
Advanced Technology Development
Research and Development Contracts
Department of Defense Procurement
Air Force Research Laboratory Contracts

Risk Flags

Cost Overrun Risk (CPFF)
Limited Competition Potential
Long-Term Project Management Complexity

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.4 million to LOCKHEED MARTIN CORPORATION. 200306!000110!5700!GR13 !AFRL/SNKE AEROSPACE COMPONENTS !F3361503C1400 !A!N! !N! !20030331!20071119!945757268!945757268!834951691!N!LOCKHEED MARTIN CORPORATION !1210 MASSILLON ROAD !AKRON !OH!44315!01000!153!39!AKRON !SUMMIT !OHIO !+000001001000!N!N!000008032000!AC63!RDTE/ELECTRONICS & COMMUNICATION EQ-ADV TECH DEV !A7 !ELECTRONICS AND COMMUNICATION !3000!NOT DISCERNABLE OR CLASSIFIED !541710!E! !3! ! ! ! ! !99990909!B

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 $11.4 million.

What is the period of performance?

Start: 2003-03-31. End: 2010-03-31.

What is Lockheed Martin's track record with similar R&D contracts for the Air Force?

Lockheed Martin has a long and extensive history of performing complex Research and Development (R&D) contracts for the Department of the Air Force and other military branches. They are a prime contractor on numerous high-value, technologically advanced programs across various domains, including aerospace, defense systems, and information technology. Their track record typically involves delivering sophisticated systems and components, often under challenging technical requirements and tight deadlines. While specific performance metrics for individual contracts are not publicly detailed, their continued selection for major programs suggests a generally positive performance history and a strong capability to meet demanding R&D objectives. However, like any large defense contractor, they may have faced scrutiny or performance issues on specific projects over their long history, which would be detailed in internal government performance reviews.

How does the value of this contract compare to other aerospace R&D investments by the Air Force?

The $945.7 million awarded to Lockheed Martin for aerospace component development represents a significant, but not unprecedented, investment for the Air Force in R&D. The Air Force consistently invests billions annually in research, development, testing, and evaluation (RDT&E) to maintain technological superiority. Contracts of this magnitude are common for developing next-generation aircraft, weapon systems, and critical components. For context, major aircraft programs or advanced missile development can easily run into tens or hundreds of billions over their lifecycle. This specific contract, focused on components and advanced technology, fits within the broader RDT&E budget, likely supporting a specific technological advancement or a critical subsystem rather than an entire platform. Its value is substantial enough to indicate a high level of technological complexity and strategic importance.

What are the primary risks associated with this cost-plus-fixed-fee contract structure?

Cost-Plus-Fixed-Fee (CPFF) contracts, like this one, carry inherent risks, primarily related to cost control. The government agrees to pay the contractor's allowable costs plus a predetermined fixed fee. The main risk for the government is that the contractor may have less incentive to control costs rigorously, as their profit (the fixed fee) is not directly tied to cost savings. If costs escalate beyond initial estimates, the government pays the higher costs, while the contractor's fee remains the same. This can lead to the contract exceeding its ceiling value if not managed carefully. For the contractor, the risk lies in underestimating the allowable costs, which could reduce their overall profit margin if the fixed fee is insufficient to cover unexpected expenses. Effective oversight and robust cost accounting are crucial to mitigate these risks.

How does the 'full and open competition after exclusion of sources' impact price discovery?

The 'full and open competition after exclusion of sources' clause suggests a competitive process was initiated, but certain potential bidders were deemed ineligible or unsuitable based on specific criteria. This can impact price discovery in a few ways. On one hand, having multiple qualified bidders still allows for competitive pricing and encourages efficiency. On the other hand, excluding sources, even for valid reasons, might reduce the overall number of competitive offers received. If the exclusions significantly limit the pool of highly capable or cost-competitive vendors, the resulting price might be higher than if a broader competition had been feasible. The effectiveness of price discovery depends heavily on the justification for the exclusions and the remaining number and competitiveness of the bidders.

What is the strategic importance of developing advanced aerospace components in this sector?

The development of advanced aerospace components is strategically vital for maintaining national security, technological leadership, and economic competitiveness. For the military, cutting-edge components are essential for developing superior aircraft, drones, and weapon systems that provide a decisive advantage. In the civilian sector, advancements drive innovation in commercial aviation, space exploration, and related industries. This contract's focus on electronics and communication equipment suggests an effort to enhance capabilities in areas like sensor technology, data processing, electronic warfare, or communication systems, which are critical for modern aerospace platforms. Investing in this R&D ensures the U.S. remains at the forefront of aerospace technology, countering potential adversaries and fostering a robust domestic aerospace industrial base.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: BASIC RESEARCH

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 1210 MASSILLON ROAD, AKRON, OH, 13

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: YES

Timeline