DoD's $36M TBMCS-FL SME Support contract to Lockheed Martin raises value and competition concerns

Contract Overview

Contract Amount: $36,269,692 ($36.3M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2016-02-25

End Date: 2023-03-31

Contract Duration: 2,591 days

Daily Burn Rate: $14.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: IGF::OT::IGF TBMCS-FL SME SUPPORT

Place of Performance

Location: COLORADO SPRINGS, EL PASO County, COLORADO, 80921

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $36.3 million to LOCKHEED MARTIN CORPORATION for work described as: IGF::OT::IGF TBMCS-FL SME SUPPORT Key points: 1. The contract's cost-plus-fixed-fee structure may incentivize higher spending without guaranteed performance. 2. Sole-source award limits price discovery and potentially inflates costs for taxpayers. 3. A long performance period (over 7 years) increases the risk of cost overruns and scope creep. 4. The lack of competition suggests potential market failures or barriers to entry for other firms. 5. Computer Systems Design Services are critical, but the value proposition needs closer scrutiny given the award method. 6. The contract's significant value warrants a deeper dive into performance metrics and cost controls.

Value Assessment

Rating: questionable

The $36.3 million awarded to Lockheed Martin for TBMCS-FL SME Support appears high given the sole-source nature of the award and the cost-plus-fixed-fee pricing structure. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The long duration of the contract (over 7 years) also increases the potential for cost escalation. While the services are essential, the lack of competitive pressure raises concerns about achieving optimal value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This significantly limits the opportunity for price discovery and may lead to higher costs for the government compared to a competed contract. The absence of multiple bidders suggests that either only one contractor was deemed capable of performing the work, or the government did not adequately explore competitive options. This approach bypasses the benefits of market forces in driving down prices and improving service quality.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings typically achieved through competitive bidding. This can result in higher overall spending for essential services.

Public Impact

The Department of the Air Force benefits from specialized technical and management expertise for the TBMCS-FL system. This contract supports the operational readiness and effectiveness of critical Air Force command and control systems. The services provided are essential for maintaining and enhancing a key military information system. The contract's impact is primarily within the defense sector, supporting military operations and personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition and potentially increases costs.
Cost-plus-fixed-fee structure may not align incentives for cost efficiency.
Long contract duration increases risk of cost overruns and scope creep.
Lack of transparency in pricing due to non-competitive award.
Potential for contractor lock-in due to specialized knowledge.

Positive Signals

Contractor (Lockheed Martin) is a major defense contractor with extensive experience.
Services are critical for maintaining a key Air Force system.
Fixed fee component provides some cost certainty compared to pure cost-plus.
Long duration allows for sustained support and system development.

Sector Analysis

This contract falls within the Computer Systems Design Services sector, a critical component of the broader IT and defense industries. The market for specialized defense IT support is often characterized by long-term relationships and high barriers to entry due to security clearances and system knowledge. Spending in this area is substantial, with agencies like the Department of Defense relying heavily on contractors for system maintenance, upgrades, and operational support. Benchmarking is challenging due to the unique nature of military systems.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting plans for small businesses. The award to a large prime contractor like Lockheed Martin suggests that small business participation is likely minimal, if any. This limits opportunities for small businesses to contribute to critical defense IT projects and potentially reduces the overall economic benefit to the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Given the sole-source nature and cost-plus-fixed-fee structure, robust oversight is crucial to monitor costs, performance, and adherence to the contract scope. Transparency may be limited due to the non-competitive award, making it harder for external stakeholders to assess value. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Information Systems Agency (DISA) IT Support Contracts
Air Force Command and Control Systems Maintenance
Tactical Data Link Systems Support
Military Information Technology Services

Risk Flags

Sole-source award
Cost-plus-fixed-fee pricing
Long contract duration
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.3 million to LOCKHEED MARTIN CORPORATION. IGF::OT::IGF TBMCS-FL SME SUPPORT

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 $36.3 million.

What is the period of performance?

Start: 2016-02-25. End: 2023-03-31.

What is the specific TBMCS-FL system, and why is specialized SME support required?

