DoD awards $503M contract to Lockheed Martin for digital and model-based engineering, focusing on R&D

Contract Overview

Contract Amount: $5,034,311 ($5.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2024-04-12

End Date: 2026-04-16

Contract Duration: 734 days

Daily Burn Rate: $6.9K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: THIS EFFORT WILL INVOLVE THE USE OF DIGITAL ENGINEERING (DE) AND MODEL-BASED ENGINEERING (MBE) PRACTICES FOR REQUIREMENTS, DESIGN, TRADE STUDIES, AND ANALYSES.

Place of Performance

Location: GRAND PRAIRIE, TARRANT County, TEXAS, 75051

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $5.0 million to LOCKHEED MARTIN CORPORATION for work described as: THIS EFFORT WILL INVOLVE THE USE OF DIGITAL ENGINEERING (DE) AND MODEL-BASED ENGINEERING (MBE) PRACTICES FOR REQUIREMENTS, DESIGN, TRADE STUDIES, AND ANALYSES. Key points: 1. Contract leverages advanced digital and model-based engineering practices for requirements, design, and analysis. 2. Significant investment in R&D for physical, engineering, and life sciences, excluding nanotechnology and biotechnology. 3. Full and open competition suggests a robust market and potential for competitive pricing. 4. Cost Plus Fixed Fee contract type may incentivize contractor efficiency while managing risk. 5. Long duration of 734 days indicates a complex and extensive research and development effort. 6. Awarded by the Department of the Air Force, highlighting a key area of defense modernization. 7. Texas is the performance location, potentially impacting local economic and workforce development.

Value Assessment

Rating: good

The contract value of $503.4 million for a 734-day duration appears substantial, reflecting the complexity of digital and model-based engineering in R&D. Benchmarking this against similar large-scale R&D contracts within the Department of Defense would provide further context on value for money. The Cost Plus Fixed Fee (CPFF) structure is common for R&D where costs can be uncertain, but it requires careful oversight to ensure efficiency and prevent cost overruns. Without specific comparable contract data, a definitive value assessment is challenging, but the scale suggests a significant technological advancement is being pursued.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple capable contractors had the opportunity to bid. This approach typically fosters a competitive environment, driving innovation and potentially leading to more favorable pricing for the government. The specific number of bidders is not provided, but the 'full and open' designation suggests a healthy level of market interest and capability for this type of advanced engineering research.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it increases the likelihood of obtaining the best value through a competitive bidding process, potentially lowering overall costs and encouraging innovation.

Public Impact

The Department of Defense, specifically the Air Force, benefits from advancements in digital and model-based engineering for future defense systems. Services delivered include research and development in physical, engineering, and life sciences, utilizing advanced DE and MBE practices. The primary geographic impact is in Texas, where the contract performance is scheduled. This contract may foster a highly skilled workforce in digital engineering and advanced R&D within the aerospace and defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can sometimes lead to higher costs if not managed diligently, as the contractor is reimbursed for costs plus a fixed fee.
The long contract duration (734 days) increases the risk of scope creep or evolving technological requirements that may necessitate contract modifications.
Reliance on specific digital engineering and model-based engineering practices requires specialized expertise and tools, potentially limiting the pool of highly qualified personnel.

Positive Signals

The use of digital and model-based engineering practices signifies a commitment to modernizing R&D processes, potentially leading to more efficient development cycles and better system designs.
Full and open competition suggests a strong market response and potential for innovative solutions from multiple offerors.
The significant investment in R&D indicates a strategic focus on future technological capabilities for the Air Force.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. The use of Digital Engineering (DE) and Model-Based Engineering (MBE) represents a significant trend in modernizing R&D processes across various industries, particularly in aerospace and defense. Comparable spending benchmarks would involve looking at other large-scale R&D contracts awarded by the DoD for advanced technology development, which often run into hundreds of millions of dollars due to the complexity and long-term nature of the research.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large-value contract awarded through full and open competition to a major defense contractor, Lockheed Martin, it is unlikely to involve significant direct subcontracting opportunities for small businesses unless specified in the contract's detailed SOW. The primary focus appears to be on advanced R&D capabilities, which may not align with the typical scope of small business set-aside programs.

Oversight & Accountability

Oversight for this Cost Plus Fixed Fee contract will likely involve rigorous monitoring of costs, performance, and adherence to the Statement of Work by the Department of the Air Force contracting and technical teams. The fixed fee component provides some incentive for cost control. Transparency will depend on the DoD's reporting practices for R&D contracts. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Research and Development Programs
Air Force Advanced Technology Development
Digital Engineering Initiatives
Model-Based Systems Engineering Contracts
Aerospace Engineering Services

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight to manage potential cost escalations.
Long contract duration increases exposure to evolving technological requirements and scope management challenges.
Reliance on specialized DE/MBE expertise may present challenges in sourcing and retaining qualified personnel.
The specific R&D focus requires careful definition and monitoring to ensure alignment with strategic defense goals.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $5.0 million to LOCKHEED MARTIN CORPORATION. THIS EFFORT WILL INVOLVE THE USE OF DIGITAL ENGINEERING (DE) AND MODEL-BASED ENGINEERING (MBE) PRACTICES FOR REQUIREMENTS, DESIGN, TRADE STUDIES, AND ANALYSES.

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 $5.0 million.

What is the period of performance?

Start: 2024-04-12. End: 2026-04-16.

What is Lockheed Martin's track record with similar Digital Engineering (DE) and Model-Based Engineering (MBE) contracts for the Department of Defense?

Lockheed Martin has a well-established track record in leveraging advanced engineering methodologies, including DE and MBE, across numerous defense programs. They have been a key player in initiatives like the F-35 program, which extensively utilizes digital design and simulation. The company has publicly stated its commitment to digital transformation and has invested heavily in DE/MBE capabilities. Their experience spans various domains, from aircraft design and manufacturing to missile systems and space technology. Specific contract history would reveal the scale and scope of their prior DE/MBE work for the DoD, including performance metrics and any past issues. However, their position as a prime contractor on major defense systems suggests a strong capability in these advanced engineering practices.

How does the $503.4 million value compare to other large-scale R&D contracts in physical, engineering, and life sciences awarded by the DoD in the last three years?

The $503.4 million award to Lockheed Martin for DE/MBE R&D is substantial and aligns with the typical scale of major research and development initiatives within the Department of Defense. Large DoD R&D contracts, particularly those involving advanced technologies like AI, cyber, aerospace, and complex systems engineering, frequently range from hundreds of millions to over a billion dollars. For instance, contracts for developing next-generation aircraft, advanced weapon systems, or significant software infrastructure often fall within or exceed this value range. The specific NAICS code (541715) covers a broad spectrum of R&D, but the focus on DE/MBE suggests a high-technology component. Without direct comparison data for contracts with identical technical scopes, it's reasonable to infer that this award is significant but not unprecedented for a prime contractor like Lockheed Martin undertaking complex, multi-year R&D for the Air Force.

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

The primary risks with CPFF contracts in R&D are that the contractor may have less incentive to control costs compared to fixed-price contracts, potentially leading to cost overruns, and that the fixed fee might not adequately compensate for unforeseen complexities or risks. For the government, the risk is paying more than necessary if costs escalate without proportional benefit. Mitigation strategies typically involve robust government oversight of contractor expenditures, detailed performance metrics, regular progress reviews, and clear definition of the Statement of Work (SOW). The fixed fee itself provides a ceiling on the profit, and the government's ability to adjust the SOW or terminate the contract for cause are further controls. The Air Force's technical and contracting teams will be crucial in monitoring progress and expenditures to ensure value is achieved within the contract's framework.

What is the expected impact of this contract on the development and adoption of Digital Engineering (DE) and Model-Based Engineering (MBE) practices within the defense sector?

This significant contract award to Lockheed Martin for DE/MBE practices is expected to accelerate the adoption and maturation of these methodologies within the defense sector. By investing over $500 million in R&D that explicitly utilizes DE/MBE, the Department of the Air Force signals a strong strategic commitment to these advanced approaches. This can drive innovation in DE/MBE tools, processes, and standards, potentially leading to wider industry adoption. Furthermore, it fosters a skilled workforce proficient in these areas and encourages other contractors to enhance their own DE/MBE capabilities to remain competitive. The success of this effort could serve as a model for future defense acquisition programs, further embedding digital engineering principles into the lifecycle of defense systems.

How does the performance location in Texas potentially influence workforce development and economic impact related to this contract?

Performance in Texas, a state with a significant aerospace and defense industry presence, suggests potential benefits for local workforce development and the regional economy. Lockheed Martin likely has existing facilities or will establish operations in Texas to execute this contract, potentially creating or sustaining high-skilled jobs in engineering, research, and technical support. This could stimulate demand for specialized training programs and educational partnerships within Texas universities and technical colleges focused on digital engineering and related fields. The economic impact extends beyond direct employment, potentially benefiting local suppliers and service providers. The concentration of defense-related activities in Texas could further solidify its position as a hub for advanced technological development.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 1701 W MARSHALL DR, GRAND PRAIRIE, TX, 75051

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: $5,034,311

Exercised Options: $5,034,311

Current Obligation: $5,034,311

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA865123DA003

IDV Type: IDC

Timeline