DoD awards $2.7B R&D contract to Lockheed Martin for advanced technology development

Contract Overview

Contract Amount: $2,715,720 ($2.7M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2023-03-30

End Date: 2026-10-08

Contract Duration: 1,288 days

Daily Burn Rate: $2.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: EMPATH

Place of Performance

Location: GREENVILLE, HUNT County, TEXAS, 75402

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $2.7 million to LOCKHEED MARTIN CORPORATION for work described as: EMPATH Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract type is Cost Plus Fixed Fee, which can incentivize cost control but also carries inherent risk. 3. Performance period spans over three years, indicating a significant, long-term research and development effort. 4. The North American Industry Classification System (NAICS) code 541715 points to R&D in physical, engineering, and life sciences. 5. The contract is a definitive contract, suggesting a firm commitment for services. 6. The awardee, Lockheed Martin Corporation, is a major defense contractor with extensive experience in R&D.

Value Assessment

Rating: fair

Benchmarking the value of this Cost Plus Fixed Fee (CPFF) contract is challenging without detailed cost breakdowns and performance metrics. CPFF contracts can be effective for R&D where costs are uncertain, but they require robust oversight to ensure value for money. Comparing this award to similar R&D contracts within the Department of Defense for advanced technology development would provide a clearer picture of its pricing reasonableness. The fixed fee component aims to provide the contractor with an incentive to control costs, but the overall cost is variable.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The fact that it was competed suggests that the Department of Defense sought to leverage market competition to obtain the best value. The number of bidders is not specified, but a full and open competition generally leads to a more robust price discovery process compared to sole-source or limited competition scenarios.

Taxpayer Impact: Taxpayers benefit from a full and open competition as it is intended to drive down costs and ensure the government receives competitive pricing for its investments in research and development.

Public Impact

The primary beneficiaries are the Department of Defense and potentially the U.S. military, through the development of advanced technologies. The services delivered are research and development in physical, engineering, and life sciences, excluding nanotechnology and biotechnology. The geographic impact is primarily within Texas, where the contractor is located, but the ultimate impact of the developed technologies could be national. Workforce implications include employment opportunities for scientists, engineers, and support staff at Lockheed Martin and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can lead to cost overruns if not closely monitored.
The long performance period requires sustained oversight to ensure progress and prevent scope creep.
The complexity of R&D projects inherently carries a risk of technical challenges and delays.

Positive Signals

Awarded through full and open competition, indicating a competitive process aimed at achieving best value.
The contractor, Lockheed Martin, has a strong track record in defense R&D.
The contract focuses on critical research and development areas for national security.

Sector Analysis

The contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. This sector is characterized by innovation and long-term investment. The Department of Defense is a significant investor in R&D, aiming to maintain technological superiority. Comparable spending benchmarks in this area are difficult to ascertain without specific project details, but R&D contracts of this magnitude are substantial investments in future capabilities.

Small Business Impact

The provided data indicates that small business set-asides were not utilized for this contract (ss: false, sb: false). This suggests that the primary award was made to a large business. However, large prime contractors like Lockheed Martin are often required to meet small business subcontracting goals. The impact on the small business ecosystem would depend on the extent to which Lockheed Martin engages small businesses as subcontractors for specialized services or components related to this R&D effort.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force, a component of the Department of Defense. Given the Cost Plus Fixed Fee structure and the R&D nature, robust oversight mechanisms will be crucial. This would typically involve regular progress reviews, cost audits, and performance monitoring to ensure adherence to the contract's objectives and to manage expenditures effectively. Transparency will be dependent on the reporting requirements stipulated in the contract and the agency's policies on releasing such information.

Related Government Programs

Department of Defense Research and Development Programs
Advanced Technology Development Contracts
Aerospace and Defense R&D
Engineering Services Contracts
Life Sciences Research Contracts

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight to manage costs.
Long contract duration increases exposure to potential cost escalation and technological obsolescence.
R&D projects inherently carry technical and schedule risks.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $2.7 million to LOCKHEED MARTIN CORPORATION. EMPATH

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 $2.7 million.

What is the period of performance?

Start: 2023-03-30. End: 2026-10-08.

What is Lockheed Martin Corporation's track record with Cost Plus Fixed Fee (CPFF) contracts, particularly with the Department of Defense?

Lockheed Martin Corporation, as a major defense contractor, has extensive experience with various contract types, including Cost Plus Fixed Fee (CPFF). CPFF contracts are common for research and development efforts where the final costs are uncertain. While CPFF contracts allow for flexibility and incentivize contractor effort, they also require diligent oversight from the procuring agency to manage costs effectively and ensure value. Lockheed Martin's historical performance on such contracts with the DoD would typically be assessed through past performance evaluations during the bidding process. Agencies review a contractor's history of meeting cost, schedule, and performance targets on similar previous contracts to gauge their likelihood of success on new awards. Specific details on their CPFF performance would be found in contract performance reports and agency procurement data, which are not publicly detailed in this summary.

How does the $2.7 billion value of this contract compare to other R&D spending by the Department of Defense in the physical, engineering, and life sciences sector?

The $2.7 billion award represents a significant investment within the Department of Defense's R&D portfolio. The DoD consistently allocates substantial funds to research and development to maintain technological superiority. While this specific contract is large, it is one of many R&D investments the DoD makes annually. To contextualize its value, one would need to compare it against the total DoD R&D budget for the relevant fiscal years and against other major R&D contracts awarded within the physical, engineering, and life sciences domain. For instance, comparing it to the average value of R&D contracts awarded under NAICS code 541715 by the DoD over the past five years would provide a benchmark. Without access to comprehensive DoD R&D spending data, it's difficult to definitively state if $2.7 billion is high or low relative to the overall landscape, but it signifies a major commitment to a specific technological advancement.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for advanced R&D, and how are they typically mitigated?

The primary risks associated with a CPFF contract for advanced R&D include potential cost overruns, contractor inefficiency, and scope creep. Since the government agrees to pay the actual costs incurred plus a fixed fee, there's less direct financial incentive for the contractor to minimize costs compared to fixed-price contracts. Mitigation strategies typically involve robust government oversight, including detailed cost monitoring, regular progress reviews, and performance metrics. The fixed fee itself acts as a ceiling on the contractor's profit, providing some incentive for efficiency. Additionally, clear contract terms, well-defined objectives, and strong program management by the government are essential to prevent scope creep and ensure the R&D stays focused on the intended outcomes. Independent cost estimates and audits can also help validate incurred costs.

What does the classification 'Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)' entail for this specific contract?

This classification (NAICS 541715) indicates that the contract's scope is focused on scientific and technical research and development activities. This includes fundamental research, applied research, and experimental development. The 'physical, engineering, and life sciences' broadly covers disciplines like physics, chemistry, materials science, mechanical and electrical engineering, computer science, biology, and medicine. The exclusion of 'nanotechnology and biotechnology' suggests the R&D efforts are directed towards other advanced scientific frontiers within these broader fields. For this Lockheed Martin contract, it implies the work could involve developing new materials, advanced engineering designs, complex systems, or innovative biological applications that do not fall under the specific definitions of nano- or bio-tech R&D.

How does the duration of the contract (1288 days) impact the assessment of its value and risk?

A contract duration of 1288 days, approximately 3.5 years, signifies a substantial, long-term commitment to the research and development effort. From a value perspective, this extended period allows for in-depth exploration and development of complex technologies, potentially leading to significant advancements. However, it also increases the risk associated with cost escalation over time due to inflation or unforeseen technical challenges. For the government, managing such a long-term project requires sustained oversight, adaptability to changing technological landscapes, and consistent funding. The risk is mitigated by breaking down the project into phases with specific milestones and deliverables, allowing for periodic reassessment and decision-making throughout the contract's life.

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: BASIC RESEARCH

Solicitation ID: FA875020S7001

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 1701 W MARSHALL DR, GRAND PRAIRIE, TX, 75051

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $3,032,329

Exercised Options: $3,032,329

Current Obligation: $2,715,720

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $390,429

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline