DoD's $23.6M engineering services contract awarded to Lockheed Martin Corp. for 364 days

Contract Overview

Contract Amount: $23,581,077 ($23.6M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2024-07-25

End Date: 2025-07-24

Contract Duration: 364 days

Daily Burn Rate: $64.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SETSS UCA

Place of Performance

Location: MARIETTA, COBB County, GEORGIA, 30063

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $23.6 million to LOCKHEED MARTIN CORP for work described as: SETSS UCA Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Cost-plus-fixed-fee structure may incentivize cost overruns. 3. Limited competition raises concerns about optimal value for taxpayer funds. 4. Contract duration of one year suggests a focused scope of work. 5. The specific engineering services (NAICS 541330) are critical for defense operations. 6. Awarded by the Department of the Air Force, indicating a focus on aviation or space systems. 7. The contract is not set aside for small businesses, potentially impacting SMB participation.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source, cost-plus-fixed-fee contract is challenging without detailed cost breakdowns and comparison to similar sole-source engineering services. The fixed fee component provides some cost control, but the "cost plus" nature inherently carries a risk of higher-than-expected expenditures if not rigorously managed. Without competitive bids, it's difficult to ascertain if the pricing reflects market rates or represents a fair value for the services rendered. The lack of competition is a primary driver for the questionable value assessment.

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 Corp., was solicited. This approach is typically justified when only one responsible source is available or when there's a compelling urgency. The lack of competition means there was no opportunity for price discovery through multiple bids, potentially leading to a higher price than if multiple firms had competed.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competition to secure the best possible pricing, which can result in less efficient use of taxpayer funds.

Public Impact

The primary beneficiary is the Department of the Air Force, receiving critical engineering services. Services likely support advanced defense systems, contributing to national security. The geographic impact is centered in Georgia (ST='GA'), where the contractor is located. Workforce implications include employment for engineers and technical staff at Lockheed Martin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus-fixed-fee contract type can lead to cost escalation if not closely monitored.
Lack of small business set-aside may reduce opportunities for smaller firms in the supply chain.

Positive Signals

Award to a large, established defense contractor like Lockheed Martin suggests a high level of trust and capability.
The contract is for a defined period, allowing for focused project management.
The fixed fee component provides a degree of cost certainty for the government.

Sector Analysis

Engineering services (NAICS 541330) are a vital component of the defense industrial base, supporting the design, development, and sustainment of complex military systems. The market is characterized by a few large, established prime contractors and numerous specialized subcontractors. This contract fits within the broader defense sector spending, where engineering expertise is crucial for maintaining technological superiority. Comparable spending benchmarks for sole-source engineering services can vary widely based on the complexity and criticality of the systems involved.

Small Business Impact

This contract was not set aside for small businesses, and the data indicates no indication of subcontracting goals for small businesses (SB=false). This means that opportunities for small businesses to participate in this specific contract are likely limited to indirect contributions or through subcontracts awarded by Lockheed Martin at their discretion. The absence of a set-aside may mean that the government did not identify specific requirements that could be effectively fulfilled by small businesses or that the nature of the services required expertise only available from larger, established firms.

Oversight & Accountability

Oversight for this contract will be managed by the Department of the Air Force contracting and program management offices. Accountability measures will be tied to the performance against the contract's statement of work and the fixed fee. Transparency is limited due to the sole-source nature and the proprietary details of engineering services. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Defense Engineering Services
Lockheed Martin Contracts
Air Force Procurement
Sole-Source Defense Contracts
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.6 million to LOCKHEED MARTIN CORP. SETSS UCA

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 $23.6 million.

What is the period of performance?

Start: 2024-07-25. End: 2025-07-24.

What is Lockheed Martin Corp.'s track record with the Department of Defense for similar engineering services?

Lockheed Martin Corporation is a major defense contractor with an extensive history of providing engineering services to the Department of Defense across various branches, including the Air Force. Their track record typically involves large-scale, complex projects related to aircraft, missile systems, and space technologies. While specific performance metrics for individual contracts are often not publicly detailed, the company's continued awards suggest a generally satisfactory performance history. However, like any large contractor, they have faced scrutiny on specific contracts regarding cost, schedule, and performance. For this particular contract, the sole-source award implies the Air Force has confidence in Lockheed Martin's unique capabilities or existing knowledge base related to the specific engineering needs.

How does the $23.6 million value compare to other sole-source engineering contracts awarded by the Air Force?

The $23.6 million value for this one-year definitive contract is moderate within the context of large defense procurements. Sole-source engineering services contracts awarded by the Air Force can range from a few million dollars for specialized support to hundreds of millions or even billions for major system development. This contract's value suggests it is likely for a specific, well-defined set of engineering tasks rather than broad system development. Without knowing the exact nature of the engineering services, direct comparison is difficult, but it falls within a common range for significant, but not program-defining, sole-source engineering support.

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

The primary risks associated with a sole-source, cost-plus-fixed-fee (CPFF) contract for engineering services are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher prices than could be achieved through bidding. The government relies on the contractor's good faith and robust oversight to ensure fair pricing. Secondly, the CPFF structure, while providing a degree of cost certainty through the fixed fee, can incentivize the contractor to incur costs, as their profit is tied to the total cost incurred (plus the fixed fee). This necessitates stringent cost monitoring and control by the government to prevent cost overruns and ensure efficient resource utilization. Effective oversight is critical to mitigate these risks.

What is the typical duration for definitive contracts of this nature, and what does this duration imply?

Definitive contracts, especially those for engineering services, can have varying durations. A one-year (364-day) duration, as seen in this contract, is quite common for projects with a defined scope and timeline, or for services that need to be procured annually. This duration suggests that the engineering tasks are likely focused and achievable within a year, or that the contract serves as an initial period of performance with potential for follow-on options or new procurements later. It allows for flexibility in adapting to evolving requirements compared to longer-term, fixed-duration contracts.

How does the PSC code (or NAICS code) inform the type of engineering services being procured?

The NAICS code 541330, 'Engineering Services,' is a broad classification that encompasses a wide range of activities, including designing, developing, and testing of equipment and systems. For the Department of the Air Force, this typically relates to aerospace engineering, mechanical engineering, electrical engineering, and systems engineering for aircraft, spacecraft, weapons systems, and related infrastructure. The specific services under this contract would be detailed in the Statement of Work (SOW), but the NAICS code indicates a focus on professional engineering expertise critical to defense applications, likely involving complex technical challenges.

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: FA852524R0016

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 86 S COBB DR SE, 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: $23,581,077

Exercised Options: $23,581,077

Current Obligation: $23,581,077

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $58,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline