DoD's $20.2M Lockheed Martin contract for Multi Stream Platform Support lacks competition, raising value concerns

Contract Overview

Contract Amount: $20,218,267 ($20.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2025-01-15

End Date: 2026-01-14

Contract Duration: 364 days

Daily Burn Rate: $55.5K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: PLANNING INCREMENT (PI) 30 THROUGH 33 AND MULTIPLE SOURCE CORRELATION SYSTEM (MSCS) FOR MULTI STREAM PLATFORM SUPPORT (MSPS)

Place of Performance

Location: LITTLETON, JEFFERSON County, COLORADO, 80127

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $20.2 million to LOCKHEED MARTIN CORPORATION for work described as: PLANNING INCREMENT (PI) 30 THROUGH 33 AND MULTIPLE SOURCE CORRELATION SYSTEM (MSCS) FOR MULTI STREAM PLATFORM SUPPORT (MSPS) Key points: 1. Contract awarded to a single, well-established defense contractor, suggesting limited market exploration. 2. The cost-plus-fixed-fee structure may incentivize cost escalation without strong performance incentives. 3. Lack of competition raises questions about achieving optimal pricing and value for taxpayer dollars. 4. The contract duration of one year provides limited insight into long-term program stability or cost trends. 5. Engineering services sector is characterized by high technical expertise and significant barriers to entry. 6. Performance context is tied to critical multi-stream platform support, indicating a vital but potentially opaque function.

Value Assessment

Rating: questionable

Benchmarking the value of this $20.2 million contract is challenging due to the lack of competitive bids. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex R&D or services where costs are uncertain, can lead to higher overall expenditures compared to fixed-price contracts. Without a competitive process, it's difficult to ascertain if the fixed fee adequately compensates Lockheed Martin for the services rendered or if it represents a premium due to the absence of market pressure. The contract's value proposition hinges heavily on the contractor's efficiency and the government's oversight.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Air Force did not solicit bids from multiple potential offerors. This approach is typically justified when only one source is capable of meeting the requirement, often due to proprietary technology, unique capabilities, or urgent needs. The absence of competition means there was no direct price negotiation driven by market forces, potentially leading to a less favorable price for the government.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competition to drive down costs, potentially resulting in higher spending for taxpayers compared to a competed contract.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Air Force, which receives critical support for its multi-stream platform. Services delivered include engineering and technical support essential for the operation and maintenance of complex defense systems. The geographic impact is likely concentrated within Air Force operational bases or facilities where these platforms are utilized. Workforce implications include the continued employment of specialized engineers and technical personnel at Lockheed Martin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential cost savings.
CPFF contract type can incentivize higher costs if not managed tightly.
Lack of transparency in the justification for sole-source award.
Potential for vendor lock-in given the specialized nature of the support.

Positive Signals

Award to a known, experienced contractor (Lockheed Martin) suggests a high likelihood of technical capability.
Contract supports critical defense platforms, indicating strategic importance.
Defined period of performance (one year) allows for periodic re-evaluation of needs and potential competition.

Sector Analysis

The engineering services sector (NAICS 541330) is a critical component of the defense industrial base, providing specialized technical expertise for complex systems. This contract falls within a segment of the market characterized by high barriers to entry, significant R&D investment, and long-standing relationships between prime contractors and government agencies. Comparable spending in this sector often involves substantial sums due to the intricate nature of defense platforms. The market is dominated by a few large, established players like Lockheed Martin.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there information indicating subcontracting opportunities for small businesses. The award to a large prime contractor like Lockheed Martin often means that the bulk of the work is performed in-house or by other large subcontractors. This could limit the direct economic benefit to the small business ecosystem within the defense contracting sphere for this specific award.

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 defined by the contract terms, including performance metrics and reporting requirements. Transparency is limited by the sole-source nature of the award and the proprietary aspects of the supported platforms. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Logistics Agency (DLA) Support Contracts
Air Force Materiel Command (AFMC) Services
Department of Defense Information Technology Services
Aerospace Engineering and Support Services

Risk Flags

Sole-source award
Cost-plus-fixed-fee pricing
Lack of competitive benchmarking
Potential for cost escalation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.2 million to LOCKHEED MARTIN CORPORATION. PLANNING INCREMENT (PI) 30 THROUGH 33 AND MULTIPLE SOURCE CORRELATION SYSTEM (MSCS) FOR MULTI STREAM PLATFORM SUPPORT (MSPS)

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 $20.2 million.

What is the period of performance?

Start: 2025-01-15. End: 2026-01-14.

What is the historical spending pattern for Multi Stream Platform Support (MSPS) with Lockheed Martin?

Analyzing historical spending for Multi Stream Platform Support (MSPS) with Lockheed Martin requires access to detailed contract databases beyond the provided data. However, given Lockheed Martin's long-standing role as a major defense contractor, it is probable that they have been a primary provider for such critical platform support for an extended period. Past contracts for similar services often involve multi-year durations and significant financial commitments, reflecting the complexity and strategic importance of the platforms. Without specific historical data, it's difficult to establish trends in spending, cost growth, or the evolution of the service requirements. However, the current sole-source award suggests a continuation of a relationship that may have roots in previous, potentially competed or sole-sourced, agreements.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for similar engineering services?

The Cost-Plus-Fixed-Fee (CPFF) contract type is often used when the scope of work is not well-defined, or when there is significant uncertainty in the costs associated with performance, such as in research and development or complex system integration. For engineering services, other common contract types include Firm-Fixed-Price (FFP), which offers the government the best price certainty but places risk on the contractor for cost overruns, and Cost-Plus-Incentive-Fee (CPIF), which shares cost savings or overruns between the government and contractor based on performance targets. Compared to FFP, CPFF generally results in higher government spending as the contractor is reimbursed for all allowable costs plus a fixed fee, potentially leading to less incentive for cost control. However, CPFF can be advantageous when innovation or flexibility is paramount and precise cost estimation is impossible upfront.

What are the specific risks associated with a sole-source award for critical defense platform support?

Sole-source awards for critical defense platform support carry several significant risks. Firstly, the lack of competition means the government cannot leverage market forces to achieve the most favorable pricing, potentially leading to inflated costs. Secondly, it can foster complacency in the contractor, reducing the incentive to innovate or improve efficiency since there is no direct threat of losing the business to a competitor. Thirdly, it can create a dependency or 'vendor lock-in,' making it difficult and costly to transition to a different provider in the future, even if performance or pricing becomes unsatisfactory. Finally, without competitive benchmarking, it is harder for the government to objectively assess whether the contractor is delivering optimal value for the investment.

What performance metrics are typically used to evaluate engineering services contracts like this one?

Performance metrics for engineering services contracts like this one are crucial for ensuring the government receives the intended value. Common metrics include technical performance (e.g., system reliability, accuracy, efficiency improvements), schedule adherence (meeting project milestones and delivery dates), cost control (managing expenditures within budget, though less critical for CPFF unless specific fee incentives are tied to it), and quality of deliverables (e.g., accuracy of designs, completeness of documentation, successful testing). For platform support, metrics might also involve system uptime, response times for technical assistance, and the successful implementation of upgrades or modifications. The effectiveness of these metrics depends on clear definition, objective measurement, and regular reporting and review by the contracting officer's representative (COR) or technical point of contact.

What is the typical profit margin or fixed fee for a contractor like Lockheed Martin on a sole-source defense engineering contract?

Determining the exact profit margin or fixed fee for a contractor like Lockheed Martin on a sole-source defense engineering contract is complex and depends on various factors, including the contract's risk profile, the specific services rendered, market conditions, and government negotiation strategies. Generally, fixed fees in CPFF contracts are negotiated upfront and are intended to represent a fair return for the contractor's effort and risk. For large, complex defense contracts, profit margins can range significantly, often falling within a government-regulated or industry-standard range, perhaps between 7% and 15% of total estimated costs, though this can vary. However, without access to the specific contract negotiations and the government's cost and profit analysis, providing a precise figure is speculative. The 'br' value of 55545 in the provided data might represent a benchmark or target, but its exact meaning in relation to profit is unclear without further context.

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: FA852724R0045

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 12999 W 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: $20,218,267

Exercised Options: $20,218,267

Current Obligation: $20,218,267

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA852724D0022

IDV Type: IDC

Timeline