DoD's $28.6M engineering services contract with Lockheed Martin lacked competition, raising value concerns

Contract Overview

Contract Amount: $28,571,057 ($28.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2007-03-12

End Date: 2013-04-30

Contract Duration: 2,241 days

Daily Burn Rate: $12.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: Defense

Official Description: ENGINEERING SERVICES

Place of Performance

Location: OWEGO, TIOGA County, NEW YORK, 13827

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $28.6 million to LOCKHEED MARTIN CORPORATION for work described as: ENGINEERING SERVICES Key points: 1. The contract was awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The duration of the contract (2,241 days) suggests a long-term need for these specialized engineering services. 3. The absence of a competitive process warrants scrutiny of the pricing and overall value for taxpayer dollars. 4. The contractor, Lockheed Martin, is a major defense contractor, indicating a focus on complex, high-value projects. 5. The contract falls under the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' NAICS code, highlighting its technical specificity.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specialized engineering services provided. Without competitive bids, it's difficult to ascertain if the $28.6 million represents a fair market price. The 'TIME AND MATERIALS' contract type can also lead to cost overruns if not closely managed. Comparing it to similar sole-source engineering contracts within the Department of Defense might offer some context, but the lack of competition inherently limits a robust value assessment.

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 responsible source is available or in cases of urgent need. The lack of competition means there were no other bidders to drive down prices or offer alternative solutions. This raises questions about whether the government received the best possible value and pricing.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings typically achieved through a competitive bidding process. This can result in higher overall expenditures for the government.

Public Impact

The Department of Defense benefits from specialized engineering services crucial for its operational capabilities. This contract supports the development and maintenance of advanced search, detection, navigation, guidance, and related systems. The geographic impact is likely concentrated around facilities where Lockheed Martin performs these engineering services, potentially in New York. Workforce implications include employment for highly skilled engineers and technical personnel within Lockheed Martin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Sole-source awards can reduce transparency in government spending.
Time and Materials contract type poses a risk of cost escalation without strict oversight.

Positive Signals

Contract awarded to a reputable and experienced defense contractor.
Services provided are critical to national defense capabilities.
Long contract duration suggests a stable and ongoing requirement.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on engineering services for navigation and guidance systems. The market for such specialized engineering is often dominated by a few large, established contractors due to high barriers to entry, including intellectual property, security clearances, and technical expertise. Spending in this sub-sector is significant, driven by continuous innovation and modernization needs within military operations. Comparable spending benchmarks would typically involve other large-scale engineering support contracts for complex defense systems.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Given the sole-source nature and the contractor (Lockheed Martin), it is unlikely that significant subcontracting opportunities for small businesses were mandated or actively pursued through this specific award. The focus is on a large prime contractor fulfilling a specialized need.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contract management and administration. Given it's a sole-source award, the emphasis would be on ensuring the contractor meets the defined scope of work, adheres to the time and materials pricing, and delivers the required engineering services. Transparency might be limited due to the non-competitive nature. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Research and Development Spending
Defense Contract Management Agency Services
Aerospace Engineering Support Contracts
Navigation and Guidance System Development

Risk Flags

Lack of Competition
Potential for Cost Overruns (Time and Materials)
Limited Transparency in Pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.6 million to LOCKHEED MARTIN CORPORATION. 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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $28.6 million.

What is the period of performance?

Start: 2007-03-12. End: 2013-04-30.

What is the track record of Lockheed Martin in delivering similar engineering services for the Department of Defense?

Lockheed Martin Corporation is a major global security and aerospace company engaged in the research, design, development, manufacture, integration, sustainment, and upgrade of advanced technology systems, products, and services. For the Department of Defense, they have a long history of providing complex engineering solutions across various platforms, including aircraft, missiles, and space systems. Their track record typically involves large-scale, high-value contracts requiring extensive technical expertise and program management capabilities. While specific performance metrics for this particular $28.6 million contract are not detailed here, Lockheed Martin is generally considered a capable contractor for sophisticated defense engineering needs, often handling critical national security programs.

How does the $28.6 million cost compare to similar sole-source engineering contracts within the DoD?

Directly comparing this $28.6 million sole-source contract to 'similar' ones is difficult without more specific details on the exact nature of the engineering services, the duration, and the specific systems involved. Sole-source contracts inherently lack the price discovery mechanism of competition, making external benchmarking less reliable. However, $28.6 million for specialized engineering services over a period of approximately 6 years (2,241 days) is within the range of significant, but not exceptionally large, sole-source awards for major defense contractors. The value is more dependent on the criticality and uniqueness of the required expertise rather than a direct cost-per-unit comparison, which is unavailable here.

What are the primary risks associated with a sole-source, Time and Materials contract of this magnitude?

The primary risks associated with a sole-source, Time and Materials (T&M) contract of this magnitude ($28.6 million) are twofold. Firstly, the sole-source nature means there was no competitive bidding, increasing the risk that the government may not have secured the most cost-effective solution or the best value. This lack of competition can lead to higher prices than might be achieved through a competitive process. Secondly, the T&M contract type, while offering flexibility, carries inherent risks of cost escalation. Without robust oversight and clear task definitions, the contractor could incur significant labor hours and material costs, potentially exceeding initial estimates and budget ceilings. This necessitates stringent monitoring of labor rates, hours, and material expenses by the contracting agency.

What is the expected effectiveness of these engineering services in supporting DoD's mission?

The effectiveness of these engineering services is directly tied to their contribution to the Department of Defense's mission, specifically concerning search, detection, navigation, guidance, and related systems. These systems are critical for intelligence gathering, situational awareness, operational planning, and the successful execution of military operations across all domains (air, land, sea, space, cyber). By providing specialized engineering expertise, Lockheed Martin is expected to enhance the performance, reliability, and technological advancement of these vital systems. The long duration of the contract (over 6 years) suggests a sustained need and implies that the services are considered essential for maintaining and improving the capabilities of these defense assets.

How has historical spending on similar engineering services by the DoD trended over time?

Historical spending by the Department of Defense on engineering services, particularly for complex systems like navigation and guidance, has generally trended upwards, driven by technological advancements, evolving threats, and the need for system modernization. While specific data for this NAICS code (334511) and contract type (sole-source) over time isn't provided, the overall defense budget allocated to research, development, testing, and evaluation (RDT&E) and procurement of advanced systems represents a significant and often growing portion of federal spending. Large defense contractors like Lockheed Martin consistently receive substantial portions of this spending due to their established capabilities and long-standing relationships with the DoD.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

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: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 1801 STATE ROUTE 17C, OWEGO, NY, 13827

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $28,619,104

Exercised Options: $28,619,104

Current Obligation: $28,571,057

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline