Lockheed Martin's $890M R&D contract for Transformer technology shows significant investment in advanced defense capabilities

Contract Overview

Contract Amount: $89,034,505 ($89.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2010-09-30

End Date: 2019-07-01

Contract Duration: 3,196 days

Daily Burn Rate: $27.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 20

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: TRANSFORMER (TX)

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $89.0 million to LOCKHEED MARTIN CORPORATION for work described as: TRANSFORMER (TX) Key points: 1. The contract's value suggests a substantial commitment to developing and refining complex technological solutions. 2. Full and open competition indicates a broad market search, potentially leading to competitive pricing. 3. The cost-plus-fixed-fee structure allows for flexibility but requires careful oversight to manage costs. 4. A long duration of over 3000 days points to the complexity and long-term nature of the R&D effort. 5. The focus on Research and Development in Physical Sciences highlights a strategic investment in future technological superiority. 6. The absence of small business set-asides suggests the primary contractor is a large, established entity.

Value Assessment

Rating: fair

Benchmarking this contract's value is challenging without specific details on the 'TRANSFORMER (TX)' technology. However, an $890 million award over nearly nine years for advanced R&D is substantial. The cost-plus-fixed-fee (CPFF) pricing structure, while common for R&D, can lead to cost overruns if not meticulously managed. Without comparable contract data for similar transformative technologies, assessing true value-for-money is difficult, but the scale implies significant expected benefits.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that the Department of Defense sought proposals from all responsible sources. This approach typically fosters a competitive environment, which can lead to better pricing and innovation. The presence of 20 bids indicates a healthy level of interest from the industry, providing a strong basis for selecting the most capable and cost-effective solution.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down costs through market forces and ensuring the government receives the best possible value for its investment.

Public Impact

The primary beneficiaries are the Department of Defense and the Air Force, gaining access to advanced 'TRANSFORMER (TX)' technology. The contract supports the development of cutting-edge research and development in physical sciences, potentially enhancing national security. The geographic impact is centered around Lockheed Martin's operations, likely in Texas, contributing to the local economy. The contract implies a need for highly skilled engineers, scientists, and technicians, impacting the specialized workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can incentivize contractors to incur costs, requiring robust oversight to prevent overspending.
The long contract duration increases the risk of scope creep and potential obsolescence of technology by completion.
Lack of specific details on 'TRANSFORMER (TX)' makes it difficult to assess the true technological advancement and its practical application.
The significant dollar amount warrants close monitoring for adherence to project milestones and deliverables.

Positive Signals

Awarded under full and open competition with 20 bids, indicating strong market interest and potential for competitive pricing.
The contractor, Lockheed Martin, is a well-established defense contractor with a proven track record in complex R&D projects.
The contract focuses on advanced R&D, positioning the U.S. at the forefront of technological innovation in defense.
The definitive contract award suggests a clear understanding of the scope and requirements, despite the R&D nature.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical sciences and engineering. The defense R&D market is characterized by long development cycles, high costs, and significant technological innovation. Spending in this area is crucial for maintaining a military advantage. Comparable spending benchmarks would typically involve other large-scale, multi-year R&D initiatives within the defense sector, often awarded to major aerospace and defense contractors.

Small Business Impact

This contract does not appear to have a small business set-aside, as indicated by 'sb: false'. The substantial value and specialized nature of the R&D likely favor large, established prime contractors like Lockheed Martin. There is no explicit information on subcontracting plans for small businesses, which could be a missed opportunity to foster innovation and economic participation within the small business ecosystem.

Oversight & Accountability

Oversight for this cost-plus-fixed-fee contract would typically be managed by the contracting officer and program management office within the Department of the Air Force. Accountability measures would involve regular progress reports, milestone reviews, and audits to ensure funds are used appropriately and objectives are met. Transparency is often limited in defense R&D contracts due to national security concerns, but contract award details are publicly available.

Related Government Programs

Advanced Technology Development
Research and Development Contracts
Department of Defense Procurement
Air Force Research Initiatives
Lockheed Martin Contracts

Risk Flags

Long contract duration increases risk of obsolescence.
Cost-plus-fixed-fee structure requires diligent cost oversight.
Lack of specific technology details hinders full assessment.
Potential for scope creep over extended performance period.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $89.0 million to LOCKHEED MARTIN CORPORATION. TRANSFORMER (TX)

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 $89.0 million.

What is the period of performance?

Start: 2010-09-30. End: 2019-07-01.

What is the specific nature of the 'TRANSFORMER (TX)' technology being developed under this contract?

The provided data abbreviates the technology as 'TRANSFORMER (TX)' and categorizes the contract under 'Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)'. However, the specific application or function of this 'TRANSFORMER (TX)' technology is not detailed in the provided data. It could refer to a wide range of advanced physical or engineering systems, potentially related to energy transformation, signal processing, or novel materials. Further investigation into contract details or public disclosures by the Department of Defense or Lockheed Martin would be necessary to ascertain the precise nature and purpose of this technology.

How does the cost-plus-fixed-fee (CPFF) structure impact the potential for cost overruns on this long-term R&D project?

The Cost-Plus-Fixed-Fee (CPFF) structure means the contractor is reimbursed for allowable costs plus a fixed fee representing profit. For long-term R&D projects like this, CPFF offers flexibility to adapt to unforeseen technical challenges. However, it can incentivize cost incurrence, as the contractor is guaranteed cost recovery. Potential for cost overruns exists if the initial cost estimates are inaccurate, the scope expands significantly, or if project management is not rigorous. Robust government oversight, including detailed cost tracking, performance reviews, and change control processes, is critical to mitigate these risks and ensure the fixed fee remains appropriate for the effort expended.

What is the significance of having 20 bidders for this contract, and what does it imply for price discovery?

Having 20 bidders for this contract is a strong indicator of robust competition within the relevant R&D market. A larger number of bidders generally suggests that the opportunity was widely known and that multiple companies possessed the capability and interest to pursue it. This high level of competition is beneficial for price discovery, as it pressures bidders to offer competitive pricing to win the contract. It increases the likelihood that the government will receive proposals reflecting fair market value and potentially lower costs than if fewer bidders were involved. This also suggests a healthy and accessible market for this type of advanced technology development.

Given the contract's duration (over 3000 days), what are the primary risks associated with technological obsolescence or changing requirements?

A contract duration exceeding 3000 days (approximately 8-9 years) presents significant risks for technological obsolescence and evolving requirements in the fast-paced R&D field. The 'TRANSFORMER (TX)' technology, by the time of its completion, might be surpassed by newer innovations or rendered less relevant by shifts in strategic needs or geopolitical landscapes. To mitigate this, contracts of such length often incorporate mechanisms for periodic reviews, phased development, and flexibility to adapt the scope or technology. Effective program management and continuous communication between the government and contractor are essential to navigate these risks and ensure the final product remains valuable and aligned with current and future defense objectives.

How does this contract fit into the broader landscape of Department of Defense R&D spending, and are there comparable programs?

This $890 million contract for 'TRANSFORMER (TX)' technology represents a significant investment within the Department of Defense's broader R&D portfolio, which annually totals tens of billions of dollars. It falls under the 'Research and Development in the Physical, Engineering, and Life Sciences' category, indicating a focus on foundational or applied science with potential for technological breakthroughs. Comparable programs would include other large-scale, multi-year R&D efforts aimed at developing next-generation capabilities in areas such as artificial intelligence, hypersonics, cyber warfare, or advanced materials. These contracts are typically awarded to major defense contractors and are crucial for maintaining technological superiority.

Industry Classification

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

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: 20

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: LOCKHEED BLVD, FORT WORTH, TX, 76108

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: $89,034,505

Exercised Options: $89,034,505

Current Obligation: $89,034,505

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $325,490

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline