Lockheed Martin's $267M PRESAGE contract for R&D saw 3 bidders, awarded by DoD

Contract Overview

Contract Amount: $26,698,466 ($26.7M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2007-09-21

End Date: 2012-06-30

Contract Duration: 1,744 days

Daily Burn Rate: $15.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: PREDICTING STABILITY THROUGH ANALYSIS OF GERMANE EVENTS (PRESAGE)

Place of Performance

Location: CHERRY HILL, CAMDEN County, NEW JERSEY, 08002

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $26.7 million to LOCKHEED MARTIN CORPORATION for work described as: PREDICTING STABILITY THROUGH ANALYSIS OF GERMANE EVENTS (PRESAGE) Key points: 1. The contract's value of $267 million over approximately 4.8 years suggests a significant investment in advanced research and development. 2. With three bidders, the competition level indicates a moderately contested space for this type of specialized R&D. 3. The 'Research and Development in the Physical, Engineering, and Life Sciences' NAICS code points to a focus on cutting-edge scientific and technological advancements. 4. The contract's duration of 1744 days (approx. 4.8 years) implies a long-term research objective. 5. The Cost Plus Fixed Fee (CPFF) contract type suggests that while costs are reimbursed, the contractor's profit is fixed, incentivizing efficiency. 6. The award was managed by the Defense Contract Management Agency, indicating a focus on defense-related research.

Value Assessment

Rating: good

Benchmarking the value of a $267 million R&D contract is challenging without specific comparable projects. However, the presence of three bidders suggests a competitive pricing environment, which generally leads to better value. The CPFF structure, while common for R&D, requires careful oversight to ensure costs remain reasonable and the fixed fee provides a predictable profit margin for the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with three distinct bidders vying for the opportunity. This level of competition is generally considered healthy for specialized R&D contracts, indicating that multiple capable entities were aware of and able to pursue the requirement. The presence of multiple bidders allows for a degree of price discovery and encourages contractors to offer competitive proposals.

Taxpayer Impact: A competitive award process for this significant R&D effort likely resulted in a more favorable price for taxpayers compared to a sole-source or limited competition scenario.

Public Impact

The primary beneficiaries are the Department of Defense, which gains access to advanced research and development capabilities. The contract supports the development of new technologies and scientific understanding within physical, engineering, and life sciences. The geographic impact is centered in New Jersey, where the contractor is located, potentially creating or sustaining high-skilled jobs in the region. The workforce implications include employment for scientists, engineers, and support staff involved in complex research projects.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can sometimes lead to cost overruns if not managed diligently, despite the fixed fee incentive.
The long duration of the contract requires sustained oversight to ensure research stays on track and objectives are met.
The specialized nature of R&D means that outcomes are inherently uncertain, posing a risk to the expected return on investment.

Positive Signals

Full and open competition suggests a robust bidding process that likely secured a qualified contractor at a reasonable price.
The award to a major defense contractor like Lockheed Martin indicates a high level of technical capability and experience.
The contract's focus on R&D aligns with strategic defense goals, potentially leading to significant technological advancements.

Sector Analysis

The contract falls within the Research and Development sector, specifically NAICS code 541710. This sector is characterized by innovation and the pursuit of new knowledge and applications. The market for defense-related R&D is substantial, with significant government investment aimed at maintaining technological superiority. Comparable spending benchmarks would typically involve other large-scale, multi-year R&D contracts awarded by defense agencies for similar scientific disciplines.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the prime contractor is Lockheed Martin Corporation, a large aerospace and defense company. There is no explicit information regarding subcontracting plans for small businesses within the provided data. Therefore, the direct impact on the small business ecosystem through this specific prime contract is likely minimal, though the prime contractor may engage small businesses in its supply chain.

Oversight & Accountability

Oversight for this contract would primarily be managed by the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance. Accountability measures are inherent in the CPFF contract type, requiring the contractor to manage costs within the agreed-upon fixed fee. Transparency is generally facilitated through contract reporting requirements, though specific details of R&D progress may be sensitive. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Advanced Technology Development
Research and Development Services
Defense Science and Technology
Aerospace Research
Engineering Services

Risk Flags

Long-term R&D projects carry inherent uncertainty in achieving desired outcomes.
Cost Plus Fixed Fee contracts require diligent oversight to manage potential cost escalations.
The specialized nature of the R&D may limit the pool of qualified contractors.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.7 million to LOCKHEED MARTIN CORPORATION. PREDICTING STABILITY THROUGH ANALYSIS OF GERMANE EVENTS (PRESAGE)

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 $26.7 million.

What is the period of performance?

Start: 2007-09-21. End: 2012-06-30.

What is the historical spending trend for Lockheed Martin Corporation with the Department of Defense in R&D contracts?

Analyzing Lockheed Martin Corporation's historical spending with the Department of Defense (DoD) in Research and Development (R&D) contracts reveals a consistent and substantial engagement. Over the years, Lockheed Martin has been a primary recipient of DoD R&D funding, reflecting its position as a major defense contractor. Specific trends would show significant annual outlays, often in the billions of dollars, across various R&D categories such as aerospace, defense systems, and advanced technologies. The PRESAGE contract, valued at $267 million, represents one component of this broader, long-term investment. Detailed analysis would require access to historical contract databases to track the volume, types, and specific R&D areas funded by the DoD to Lockheed Martin, highlighting patterns of sustained collaboration and investment in innovation.

How does the number of bidders (3) for this contract compare to similar R&D contracts awarded by the DoD?

The presence of three bidders for this $267 million R&D contract awarded by the Department of Defense (DoD) suggests a moderately competitive environment. For highly specialized R&D requirements, particularly those involving cutting-edge technology or requiring extensive contractor expertise, the number of capable bidders can often be limited. While more bidders generally indicate greater competition and potentially better pricing, three bidders is not uncommon for complex R&D efforts. Contracts with broader applicability or less specialized requirements might see a higher number of bids. Conversely, extremely niche or classified R&D could result in fewer than three, or even sole-source, awards. Therefore, three bidders indicates a healthy, though not intensely crowded, competitive landscape for this specific R&D domain.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for R&D, and how are they mitigated?

Cost Plus Fixed Fee (CPFF) contracts, while common for R&D due to the inherent uncertainty of research outcomes, carry specific risks. A primary risk is that the contractor may not be sufficiently incentivized to control costs, as all allowable costs are reimbursed. While the fixed fee provides a profit incentive, it doesn't directly tie to cost savings. This can lead to potential cost overruns if not managed diligently. Mitigation strategies include robust government oversight, detailed cost monitoring, and clear definition of allowable costs. The government must actively review expenditures and ensure they align with the research objectives. Furthermore, the fixed fee itself acts as a ceiling on the contractor's profit, providing some level of cost containment. Effective communication and collaboration between the government and contractor are crucial for managing R&D projects under CPFF to ensure objectives are met within reasonable financial parameters.

What is the typical duration for large-scale R&D contracts within the defense sector, and how does this contract's duration compare?

Large-scale Research and Development (R&D) contracts within the defense sector often have durations ranging from several months to many years, reflecting the complex and iterative nature of scientific discovery and technological advancement. Contracts spanning 3 to 5 years are quite common for significant R&D initiatives, allowing sufficient time for exploration, experimentation, prototyping, and testing. The PRESAGE contract, with a duration of 1744 days (approximately 4.8 years), falls within this typical range for substantial defense R&D efforts. Shorter durations might be suitable for specific research phases or technology demonstrations, while longer durations may be allocated for foundational research or the development of highly complex systems. The 4.8-year timeframe for PRESAGE suggests a comprehensive research program aimed at achieving significant, long-term advancements.

How does the NAICS code 541710 (Research and Development in the Physical, Engineering, and Life Sciences) typically influence the type of work performed and the contractors involved?

The North American Industry Classification System (NAICS) code 541710, 'Research and Development in the Physical, Engineering, and Life Sciences,' signifies contracts focused on scientific inquiry and technological innovation across a broad spectrum of disciplines. This code encompasses work ranging from fundamental research to applied development in areas like materials science, biotechnology, advanced manufacturing, artificial intelligence, and complex systems engineering. Consequently, contractors operating under this code are typically specialized R&D firms, large technology corporations with dedicated research divisions, universities, and research institutions. The work often involves high levels of technical expertise, advanced laboratory facilities, and a focus on intellectual property generation. Government agencies awarding contracts under this NAICS code, such as the Department of Defense, are seeking to advance scientific knowledge and develop new technologies to meet strategic objectives.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: BASIC RESEARCH

Offers Received: 3

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 3 EXECUTIVE CAMPUS, CHERRY HILL, NJ, 08002

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

Financial Breakdown

Contract Ceiling: $53,396,932

Exercised Options: $53,396,932

Current Obligation: $26,698,466

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline