DoD's $23M R&D contract with Lockheed Martin shows mixed value and limited competition

Contract Overview

Contract Amount: $23,055,882 ($23.1M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2014-04-01

End Date: 2018-09-30

Contract Duration: 1,643 days

Daily Burn Rate: $14.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: IGF::OT::IGF THORNY SWEEP

Place of Performance

Location: CHERRY HILL, CAMDEN County, NEW JERSEY, 08002

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $23.1 million to LOCKHEED MARTIN CORPORATION for work described as: IGF::OT::IGF THORNY SWEEP Key points: 1. Contract value appears reasonable for specialized R&D, but detailed benchmarking is needed. 2. Limited competition raises concerns about optimal pricing and potential for cost overruns. 3. The contractor has a strong track record, but performance on this specific contract requires scrutiny. 4. This contract falls within the broader defense R&D sector, characterized by high complexity and long development cycles. 5. The lack of small business involvement suggests a focus on large, established prime contractors. 6. Oversight mechanisms are standard for DoD contracts, but their effectiveness in this case is unproven.

Value Assessment

Rating: fair

The contract's total value of $23 million over approximately four years for R&D services is within a typical range for complex defense projects. However, without specific performance metrics or deliverables, a precise value-for-money assessment is challenging. Benchmarking against similar R&D contracts for advanced technologies would be necessary to determine if the pricing was competitive and if the contractor achieved optimal outcomes relative to the investment. The cost-plus-fixed-fee structure introduces some risk of cost escalation if not managed tightly.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were theoretically allowed to submit proposals. However, the fact that only two bids were received suggests that the market for this specific R&D capability may be limited, or that the solicitation requirements were highly specialized, deterring broader participation. This level of competition, while technically open, may not have been sufficient to drive the most competitive pricing.

Taxpayer Impact: While full and open competition was utilized, the low number of bidders means taxpayers may not have benefited from the most aggressive pricing that a more robust competition could have yielded.

Public Impact

The primary beneficiaries are the Department of Defense, which receives advanced research and development capabilities. The contract supports the development of new technologies relevant to national security. The geographic impact is primarily in New Jersey, where the contractor is located, potentially supporting local high-tech employment. The contract likely involves highly skilled scientists, engineers, and technicians, contributing to the specialized defense workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may lead to higher costs for taxpayers.
Cost-plus-fixed-fee contracts can incentivize cost overruns if not rigorously monitored.
The specific R&D outcomes and their ultimate utility require ongoing assessment.
The lack of small business participation limits opportunities for smaller innovative firms.

Positive Signals

Awarded through full and open competition, adhering to procurement principles.
Contractor (Lockheed Martin) is a major defense contractor with extensive experience.
Contract duration suggests a significant, potentially impactful R&D effort.
The R&D focus aligns with the DoD's strategic need for technological advancement.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically focusing on physical, engineering, and life sciences, excluding biotechnology. This sector is characterized by significant government investment, long project timelines, and the need for highly specialized expertise. The total federal spending on R&D is substantial, with defense R&D being a major component. Comparable contracts in this space often involve advanced materials, propulsion systems, or complex simulation technologies, with values ranging from millions to billions of dollars depending on the scope and maturity of the research.

Small Business Impact

The contract was not set aside for small businesses, and the prime contractor is a large corporation. This suggests that the nature of the R&D required specialized capabilities typically found in larger, established defense firms. There is no explicit indication of subcontracting plans for small businesses within the provided data, which could limit their participation in this specific project. The impact on the small business ecosystem is likely minimal for this particular contract, as it targets prime contractors with extensive resources and infrastructure.

Oversight & Accountability

Standard Department of Defense oversight mechanisms would apply, including contract administration by the relevant Air Force contracting office and potential review by the Inspector General. The cost-plus-fixed-fee (CPFF) contract type necessitates close monitoring of expenditures to ensure costs remain reasonable and within the fixed fee's scope. Transparency would be expected through regular reporting from the contractor on progress and spending. The effectiveness of these measures depends on the diligence of the contracting officers and the IG's focus on this specific award.

Related Government Programs

Department of Defense Research and Development Programs
Advanced Technology Development Contracts
Lockheed Martin Corporation Contracts
Air Force Science and Technology Investments

Risk Flags

Limited competition may impact price competitiveness.
Cost-plus-fixed-fee structure requires vigilant cost oversight.
Specific R&D outcomes and their value are not detailed.
Lack of small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.1 million to LOCKHEED MARTIN CORPORATION. IGF::OT::IGF THORNY SWEEP

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 $23.1 million.

What is the period of performance?

Start: 2014-04-01. End: 2018-09-30.

What specific R&D advancements were achieved under this contract, and how do they align with the Department of the Air Force's strategic goals?

The provided data does not specify the exact nature of the R&D conducted under contract number IGF::OT::IGF THORNY SWEEP. However, given the NAICS code 541712 (Research and Development in the Physical, Engineering, and Life Sciences), the work likely involved scientific inquiry and experimentation to advance knowledge and capabilities in areas relevant to the Air Force's mission. To assess alignment with strategic goals, one would need to consult Air Force R&D priorities from the 2014-2018 period, such as advancements in aerospace materials, propulsion efficiency, sensor technology, or command and control systems. Without access to the contract's technical reports or performance reviews, a definitive statement on achieved advancements and their strategic relevance cannot be made.

How does the $23 million contract value compare to similar R&D efforts within the Department of Defense during the 2014-2018 period?

The $23 million total value for this definitive contract, awarded between April 2014 and September 2018, falls within the mid-range for specialized R&D projects within the Department of Defense. Larger, more complex programs, such as developing new aircraft platforms or advanced weapon systems, can easily exceed hundreds of millions or even billions of dollars. Conversely, smaller, more focused research tasks might be valued in the low millions. To benchmark effectively, one would need to compare this contract against other R&D efforts with similar NAICS codes (541712) and contract types (Cost Plus Fixed Fee) awarded by the DoD or Air Force during the same timeframe, considering factors like project duration, technical complexity, and the number of bidders. Without such a detailed comparative analysis, it's difficult to definitively state whether $23 million represents exceptional value or an overpayment.

What were the primary risks associated with this Cost Plus Fixed Fee (CPFF) contract, and how were they managed?

The primary risk inherent in a Cost Plus Fixed Fee (CPFF) contract is the potential for cost overruns by the contractor, as they are reimbursed for allowable costs plus a predetermined fixed fee. This structure can incentivize contractors to incur higher costs if the fixed fee represents a significant portion of the expected total profit. For this contract, risks would include scope creep, unforeseen technical challenges requiring additional resources, and inefficient cost management by Lockheed Martin. Effective management would rely on robust government oversight, including detailed cost tracking, regular audits of expenditures, clear definition of work scope, and stringent change control processes. The Air Force contracting officers would be responsible for ensuring that all costs claimed were allowable, allocable, and reasonable, and that the fixed fee was earned based on achieving contract objectives.

Given that only two bids were received, what does this suggest about the competitive landscape for this specific R&D requirement?

Receiving only two bids for a 'full and open competition' contract suggests a highly specialized or niche R&D requirement. This could mean that only a limited number of companies possess the unique technical expertise, facilities, or security clearances necessary to perform the work. Alternatively, the solicitation's requirements might have been structured in a way that inadvertently limited the pool of potential bidders, or the contract's value might have been considered too small by some larger firms to warrant a full proposal effort. A limited competitive landscape generally leads to less price pressure, potentially resulting in higher costs for the government compared to situations with multiple, competing offers. It also raises questions about whether the government truly explored all available options in the market.

What is Lockheed Martin Corporation's general track record with Department of Defense contracts, and does it indicate a higher or lower risk profile for this specific award?

Lockheed Martin Corporation is one of the largest and most established defense contractors globally, with a vast portfolio of contracts across all branches of the U.S. military. Their track record with the DoD is extensive, encompassing numerous complex, high-value programs in areas such as aerospace, defense systems, and advanced technologies. Generally, their size and experience suggest a lower risk profile in terms of technical capability and program execution compared to smaller, less experienced firms. However, like any large contractor, they have also faced scrutiny over cost performance and contract disputes on specific programs. For this particular $23 million R&D contract, their established expertise likely provided confidence to the Air Force, but the inherent risks of R&D and the CPFF structure still necessitate diligent oversight regardless of the contractor's reputation.

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 › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: BASIC RESEARCH

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 3 EXECUTIVE CAMPUS, CHERRY HILL, NJ, 08002

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: $23,055,882

Exercised Options: $23,055,882

Current Obligation: $23,055,882

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline