DoD's $61.5M R&D contract for critical design review awarded to Lockheed Martin

Contract Overview

Contract Amount: $61,514,239 ($61.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2019-07-29

End Date: 2021-03-31

Contract Duration: 611 days

Daily Burn Rate: $100.7K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: CRITICAL DESIGN REVIEW - TEST READINESS REVIEW

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35805

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $61.5 million to LOCKHEED MARTIN CORPORATION for work described as: CRITICAL DESIGN REVIEW - TEST READINESS REVIEW Key points: 1. Contract awarded for critical design review and test readiness, indicating a focus on advanced development stages. 2. The contract's cost-plus-fixed-fee structure allows for flexibility but requires careful oversight of expenditures. 3. Awarded under full and open competition, suggesting a robust market for these specialized R&D services. 4. The duration of nearly two years points to the complexity and scope of the review process. 5. Research and Development in Physical, Engineering, and Life Sciences is a key area for technological advancement. 6. The contract's value places it within a significant tier for R&D investments.

Value Assessment

Rating: good

The contract value of $61.5 million for a critical design review and test readiness is substantial. Benchmarking against similar R&D contracts in the physical, engineering, and life sciences sector is challenging without more specific service details. However, the cost-plus-fixed-fee (CPFF) pricing structure suggests that while the contractor's profit is fixed, the government bears the risk of cost overruns. This necessitates diligent oversight to ensure value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition after exclusion of sources,' indicating that multiple potential bidders were allowed to submit proposals. This competitive process is generally expected to yield better pricing and innovation. The specific number of bidders is not provided, but the designation suggests a healthy level of market interest and capability for this type of specialized research and development service.

Taxpayer Impact: A competitive award process helps ensure that taxpayer funds are used efficiently by driving down costs and encouraging the best possible solutions to be offered.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Air Force, which will receive the results of the critical design review and test readiness assessment. The services delivered are crucial for ensuring the readiness and effectiveness of a significant defense system or technology. The geographic impact is primarily within Alabama, where the contractor is located, suggesting potential for local economic activity and specialized employment. Workforce implications include the employment of highly skilled engineers, scientists, and technical personnel required for complex R&D reviews.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can lead to cost overruns if not managed tightly.
The specific nature of the R&D is not detailed, making it hard to assess the true innovation or necessity.
Long contract durations can sometimes indicate scope creep or slow progress if not actively managed.

Positive Signals

Awarded through full and open competition, suggesting a competitive market and potentially good value.
Focus on critical design and test readiness indicates a commitment to ensuring system integrity before further investment.
The contractor, Lockheed Martin, is a major defense contractor with a track record in complex R&D projects.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. This is a critical area for defense innovation, involving significant investment in advanced technologies. The market for such specialized R&D services is dominated by large aerospace and defense contractors. Comparable spending benchmarks would typically be found within the DoD's broader R&D budget, which consistently allocates billions to advance technological capabilities.

Small Business Impact

The contract does not indicate any specific small business set-aside. Given the nature of the work and the prime contractor (Lockheed Martin), it is likely that any small business involvement would be through subcontracting. Analysis of subcontracting plans and actual performance would be necessary to determine the extent of small business participation and its impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily reside with the contracting officer and the relevant program management office within the Department of the Air Force. The cost-plus-fixed-fee structure necessitates rigorous financial oversight to monitor expenditures against the fixed fee and ensure compliance with contract terms. Transparency is typically managed through contract reporting requirements and milestone reviews. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Department of Defense Research and Development
Air Force Advanced Technology Programs
Aerospace Engineering Services
Critical Design Review Processes
Test and Evaluation Contracts

Risk Flags

Cost Overrun Risk (CPFF)
Scope Creep Potential
Technical Challenge Uncertainty
Contract Management Intensity

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $61.5 million to LOCKHEED MARTIN CORPORATION. CRITICAL DESIGN REVIEW - TEST READINESS REVIEW

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 $61.5 million.

