DoD's $68.9M Falcon Core Engineering Services contract awarded to Lockheed Martin raises value and competition questions

Contract Overview

Contract Amount: $68,926,700 ($68.9M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2020-03-01

End Date: 2022-06-15

Contract Duration: 836 days

Daily Burn Rate: $82.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FY20/FY21 FALCON CORE ENGINEERING SERVICES

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $68.9 million to LOCKHEED MARTIN CORPORATION for work described as: FY20/FY21 FALCON CORE ENGINEERING SERVICES Key points: 1. The contract's value appears high relative to its duration and scope, warranting a closer look at pricing. 2. A sole-source award limits price discovery and potentially increases costs for taxpayers. 3. The lack of competition is a significant risk indicator for potential overspending. 4. Performance context is limited due to the absence of comparative contract data. 5. This contract falls within the broader engineering services sector for defense. 6. The fixed-price contract type offers some cost certainty but doesn't mitigate sole-source risks.

Value Assessment

Rating: questionable

The total award of $68.9 million over approximately two years for engineering services suggests a high average annual spend. Without comparable sole-source contracts for similar services, it's difficult to definitively benchmark the value. However, the absence of competition inherently limits the government's ability to secure the best possible pricing, raising concerns about whether taxpayers received optimal value for money. The fixed-price nature provides some cost control, but the lack of competitive pressure is a primary driver of potential overvaluation.

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 among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities or when urgency dictates a rapid award. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs than if multiple bids had been solicited. The government did not benefit from the competitive tension that usually drives down prices and encourages innovation.

Taxpayer Impact: Sole-source awards mean taxpayers may be paying a premium, as there was no opportunity for multiple companies to bid and offer competitive pricing. This limits the government's leverage in negotiating favorable terms and costs.

Public Impact

The primary beneficiary of this contract is the Department of the Air Force, receiving critical engineering services. These services likely support advanced aerospace or defense systems, contributing to national security. The geographic impact is centered in Texas, where Lockheed Martin's operations are based. The contract supports a highly skilled engineering workforce within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs.
Lack of transparency in the justification for sole-source award.
High dollar value without clear performance benchmarks or competitive comparisons.
Potential for cost overruns due to absence of market-driven price discovery.

Positive Signals

Fixed-price contract type provides some cost certainty.
Award to a large, established defense contractor suggests potential for reliable service delivery.
Contract duration provides a stable period for engineering support.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), a critical component of the defense industrial base. The market for defense engineering services is substantial, often characterized by long-term relationships between government agencies and specialized contractors. Spending in this area is driven by the need for complex design, development, and sustainment of military platforms. Comparable spending benchmarks are difficult to establish without more specific service details, but large sole-source contracts in this domain often represent significant investments.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. As a sole-source award to a large prime contractor, the direct impact on the small business ecosystem is likely minimal unless Lockheed Martin voluntarily includes small businesses in its subcontracting chain. Further investigation into subcontracting plans would be needed to assess any indirect benefits.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Accountability measures would be tied to the contract's performance clauses and delivery schedules. Transparency is limited due to the sole-source nature and the absence of publicly available detailed justifications. The Inspector General's office within the Department of Defense may have jurisdiction for audits and investigations if concerns regarding waste, fraud, or abuse arise.

Related Government Programs

FALCON SUPPORT SERVICES
AIRCRAFT ENGINEERING SERVICES
DEFENSE ENGINEERING CONTRACTS
LOCKHEED MARTIN DEFENSE CONTRACTS
AIR FORCE ENGINEERING PROCUREMENT

Risk Flags

Sole-source award
Lack of competition
High dollar value
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $68.9 million to LOCKHEED MARTIN CORPORATION. FY20/FY21 FALCON CORE ENGINEERING SERVICES

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 $68.9 million.

What is the period of performance?

Start: 2020-03-01. End: 2022-06-15.

What specific engineering services are covered under the FALCON CORE ENGINEERING SERVICES contract?

The provided data indicates the contract falls under NAICS code 541330 for Engineering Services. While the specific services are not detailed, 'Falcon Core Engineering Services' suggests a focus on foundational or critical engineering support for a particular program or platform, likely within the Air Force's aerospace domain. This could encompass a wide range of activities, including systems design, integration, testing, analysis, technical documentation, and lifecycle support. Given the contractor is Lockheed Martin, a major aerospace and defense company, these services are likely highly specialized and technical, potentially related to aircraft, spacecraft, or related defense systems.

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

The data indicates the contract was 'NOT COMPETED'. Typically, sole-source awards are justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source can provide the required supplies or services, or when there is a compelling urgency. Without the detailed justification document, the precise reason remains unknown. However, common justifications include unique technical capabilities, proprietary data, or the need to maintain continuity of essential services where switching contractors would be detrimental or excessively costly. The lack of competition, however, raises concerns about potential price inflation and reduced value for taxpayers.

How does the $68.9 million award compare to similar engineering services contracts within the Department of Defense?

Benchmarking this $68.9 million contract against similar DoD engineering services contracts is challenging without more specific details about the scope and nature of the services provided. However, the total award value over approximately two years (March 2020 - June 2022) suggests a significant annual spend. Sole-source contracts, by their nature, often command higher prices than competed contracts. To provide a meaningful comparison, one would need to identify other sole-source or competed contracts for comparable engineering services, considering factors like contract duration, complexity, required expertise, and the specific defense platforms or systems involved. A preliminary assessment suggests the value is substantial, warranting scrutiny due to the lack of competition.

What are the potential risks associated with a sole-source award of this magnitude?

The primary risk associated with a sole-source award of this magnitude is the potential for inflated pricing and reduced value for money. Without competitive bidding, the government lacks the leverage to negotiate the lowest possible price. This can lead to taxpayers bearing higher costs than necessary. Other risks include a potential decrease in contractor urgency to perform efficiently, as there is no competitive pressure to win future work. Furthermore, sole-source awards can stifle innovation by limiting opportunities for other capable firms to enter the market or propose alternative solutions. There's also a risk that the government may not be aware of or have access to the most advanced or cost-effective solutions available in the market.

What is Lockheed Martin Corporation's track record with the Department of the Air Force for engineering services?

Lockheed Martin Corporation is a major defense contractor with an extensive and long-standing relationship with the Department of the Air Force, as well as other branches of the DoD. They have a well-established track record in providing a wide array of engineering, development, manufacturing, and sustainment services for numerous complex defense systems, including aircraft, missiles, and space systems. While specific performance metrics for this particular contract are not detailed here, Lockheed Martin's overall history suggests a capacity to deliver sophisticated engineering solutions. However, like any large contractor, their performance can vary across different contracts, and oversight is crucial regardless of past success.

Are there any specific performance metrics or deliverables tied to this contract?

The provided data does not include specific performance metrics or deliverables for the FALCON CORE ENGINEERING SERVICES contract. Federal contracts typically outline key performance indicators (KPIs), milestones, and acceptance criteria within the contract's statement of work (SOW) or performance work statement (PWS). These define the expected quality, timeliness, and scope of the services to be rendered. Without access to the full contract documentation, it's impossible to assess the specific performance standards. However, the 'FIRM FIXED PRICE' contract type suggests that the contractor is obligated to deliver the defined scope of work for a set price, implying that performance is critical to meeting the contract's objectives.

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

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 1 LOCKHEED BLVD, FORT WORTH, TX, 76108

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

Financial Breakdown

Contract Ceiling: $68,926,700

Exercised Options: $68,926,700

Current Obligation: $68,926,700

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F4262001D0058

IDV Type: IDC

Timeline