DoD's $170M Lockheed Martin contract for enterprise infrastructure sustainment awarded without competition

Contract Overview

Contract Amount: $17,047,391 ($17.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2022-05-01

End Date: 2023-04-30

Contract Duration: 364 days

Daily Burn Rate: $46.8K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: SUSTAINMENT OF COMMON ENTERPRISE INFRASTRUCTURE (CEI) AND TRUSTED MANAGER (TMAN)

Place of Performance

Location: LITTLETON, JEFFERSON County, COLORADO, 80127

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $17.0 million to LOCKHEED MARTIN CORPORATION for work described as: SUSTAINMENT OF COMMON ENTERPRISE INFRASTRUCTURE (CEI) AND TRUSTED MANAGER (TMAN) Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, indicating potential for cost overruns. 2. Sole-source award raises concerns about price discovery and potential lack of competitive pressure. 3. The contract duration of 364 days suggests a focus on ongoing operational support rather than new development. 4. The specific services provided under 'Common Enterprise Infrastructure' and 'Trusted Manager' require further clarification to assess value. 5. Lack of competition may limit opportunities for other contractors and innovation within the sector. 6. The contract's value of $170.47 million warrants scrutiny for cost-effectiveness given the sole-source nature.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the broad description of services. Without competitive bids, it's difficult to assess if the fixed fee represents a fair market price for the sustainment of common enterprise infrastructure and trusted manager services. The cost-plus-fixed-fee structure means the government pays the actual costs plus a negotiated fee, which can sometimes lead to higher overall costs compared to fixed-price contracts if cost controls are not robust. Further analysis of the specific cost components and the fixed fee is needed to determine true value for money.

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. The data indicates the contract type as 'NOT COMPETED'. This approach bypasses the standard procurement process where multiple vendors would submit proposals, allowing for price and technical evaluation. The absence of competition means that Lockheed Martin was the only entity considered for this award, which can limit price negotiation leverage for the government and potentially lead to higher costs than if a competitive process had been employed.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that typically arise from competitive bidding. This can result in a higher overall expenditure for the government and, consequently, for taxpayers.

Public Impact

The primary beneficiary is the Department of Defense, which receives sustainment for its common enterprise infrastructure and trusted manager services. The services delivered are critical for the ongoing operation and security of essential defense IT systems. The geographic impact is likely focused on facilities and personnel managed by the Defense Contract Management Agency, with potential broader implications for DoD-wide IT operations. Workforce implications may include the continued employment of personnel by Lockheed Martin to perform these sustainment tasks.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may stifle innovation and prevent smaller, more agile companies from participating.
Cost-plus-fixed-fee contracts can incentivize spending if not carefully monitored, potentially increasing costs.
The broad nature of 'enterprise infrastructure' and 'trusted manager' could lead to scope creep if not precisely defined and managed.
Sole-source awards can create a perception of favoritism or lack of due diligence in procurement.
Dependence on a single contractor for critical infrastructure sustainment poses a long-term risk.

Positive Signals

Lockheed Martin is a large, established defense contractor with extensive experience in complex systems.
The contract ensures continuity of essential IT infrastructure, vital for national security operations.
The fixed fee component provides some level of cost predictability for the government, albeit within a cost-plus structure.
The Defense Contract Management Agency is responsible for oversight, suggesting a structured management approach.

Sector Analysis

This contract falls within the Engineering Services sector, specifically related to IT infrastructure and management. The defense IT market is substantial, with significant government spending allocated to maintaining and upgrading complex systems. Comparable spending benchmarks for enterprise infrastructure sustainment can vary widely based on scope and complexity. However, large sole-source contracts like this, particularly within defense, often represent significant investments in maintaining legacy systems or critical operational capabilities where a specific contractor's expertise is deemed essential.

Small Business Impact

This contract does not appear to include a small business set-aside. The award to Lockheed Martin Corporation, a large prime contractor, suggests that small businesses are unlikely to be direct recipients of this prime contract. However, there may be subcontracting opportunities for small businesses, depending on Lockheed Martin's subcontracting plan and the specific needs of the enterprise infrastructure sustainment. The absence of a set-aside means that opportunities for small businesses to compete directly for this significant contract are limited.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Contract Management Agency (DCMA), as indicated by the 'sa' field. DCMA's role typically involves ensuring contract compliance, monitoring performance, and verifying costs. The cost-plus-fixed-fee nature of the contract necessitates robust oversight to manage expenditures and ensure the fixed fee remains appropriate. Transparency would be enhanced through regular reporting from the contractor and periodic audits by the government. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Information Systems Agency (DISA) IT Services
DoD Enterprise Architecture
Cloud Computing Services (DoD)
Cybersecurity Sustainment Programs
IT Infrastructure Modernization

Risk Flags

Sole-source award bypasses competition.
Cost-plus-fixed-fee structure carries inherent cost overrun risk.
Broad service description lacks specificity for detailed value assessment.
Potential for vendor lock-in due to sole-source nature.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.0 million to LOCKHEED MARTIN CORPORATION. SUSTAINMENT OF COMMON ENTERPRISE INFRASTRUCTURE (CEI) AND TRUSTED MANAGER (TMAN)

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 $17.0 million.

What is the period of performance?

Start: 2022-05-01. End: 2023-04-30.

What specific 'Common Enterprise Infrastructure' and 'Trusted Manager' services are included in this contract?

The provided data does not detail the specific services encompassed by 'Common Enterprise Infrastructure (CEI)' and 'Trusted Manager (TMAN)'. These terms are broad and could refer to a wide range of IT support functions, including network management, server maintenance, data center operations, cybersecurity monitoring, identity and access management, and system administration. To fully assess the contract's value and risks, a detailed breakdown of the services, deliverables, and performance metrics is essential. Without this specificity, it is difficult to benchmark costs or evaluate the contractor's performance effectively against industry standards or alternative solutions.

What was the justification for awarding this contract on a sole-source basis?

The data indicates the contract was 'NOT COMPETED', signifying a sole-source award. Government regulations typically require competitive procurement unless specific exceptions apply, such as the existence of only one responsible source, urgent and compelling needs, or specific statutory authorities. Without further documentation, the precise justification for this sole-source award remains unclear. Common reasons for sole-sourcing defense contracts include proprietary technology, unique capabilities, or the need for seamless integration with existing systems where only one contractor can provide the required services. Understanding this justification is crucial for evaluating the necessity of bypassing competition.

How does the cost-plus-fixed-fee (CPFF) structure impact cost control and potential for overruns?

A Cost-Plus-Fixed-Fee (CPFF) contract means the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. While the fixed fee provides some cost certainty regarding profit, the overall cost is variable as it depends on the actual costs incurred. This structure can incentivize contractors to incur costs, as their reimbursement is tied to them, potentially leading to overruns if not rigorously managed. Effective cost control relies heavily on robust government oversight, detailed cost accounting, and clear performance metrics to ensure that costs are reasonable and allocable to the contract objectives. Without strong oversight, CPFF contracts can be more expensive than fixed-price alternatives.

What is Lockheed Martin's track record with similar DoD IT sustainment contracts?

Lockheed Martin Corporation is a major defense contractor with extensive experience in providing a wide array of IT and systems sustainment services to the Department of Defense and other government agencies. They have a long history of managing large, complex programs, including infrastructure support, cybersecurity, and enterprise resource planning systems. While specific performance data for this particular contract is not provided, Lockheed Martin's general track record suggests they possess the scale and expertise to handle significant IT sustainment requirements. However, the success of any CPFF contract is highly dependent on the specific program management and oversight applied by both the contractor and the government.

Are there any comparable industry benchmarks for the sustainment of enterprise IT infrastructure of this scale?

Benchmarking the sustainment of enterprise IT infrastructure is complex due to the variability in scope, technology stack, security requirements, and service level agreements. However, industry reports and market analyses often provide cost ranges for managed IT services, data center operations, and network maintenance. For a contract valued at approximately $170 million over a year, it represents a significant investment. Comparable benchmarks would typically look at metrics such as cost per server, cost per user, or cost as a percentage of total IT spend. Given the sole-source nature and the specific defense context, direct public benchmarks may be scarce, but general IT infrastructure management costs can provide a directional comparison point, highlighting the need for detailed cost breakdowns to assess value.

What are the potential risks associated with relying on a single contractor for critical enterprise infrastructure?

Relying on a single contractor for critical enterprise infrastructure, especially through a sole-source award, presents several risks. These include a lack of competitive pressure to drive down costs or improve service quality, potential vendor lock-in making future transitions difficult and expensive, and increased vulnerability if the contractor experiences financial instability, operational failures, or security breaches. There's also the risk of knowledge silos, where critical institutional knowledge resides solely with the incumbent contractor, hindering the government's ability to manage or transition the services independently. This dependence can reduce the government's flexibility and bargaining power over the long term.

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: FA852722R0006

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 12999 DEER CREEK CANYON RD, LITTLETON, CO, 80127

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

Financial Breakdown

Contract Ceiling: $17,047,391

Exercised Options: $17,047,391

Current Obligation: $17,047,391

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852718D0022

IDV Type: IDC

Timeline