What is the period of performance?

Start: 2019-07-29. End: 2021-03-31.

What is Lockheed Martin's track record with similar critical design review contracts for the Department of Defense?

Lockheed Martin, as one of the largest defense contractors globally, has an extensive track record with critical design review (CDR) and test readiness review (TRR) contracts across various platforms and systems for the Department of Defense (DoD). Their experience spans complex aerospace, defense, and technology programs, including fighter jets, satellites, and missile systems. While specific contract details for CDR/TRR are often sensitive, their history suggests a deep understanding of the rigorous processes required by the DoD. This includes managing large, multi-disciplinary teams, adhering to strict technical requirements, and navigating complex regulatory and testing environments. Their past performance on similar, high-stakes reviews would be a key factor in the DoD's decision-making process for awarding such contracts, often evaluated through past performance questionnaires and source selection criteria.

How does the $61.5 million value compare to typical R&D contracts for critical design reviews in the aerospace sector?

The $61.5 million contract value for a critical design review (CDR) and test readiness review (TRR) is substantial but falls within a common range for major defense programs. CDRs and TRRs are pivotal, often costly, phases in the development lifecycle of complex systems like aircraft, spacecraft, or advanced weapon systems. The cost is driven by the extensive engineering analysis, simulation, prototyping (if applicable), documentation, and expert review required. Smaller, less complex R&D projects or component-level reviews might cost significantly less, while the development of entirely new, large-scale platforms could involve CDRs costing hundreds of millions or even billions. This $61.5 million figure suggests a significant system or subsystem is undergoing review, likely involving advanced technologies and requiring a considerable engineering effort over its duration.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for R&D services?

The primary risk with a Cost Plus Fixed Fee (CPFF) contract, like the one awarded to Lockheed Martin, is that the government bears the risk of cost overruns. While the contractor's profit (the 'fixed fee') is predetermined, any increase in the actual costs incurred to complete the work goes to the government. This can lead to the total contract cost exceeding initial estimates if the contractor is inefficient or if unforeseen technical challenges arise. For the government, this necessitates robust oversight and control mechanisms to monitor expenditures, ensure efficient performance, and prevent scope creep. The contractor's incentive is to control costs to maximize their fee relative to effort, but the ultimate financial risk lies with the government, making diligent contract management crucial.

What does 'Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)' encompass in the context of this contract?

This classification (NAICS code 541715) covers a broad spectrum of scientific and technical R&D activities. For this DoD contract, it likely pertains to the engineering and physical sciences aspects crucial for defense systems. This could include areas such as materials science, propulsion systems, advanced manufacturing, electronics, cyber systems, aerospace engineering, and related fields. The exclusion of nanotechnology and biotechnology suggests the focus is on more established or macro-level engineering and physics principles rather than cutting-edge molecular or biological research. The 'critical design review' and 'test readiness' aspects imply the R&D has progressed to a stage where a specific system's design is being finalized and prepared for rigorous testing.

How does the contract's duration (611 days) impact the assessment of its value and risk?

A duration of 611 days (approximately 20 months) for a critical design review and test readiness phase suggests a project of considerable complexity and scope. Longer durations can increase the risk of cost escalation due to inflation, potential changes in requirements, or unforeseen technical hurdles that require extended problem-solving. However, a longer timeframe can also be necessary to conduct thorough analyses, simulations, and prepare for comprehensive testing, ultimately leading to a more robust and reliable system. The value assessment must consider whether this duration is appropriate for the defined objectives. Effective project management, clear milestones, and proactive risk mitigation are essential to ensure value is realized within this timeframe and to prevent potential cost overruns or delays.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 4800 BRADFORD DR NW, HUNTSVILLE, AL, 35805

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

Financial Breakdown

Contract Ceiling: $61,849,770

Exercised Options: $61,849,770

Current Obligation: $61,514,239

Actual Outlays: $1,054,136

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA868218D0003

IDV Type: IDC

Timeline