Air Force awards $26M engineering services contract for display system upgrades to Lockheed Martin

Contract Overview

Contract Amount: $25,963,777 ($26.0M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2021-06-17

End Date: 2025-05-31

Contract Duration: 1,444 days

Daily Burn Rate: $18.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING SERRVICES FOR THE REPLACEMENT OF MULTIFUNCTIONAL CONTROLS DISPLAYS (RMCD) INTERGRATION EFFORT.

Place of Performance

Location: MARIETTA, COBB County, GEORGIA, 30063

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $26.0 million to LOCKHEED MARTIN CORP for work described as: ENGINEERING SERRVICES FOR THE REPLACEMENT OF MULTIFUNCTIONAL CONTROLS DISPLAYS (RMCD) INTERGRATION EFFORT. Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can lead to cost overruns if not managed carefully. 2. Sole-source award raises concerns about potential lack of competitive pricing and value for taxpayer dollars. 3. Long contract duration of nearly four years suggests a complex and potentially high-risk integration effort. 4. The contract is for engineering services related to Multifunctional Control Displays (RMCD), a critical component for aircraft. 5. The awardee, Lockheed Martin, is a major defense contractor with extensive experience in aerospace systems.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source, cost-plus-fixed-fee contract is challenging without competitive data. The fixed fee component provides some cost control, but the overall cost is subject to the actual expenses incurred by Lockheed Martin. Given the lack of competition, it's difficult to definitively assess if the pricing represents fair market value. Further analysis would require comparing the scope and deliverables to similar engineering services contracts, particularly those awarded competitively.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Lockheed Martin, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified in specific circumstances, such as when only one vendor possesses the required unique capabilities, they generally limit price discovery and can result in higher costs for the government.

Taxpayer Impact: The lack of competition means taxpayers may not benefit from the cost savings that could arise from a more competitive bidding environment. This could translate to a higher overall expenditure for the required engineering services.

Public Impact

The primary beneficiaries are the Department of the Air Force, which will receive upgraded Multifunctional Control Displays. This contract supports the modernization of critical aircraft systems, potentially enhancing pilot situational awareness and mission effectiveness. The geographic impact is primarily within the United States, where Lockheed Martin's engineering and integration activities will take place. The contract will likely involve a workforce of engineers and technical specialists, supporting jobs within the aerospace and defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus-fixed-fee structure can incentivize higher spending if not rigorously overseen.
Long contract duration increases exposure to potential cost escalations and scope creep.
Lack of transparency in the sole-source justification process.

Positive Signals

Award to a prime contractor with proven expertise in complex aerospace systems.
Focus on upgrading critical display technology for enhanced operational capabilities.
Clear definition of the engineering services required for integration.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting aerospace and defense systems. The market for such specialized engineering services is dominated by a few large, established defense contractors. The total addressable market for defense engineering services is substantial, driven by ongoing military modernization efforts and the need for advanced technological solutions. This contract represents a specific investment in upgrading avionics and display technology, a common area of focus within the defense sector.

Small Business Impact

The contract data indicates that small business participation (sb) is false, and it was not set aside for small businesses (ss is false). This suggests that small businesses are unlikely to be direct recipients of this prime contract. However, Lockheed Martin, as a large prime contractor, may engage small businesses as subcontractors for specific components or services, though this is not explicitly detailed in the provided data. The absence of a small business set-aside means opportunities for small businesses to compete directly for this significant engineering effort are limited.

Oversight & Accountability

Oversight for this contract will be managed by the Department of the Air Force, likely through contracting officers and program managers. Accountability measures are inherent in the cost-plus-fixed-fee structure, requiring detailed reporting and justification of costs. Transparency may be limited due to the sole-source nature of the award, but contract performance metrics and financial expenditures should be subject to internal review and potentially Inspector General oversight if performance issues or financial irregularities arise.

Related Government Programs

Aircraft Avionics Modernization Programs
Defense Engineering Services Contracts
Aerospace Systems Integration
Department of Defense IT and Software Development

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Long contract duration
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.0 million to LOCKHEED MARTIN CORP. ENGINEERING SERRVICES FOR THE REPLACEMENT OF MULTIFUNCTIONAL CONTROLS DISPLAYS (RMCD) INTERGRATION EFFORT.

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORP.

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 $26.0 million.

What is the period of performance?

Start: 2021-06-17. End: 2025-05-31.

What is Lockheed Martin's track record with similar sole-source, cost-plus-fixed-fee contracts for engineering services within the Department of Defense?

Lockheed Martin has a long history of performing sole-source and cost-plus-fixed-fee contracts with the Department of Defense across various platforms and systems. Their extensive experience in complex defense programs means they are often the sole or primary provider of specialized engineering services. While this expertise can be valuable, cost-plus-fixed-fee contracts, especially when sole-sourced, require diligent oversight to ensure costs remain reasonable and that the fixed fee is justified by the scope of work and associated risks. Historical data on their performance in managing such contracts would reveal trends in cost performance, schedule adherence, and the effectiveness of their internal controls in preventing cost overruns and ensuring value delivery.

How does the estimated value of this contract compare to similar engineering services contracts for display system upgrades in the defense sector?

Direct comparison of this $25.96 million contract for RMCD integration is difficult without more specific data on the scope, complexity, and duration of comparable contracts. However, engineering services for avionics and display systems on major defense platforms can range significantly. Sole-source awards, particularly those on a cost-plus-fixed-fee basis, tend to be higher than competitively bid contracts due to the lack of price pressure. To benchmark effectively, one would need to identify contracts with similar technical requirements (e.g., integration of advanced multi-function displays), similar aircraft types or mission systems, and similar contract types. The duration of this contract (nearly four years) also suggests a substantial scope of work that would naturally command a higher price point than shorter-term, less complex engineering tasks.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract for complex engineering integration?

The primary risks associated with a sole-source, cost-plus-fixed-fee (CPFF) contract for complex engineering integration are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated pricing and reduced incentive for the contractor to optimize costs. The government relies heavily on the contractor's cost proposals and internal controls. Secondly, the CPFF structure means the contractor is reimbursed for allowable costs plus a fixed fee. While the fee provides some incentive for efficiency, the contractor may have less motivation to control costs aggressively compared to fixed-price contracts, as cost overruns are generally reimbursed. This structure necessitates robust government oversight to monitor expenditures, ensure cost reasonableness, and prevent scope creep, which can significantly increase the total contract value beyond initial estimates.

What is the expected impact of these RMCD upgrades on the operational effectiveness of the Air Force aircraft involved?

The Multifunctional Control Displays (RMCD) are critical components of modern aircraft cockpits, providing pilots with integrated information and control capabilities. Upgrading these displays is expected to enhance operational effectiveness by improving pilot situational awareness through better data visualization, reduced workload via more intuitive interfaces, and potentially increased system reliability. Advanced RMCDs can integrate data from various sensors and systems, presenting a unified operational picture. This modernization effort likely aims to keep Air Force platforms current with technological advancements, ensuring they can effectively perform missions in increasingly complex threat environments and maintain parity with or superiority over potential adversaries.

What historical spending patterns exist for engineering services related to aircraft display systems within the Department of the Air Force?

Historical spending patterns for engineering services related to aircraft display systems within the Department of the Air Force typically show consistent investment in modernization and upgrades. These expenditures are driven by the lifecycle of aircraft, the introduction of new technologies, and evolving operational requirements. Spending can fluctuate based on major platform upgrades, new aircraft procurements, or specific threats that necessitate enhanced display capabilities. Contracts in this area often involve a mix of competitive and sole-source awards, depending on the uniqueness of the technology or the incumbent contractor's expertise. Analyzing past spending reveals a trend of sustained funding for avionics and display system engineering, reflecting the critical role these components play in maintaining air superiority.

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

Solicitation ID: FA852521R0002

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 86 SOUTH COBB DR, MARIETTA, GA, 30063

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $40,207,700

Exercised Options: $25,963,777

Current Obligation: $25,963,777

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $2,452,587

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline