DoD awards $16.95M to Lockheed Martin for engineering support, with limited competition

Contract Overview

Contract Amount: $16,953,732 ($17.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2024-03-28

End Date: 2027-03-16

Contract Duration: 1,083 days

Daily Burn Rate: $15.7K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: THIS EFFORT INCLUDES PLANNING AND MANAGING AN ENGINEERING SUPPORT PROGRAM, ACCOMPLISHING PRODUCTION ENGINEERING TASKS, INCLUDING STUDIES, DATA ANALYSIS, REPORTS AND OTHER REQUIRED DOCUMENTATION.

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $17.0 million to LOCKHEED MARTIN CORPORATION for work described as: THIS EFFORT INCLUDES PLANNING AND MANAGING AN ENGINEERING SUPPORT PROGRAM, ACCOMPLISHING PRODUCTION ENGINEERING TASKS, INCLUDING STUDIES, DATA ANALYSIS, REPORTS AND OTHER REQUIRED DOCUMENTATION. Key points: 1. Contract focuses on engineering support, production tasks, studies, and data analysis. 2. The award represents a significant investment in specialized engineering services for the Air Force. 3. Limited competition raises questions about potential price overruns and value for money. 4. The duration of the contract suggests a long-term need for these services. 5. The contractor, Lockheed Martin, is a major defense industry player with extensive experience. 6. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns if not closely monitored.

Value Assessment

Rating: fair

The contract value of $16.95 million for engineering support services over approximately three years appears within a reasonable range for a major defense contractor like Lockheed Martin. However, without specific benchmarks for the type of engineering support provided, a definitive value-for-money assessment is challenging. The Cost Plus Fixed Fee (CPFF) contract type introduces a risk of cost escalation, as the contractor is reimbursed for allowable costs plus a fixed fee. This necessitates robust oversight to ensure costs remain controlled and that the fixed fee adequately compensates for the effort without being excessive.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that only one bidder was considered. This approach is typically used when a specific contractor possesses unique capabilities, proprietary technology, or when urgency precludes a competitive process. The lack of competition means that the government did not benefit from a range of proposals and pricing strategies, potentially leading to a higher price than if multiple firms had competed.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage market competition to secure the best possible pricing for taxpayers. This can result in higher overall expenditure for the services rendered.

Public Impact

The primary beneficiary is the Department of the Air Force, which will receive critical engineering support. Services include planning and managing an engineering support program, production engineering tasks, studies, data analysis, and report generation. The contract is located in Florida, suggesting a concentration of defense-related activities and workforce in that region. This contract supports specialized engineering roles, potentially impacting the demand for skilled engineers in the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Cost Plus Fixed Fee contract type carries inherent risks of cost escalation if not managed diligently.
Lack of transparency in the justification for a sole-source award.
The specific nature of 'engineering support' is broad and may lack clear performance metrics.
Long contract duration (over 3 years) increases exposure to potential cost overruns.

Positive Signals

Award to a reputable and experienced contractor (Lockheed Martin) suggests a higher likelihood of successful execution.
The contract addresses a clear need for specialized engineering support within the Air Force.
The fixed fee component provides some cost certainty compared to purely cost-reimbursable contracts.
The contract is for a specific, defined set of tasks related to engineering support.

Sector Analysis

The aerospace and defense sector is characterized by high-value, complex contracts often awarded through limited competition due to specialized requirements and existing relationships. This contract for engineering support fits within the broader 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' NAICS code, a segment of the defense industry focused on advanced technological components and systems. Spending in this sector is heavily influenced by government defense budgets and strategic priorities. Comparable contracts often involve significant R&D, system integration, and lifecycle support, with values ranging from millions to billions of dollars.

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, a large defense corporation. While there is no explicit information on subcontracting plans for small businesses, large defense contracts often include provisions for small business participation. The absence of a set-aside suggests that the primary focus was on securing specialized capabilities from a large, established firm rather than specifically promoting small business involvement in this particular award.

Oversight & Accountability

Oversight for this contract will primarily fall under the Department of the Air Force's contracting and program management offices. As a Cost Plus Fixed Fee contract, rigorous financial oversight is crucial to monitor allowable costs and ensure the fixed fee remains appropriate. Transparency regarding the justification for the sole-source award and performance metrics would enhance accountability. While specific Inspector General (IG) jurisdiction is not detailed, defense contracts are generally subject to IG review for fraud, waste, and abuse.

Related Government Programs

Guided Missile and Space Vehicle Manufacturing
Defense Engineering Services
Air Force Logistics and Sustainment Programs
Aerospace Research and Development

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Potential for cost overruns
Lack of competitive pricing pressure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.0 million to LOCKHEED MARTIN CORPORATION. THIS EFFORT INCLUDES PLANNING AND MANAGING AN ENGINEERING SUPPORT PROGRAM, ACCOMPLISHING PRODUCTION ENGINEERING TASKS, INCLUDING STUDIES, DATA ANALYSIS, REPORTS AND OTHER REQUIRED DOCUMENTATION.

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 $17.0 million.

What is the period of performance?

Start: 2024-03-28. End: 2027-03-16.

What is the historical spending pattern for similar engineering support contracts awarded by the Department of the Air Force to Lockheed Martin?

Analyzing historical spending for similar engineering support contracts awarded by the Department of the Air Force to Lockheed Martin requires access to detailed contract databases. However, general trends indicate that the Air Force frequently contracts with major defense primes like Lockheed Martin for extensive engineering, sustainment, and technical support services. These contracts often span multiple years and can range from tens to hundreds of millions of dollars, depending on the scope and complexity. For instance, contracts related to aircraft sustainment, missile system development, or space vehicle operations often include significant engineering support components. The specific nature of 'engineering support' can vary widely, encompassing everything from basic studies and data analysis to complex system design and integration. Without precise historical data on comparable contracts, it's difficult to benchmark this $16.95 million award definitively, but it appears to be a mid-sized award for specialized, long-term support.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other pricing arrangements in terms of risk and value for this type of engineering support?

The Cost Plus Fixed Fee (CPFF) contract type is often used when the scope of work is not precisely defined, or when there is uncertainty about the costs involved, making it suitable for certain types of engineering support. In CPFF, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. Compared to a Firm-Fixed-Price (FFP) contract, CPFF shifts more cost risk to the government, as cost overruns directly increase the total contract value (though the fee remains fixed). However, it offers more flexibility than FFP if requirements evolve. Compared to a Cost-Plus-Incentive-Fee (CPIF) contract, CPFF lacks the built-in incentives for the contractor to control costs beyond the initial estimation, as the fee is fixed regardless of final costs. While CPFF provides a degree of cost certainty through the fixed fee, it requires stringent government oversight to manage the 'cost' portion effectively and ensure value for money.

What specific justification was provided for awarding this contract on a sole-source basis instead of through full and open competition?

The provided data indicates the contract was 'NOT COMPETED,' implying a sole-source or limited competition award. Typically, justifications for sole-source awards must meet specific criteria outlined in federal acquisition regulations (e.g., FAR Part 6). Common reasons include the existence of only one responsible source capable of providing the required services, urgent and compelling needs that preclude competition, or when the services are a follow-on to a previously competed contract where only the original contractor can provide them due to unique knowledge or proprietary data. For this specific contract, the justification would likely center on Lockheed Martin's unique capabilities, proprietary information, or specialized knowledge related to the engineering support program that cannot be replicated by other firms within the required timeframe or without significant cost and duplication of effort. A formal Justification for Other Than Full and Open Competition (JOFOC) document would contain the detailed rationale.

What are the key performance indicators (KPIs) or metrics used to measure the success of this engineering support program?

The provided data snippet does not specify the key performance indicators (KPIs) or metrics for this engineering support contract. However, for a contract involving 'planning and managing an engineering support program, accomplishing production engineering tasks, including studies, data analysis, reports and other required documentation,' typical KPIs would likely focus on timeliness, quality, and completeness of deliverables. This could include metrics such as: on-time completion of studies and reports, accuracy and completeness of data analysis, adherence to project schedules for planning and management tasks, responsiveness to Air Force requests for information or modifications, and overall satisfaction with the engineering support provided. The effectiveness of the CPFF structure also relies on the government's ability to track and verify the costs associated with achieving these performance outcomes.

What is the potential impact of this contract on the small business ecosystem within the defense sector in Florida?

Given that this contract is a sole-source award to Lockheed Martin and does not have a small business set-aside, its direct impact on the small business ecosystem in Florida is likely minimal in terms of prime contract awards. However, large prime contractors like Lockheed Martin often engage small businesses as subcontractors to fulfill specific portions of their contracts. The extent to which Lockheed Martin utilizes Florida-based small businesses for subcontracting opportunities related to this engineering support program will determine the indirect impact. If Lockheed Martin actively seeks out and partners with local small businesses for specialized services, components, or support functions, it could provide valuable work and foster growth within the state's small business defense sector. Conversely, if subcontracting opportunities are limited or primarily awarded to larger firms, the direct economic benefit to Florida's small businesses from this specific contract would be negligible.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 5600 W SAND LAKE RD # MP-265, ORLANDO, FL, 32819

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: $17,697,563

Exercised Options: $17,697,563

Current Obligation: $16,953,732

Subaward Activity

Number of Subawards: 6

Total Subaward Amount: $913,195

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA868222DB001

IDV Type: IDC

Timeline