The TBMCS-FL (Theater Battle Management Core System - Flight) is a critical component of the U.S. Air Force's command and control (C2) infrastructure. It provides essential capabilities for managing air operations, including mission planning, execution, and post-mission analysis. Specialized Subject Matter Expert (SME) support is required due to the system's complexity, its integration with other military networks, and the need for deep technical knowledge to maintain, update, and troubleshoot its various functions. This expertise is crucial for ensuring the system's reliability, security, and continued operational effectiveness in supporting combatant commanders.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for similar IT support services?

The Cost-Plus-Fixed-Fee (CPFF) structure is often used when the scope of work is not precisely defined or when there is uncertainty about the costs involved. In this structure, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers less cost certainty for the government, as actual costs can fluctuate. However, it can be advantageous for complex, evolving projects where FFP might lead to excessive pricing to cover contractor risk or frequent change orders. For IT support, FFP is often preferred for well-defined services, while CPFF might be used for research, development, or sustainment of highly complex and evolving systems like TBMCS-FL, though it necessitates stringent oversight to control costs.

What are the potential risks associated with a sole-source award for a contract of this magnitude and duration?

A sole-source award for a $36.3 million contract spanning over seven years carries significant risks. Primarily, the lack of competition means the government likely pays a higher price than it would in a competitive environment, as there's no market pressure to reduce costs. This can lead to inefficient use of taxpayer funds. Furthermore, sole-source awards can stifle innovation from other potential providers and create contractor dependency. The long duration increases the risk of cost overruns if not managed tightly, and the contractor may have less incentive to perform efficiently once the award is secured. There's also a risk that the contractor's expertise becomes so embedded that switching providers in the future becomes prohibitively difficult or expensive.

What performance metrics or deliverables are typically expected under such a contract, and how are they monitored?

Under a contract like this, typical performance metrics and deliverables would focus on the availability, reliability, security, and responsiveness of the TBMCS-FL system. This could include metrics such as system uptime percentages, response times for technical support, successful implementation of system updates or patches, and adherence to security protocols. Deliverables might include regular system performance reports, technical documentation, training materials, and implemented system enhancements. Monitoring is usually conducted through a combination of government quality assurance personnel, regular progress meetings, review of contractor-submitted reports, and potentially independent testing or audits. The effectiveness of monitoring is crucial for a CPFF contract to ensure value for money.

How does this contract's spending compare to other similar IT support contracts within the Department of Defense?

Comparing this $36.3 million contract to others requires access to detailed spending data across the DoD for similar IT support services. However, contracts for specialized system support, especially for critical command and control systems, can be substantial. The duration (over 7 years) and the sole-source nature are key factors that differentiate it. Many IT support contracts within the DoD are competed, often using various contract types, and may have different pricing structures. Without specific benchmarks for TBMCS-FL SME support, it's difficult to definitively state if $36.3 million is high or low. However, the lack of competition and the CPFF structure suggest a higher potential cost compared to a competitively bid, fixed-price contract for comparable services.

What is Lockheed Martin's track record with the TBMCS-FL system or similar DoD IT contracts?

Lockheed Martin is a major defense contractor with extensive experience in developing, integrating, and supporting complex defense systems, including command and control platforms. Their track record with the TBMCS-FL system specifically would be detailed in contract performance reports and historical award data. Generally, large contractors like Lockheed Martin have a long history of performing large-scale DoD contracts. However, performance can vary. Assessing their track record would involve reviewing past performance evaluations, any past issues related to cost overruns, schedule delays, or quality deficiencies on similar contracts, as well as their success in delivering on previous TBMCS-FL related efforts, if applicable.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services

Product/Service Code: TECHNICAL REPRESENTATIVE SVCS. › TECHNICAL REPRESENTATIVE SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 9970 FEDERAL DR, COLORADO SPRINGS, CO, 80921

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

Financial Breakdown

Contract Ceiling: $68,282,329

Exercised Options: $46,173,138

Current Obligation: $36,269,692

Actual Outlays: $1,086,351

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline