Lockheed Martin awarded $1.16B R&D contract for Denali TA2A by the Air Force

Contract Overview

Contract Amount: $11,574,000 ($11.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2022-12-09

End Date: 2026-04-08

Contract Duration: 1,216 days

Daily Burn Rate: $9.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 15

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: DENALI TA2A

Place of Performance

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

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $11.6 million to LOCKHEED MARTIN CORPORATION for work described as: DENALI TA2A Key points: 1. Contract value represents a significant investment in advanced research and development. 2. Full and open competition suggests a robust market for these specialized services. 3. The contract's duration indicates a long-term commitment to the research objectives. 4. Cost Plus Fixed Fee pricing structure may incentivize efficient cost management. 5. Research and Development in Physical, Engineering, and Life Sciences is a critical sector for innovation. 6. The contract is a definitive contract, implying a clear scope of work. 7. The award to a large corporation like Lockheed Martin suggests complex, high-value R&D requirements.

Value Assessment

Rating: good

The contract's value of $1.16 billion over approximately 4 years is substantial for R&D. Benchmarking against similar large-scale R&D contracts is challenging without more specific project details. However, the Cost Plus Fixed Fee (CPFF) structure is common for R&D where costs are not fully predictable, aiming to balance contractor incentive with government oversight. The fixed fee component provides a degree of cost certainty for the contractor, while the government pays the actual costs incurred.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit proposals. This suggests a competitive environment where multiple companies likely vied for the award. The presence of 15 proposals (implied by 'no': 15) further supports a healthy level of competition, which typically drives better pricing and innovation.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it encourages a wider range of solutions and potentially lower prices due to market pressures.

Public Impact

The primary beneficiaries are the Department of Defense and the Air Force, who will receive the outcomes of advanced research and development. The contract supports the development of new technologies and capabilities within the physical, engineering, and life sciences sectors. The geographic impact is centered in New Jersey, where the contractor is located, potentially creating or sustaining high-skilled jobs. Workforce implications include the employment of scientists, engineers, and technical personnel required for complex R&D projects.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can sometimes lead to cost overruns if not closely monitored.
The long duration of the contract requires sustained oversight to ensure progress and alignment with evolving research needs.
The complexity of R&D projects inherently carries a risk of technical challenges and delays.

Positive Signals

Full and open competition suggests a strong market offering and potentially competitive pricing.
The award to a reputable contractor like Lockheed Martin indicates confidence in their technical capabilities.
The definitive contract type provides a clear framework for the scope of work and deliverables.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. This is a broad category encompassing fundamental and applied research aimed at discovering new knowledge and developing new technologies. The market for such R&D is characterized by high barriers to entry due to specialized expertise, significant capital investment, and intellectual property considerations. Government contracts are a major source of funding for R&D, driving innovation across various industries.

Small Business Impact

The data indicates this contract was awarded under full and open competition and does not specify any small business set-aside. Given the large contract value and the nature of advanced R&D, it is likely that prime contracting opportunities for small businesses would be limited, potentially through subcontracting. However, the extent of small business participation would depend on the specific subcontracting plan requirements set by the Air Force.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force, with specific contracting officers and program managers responsible for monitoring performance, costs, and adherence to the contract terms. The Cost Plus Fixed Fee structure necessitates rigorous financial oversight to ensure that costs are reasonable and allocable. Transparency will depend on the reporting requirements stipulated in the contract and the agency's policies regarding public disclosure of R&D activities.

Related Government Programs

Advanced Technology Development
Research and Development Services
Aerospace Research
Engineering Services
Scientific Research Services

Risk Flags

Long contract duration requires sustained oversight.
CPFF pricing structure necessitates careful cost monitoring.
R&D projects inherently carry technical and schedule risks.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $11.6 million to LOCKHEED MARTIN CORPORATION. DENALI TA2A

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 $11.6 million.

What is the period of performance?

Start: 2022-12-09. End: 2026-04-08.

What is the specific nature of the research and development being conducted under the DENALI TA2A contract?

The provided data classifies the contract under NAICS code 541715, 'Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)'. While this gives a broad category, the specific 'DENALI TA2A' designation suggests a particular program or project within the Air Force's research portfolio. Without access to the contract's statement of work or further program details, the precise research objectives remain undisclosed. However, given the contractor (Lockheed Martin) and the agency (Department of Defense), it is likely related to advanced defense technologies, materials science, engineering innovations, or complex system development critical for national security.

How does the $1.16 billion contract value compare to typical R&D spending in the physical, engineering, and life sciences sector by the Department of Defense?

The Department of Defense is consistently one of the largest government funders of R&D, with billions allocated annually across various scientific and engineering disciplines. A single contract valued at $1.16 billion for R&D is substantial and indicates a significant, long-term investment in a specific area. While it represents a notable portion of the DoD's R&D budget, it is not unusual for major defense contractors to receive such large awards for critical technology development programs. To provide a precise comparison, one would need to analyze the DoD's annual R&D budget breakdowns and identify comparable large-scale, multi-year R&D contracts awarded in recent years within the physical, engineering, and life sciences domains.

What are the potential risks associated with a Cost Plus Fixed Fee (CPFF) contract for a long-duration R&D project?

Cost Plus Fixed Fee (CPFF) contracts, while common for R&D where costs are uncertain, carry inherent risks. For the government, the primary risk is that the contractor may not be sufficiently incentivized to control costs beyond what is necessary to achieve the fixed fee, potentially leading to higher overall expenditures than anticipated if oversight is lax. Contractors might also face challenges in accurately estimating costs upfront, which could impact their profitability if the fixed fee proves insufficient for the actual effort required. For long-duration projects, the risk of scope creep or evolving requirements necessitates robust change management processes to prevent uncontrolled cost increases. Effective government oversight, detailed cost accounting, and clear performance metrics are crucial to mitigate these risks.

What is Lockheed Martin's track record with large-scale R&D contracts from the Department of Defense?

Lockheed Martin Corporation is a major defense contractor with an extensive history of securing and executing large-scale research and development contracts for the Department of Defense and other government agencies. They are known for their work in areas such as aerospace, defense systems, advanced materials, and complex engineering solutions. Their track record typically involves managing multi-billion dollar programs, often involving cutting-edge technologies and long development cycles. While specific performance metrics for all past contracts are not publicly detailed, their continued success in winning competitive bids for significant R&D efforts suggests a strong capability in meeting the DoD's demanding technical and programmatic requirements.

How might the 'Research and Development in the Physical, Engineering, and Life Sciences' classification impact the types of innovations expected from this contract?

The classification 'Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)' is broad, encompassing a wide array of scientific and technical fields. This suggests the contract could lead to innovations in areas such as advanced materials, propulsion systems, energy technologies, robotics, artificial intelligence applications in engineering, advanced manufacturing processes, or even novel approaches to biological systems relevant to defense (excluding specific nano/biotech focus). The 'physical and engineering' aspects point towards hardware, systems, and process development, while 'life sciences' could involve human performance enhancement, environmental resilience, or medical technologies pertinent to military operations. The exclusion of nanotechnology and biotechnology suggests a focus on more established or macro-level scientific domains.

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

Solicitation ID: HR001122S0019

Offers Received: 15

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 3 EXECUTIVE CAMPUS FL 6, CHERRY HILL, NJ, 08002

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

Financial Breakdown

Contract Ceiling: $15,803,093

Exercised Options: $15,803,093

Current Obligation: $11,574,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline