DoD's $185M R&D contract for missile and space systems management support awarded to Lockheed Martin

Contract Overview

Contract Amount: $18,493,731 ($18.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2004-09-29

End Date: 2005-09-28

Contract Duration: 364 days

Daily Burn Rate: $50.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: 200412!000164!5700!CZ80 !SMC/PKS LOS ANGELES AFB !FA880304C0001 !A!N! !N! ! !20040929!20050928!176325579!176325579!834951691!N!LOCKHEED MARTIN CORPORATION !230 MALL BLVD !KING OF PRUSSI !PA!19406!39736!091!42!KING OF PRUSSIA !MONTGOMERY !PENN !+000002154612!N!N!000030000000!AC26!RDTE/MISSILE AND SPACE SYSTEMS-MGMT SUPPORT !A2 !MISSILE AND SPACE SYSTEMS !000 !* !541710!E! !1! ! ! ! ! !99990909!B!A!N!A! !D!N!U!1!001!N!1G!A!Y!Z! ! !N!C!N! ! ! !Z!Z!A!A!000!A!C!N! ! ! !Y! ! !0001! !

Place of Performance

Location: KING OF PRUSSIA, MONTGOMERY County, PENNSYLVANIA, 19406

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $18.5 million to LOCKHEED MARTIN CORPORATION for work described as: 200412!000164!5700!CZ80 !SMC/PKS LOS ANGELES AFB !FA880304C0001 !A!N! !N! ! !20040929!20050928!176325579!176325579!834951691!N!LOCKHEED MARTIN CORPORATION !230 MALL BLVD !KING OF PRUSSI !PA!19406!39736!091!42!KING OF PRUSSIA !MONT… Key points: 1. Contract awarded on a sole-source basis, raising questions about potential cost efficiencies. 2. Significant portion allocated to research, development, testing, and evaluation (RDT&E). 3. Long-term contract duration of one year suggests a need for sustained support. 4. Geographic concentration in Pennsylvania for contractor operations. 5. Contract type (Cost Plus Fixed Fee) can lead to cost overruns if not managed carefully. 6. High dollar value indicates a critical program area for the Department of Defense.

Value Assessment

Rating: questionable

The contract's value of approximately $185 million for a one-year period for missile and space systems management support is substantial. Without comparable sole-source contracts for similar services, it is difficult to benchmark the value for money. The Cost Plus Fixed Fee (CPFF) contract type, while allowing for flexibility, carries inherent risks of cost escalation if the fixed fee is not adequately justified against the anticipated costs. Further analysis would be needed to determine if the fixed fee represents a fair return for the contractor's management and support services in this specialized R&D domain.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. The lack of competition means that price discovery through market forces was absent, potentially leading to higher costs for the government compared to a competitive procurement.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without a competitive process, there is less assurance that the government secured the best possible price for the services rendered.

Public Impact

The primary beneficiary is the Department of Defense, specifically its missile and space systems programs. The contract supports research, development, testing, and evaluation (RDT&E) activities. Management support services are crucial for the successful execution of complex defense projects. The contract has implications for the aerospace and defense industry workforce, particularly in specialized R&D roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Cost Plus Fixed Fee contract type introduces risk of cost overruns.
Lack of detailed performance metrics in the provided data makes assessing effectiveness challenging.
Long-term nature of R&D support requires continuous monitoring for relevance and efficiency.

Positive Signals

Award to a major defense contractor like Lockheed Martin suggests access to significant expertise and resources.
Focus on RDT&E indicates investment in critical national security capabilities.
The contract supports essential management functions for complex defense systems.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on missile and space systems. The aerospace and defense industry is characterized by high R&D investment, long product development cycles, and significant government procurement. Comparable spending benchmarks in this niche would involve analyzing other large R&D contracts for advanced defense systems, where specialized expertise and technological innovation are paramount. The market size for such specialized R&D is substantial, driven by national security imperatives.

Small Business Impact

The provided data does not indicate any small business set-aside provisions or subcontracting requirements for this contract. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely minimal unless Lockheed Martin voluntarily engages them for specific support. Further investigation into subcontracting plans would be necessary to understand any indirect benefits 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. Accountability measures would be embedded within the Cost Plus Fixed Fee structure, requiring the contractor to justify costs and the government to monitor expenditures against the fixed fee. Transparency is often limited in sole-source R&D contracts due to the sensitive nature of the work and proprietary information. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Missile Defense Systems
Space Systems Development
Advanced Technology Research
Defense Management Support
Aerospace Engineering Services

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
High contract value
Research and Development focus

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.5 million to LOCKHEED MARTIN CORPORATION. 200412!000164!5700!CZ80 !SMC/PKS LOS ANGELES AFB !FA880304C0001 !A!N! !N! ! !20040929!20050928!176325579!176325579!834951691!N!LOCKHEED MARTIN CORPORATION !230 MALL BLVD !KING OF PRUSSI !PA!19406!39736!091!42!KING OF PRUSSIA !MONTGOMERY !PENN !+000002154612!N!N!000030000000!AC26!RDTE/MISSILE AND SPACE SYSTEMS-MGMT SUPPORT !A2 !MISSILE AND SPACE SYSTEMS !000 !* !541710!E! !1! ! ! ! ! !999

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 $18.5 million.

What is the period of performance?

Start: 2004-09-29. End: 2005-09-28.

What is Lockheed Martin's track record with similar sole-source R&D contracts for missile and space systems?

Lockheed Martin is a major defense contractor with extensive experience in sole-source R&D contracts, particularly in missile and space systems. Historically, the company has been awarded numerous large, sole-source contracts for developing and supporting advanced defense technologies. While this provides a basis for confidence in their technical capabilities, sole-source awards, by their nature, limit the government's ability to leverage competitive pricing. A detailed review of past performance on similar contracts, including cost performance and adherence to schedule, would be necessary to fully assess their track record in this specific context. The company's long-standing relationship with the DoD suggests a deep understanding of requirements but also necessitates rigorous oversight to ensure value.

How does the $185 million value compare to other R&D contracts for missile and space systems management support?

The $185 million contract value for one year of missile and space systems management support is substantial, placing it among significant investments in this specialized R&D domain. Without access to a comprehensive database of all comparable sole-source and competitively awarded contracts for similar services, a precise benchmark is difficult. However, given the complexity and strategic importance of missile and space systems, such high-value contracts are not uncommon for leading defense contractors like Lockheed Martin. The value reflects the specialized expertise, advanced technology, and critical nature of the support required. Further analysis would involve comparing this contract's scope, duration, and specific deliverables against other large R&D contracts within the DoD and NASA to ascertain if the pricing is within an expected range for this type of work.

What are the primary risks associated with a sole-source Cost Plus Fixed Fee (CPFF) contract for R&D?

The primary risks associated with a sole-source CPFF contract for R&D are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated prices as the government lacks market-driven cost validation. The contractor may have less incentive to aggressively control costs. Secondly, the CPFF structure, while providing flexibility for R&D's inherent uncertainties, carries the risk of cost overruns. If the contractor's actual costs exceed initial estimates, the government pays these costs plus the pre-negotiated fixed fee. This can result in the total contract price significantly exceeding initial projections, especially if the fixed fee is not adequately tied to performance metrics or if the scope of work evolves without proper adjustments. Effective government oversight is crucial to mitigate these risks.

What is the expected program effectiveness given the contract's focus on R&D and management support?

The expected program effectiveness hinges on the contractor's ability to deliver critical R&D outcomes and provide robust management support for missile and space systems. Effective R&D requires innovation, timely problem-solving, and the successful development of new technologies or system enhancements. Strong management support ensures that projects stay on track, within budget (as much as possible under CPFF), and meet technical specifications. The effectiveness will be measured by the successful advancement of the targeted missile and space programs, the quality of technical solutions provided, and the efficiency of the management oversight. Without specific performance metrics and deliverables outlined in the contract, assessing predicted effectiveness remains qualitative, relying on the contractor's reputation and the DoD's program objectives.

How has historical spending on missile and space systems R&D by the Department of Defense evolved?

Historical spending on missile and space systems R&D by the Department of Defense has generally been substantial and subject to fluctuations based on geopolitical threats, technological advancements, and budgetary priorities. Over the decades, there has been a consistent, significant investment in maintaining and advancing capabilities in these critical areas. Spending often increases during periods of perceived threat escalation or when pursuing next-generation technologies. Conversely, budget constraints or shifts in strategic focus can lead to reductions. The trend generally shows a sustained, high-priority allocation towards these domains, reflecting their importance to national security. Analyzing specific historical spending patterns would reveal trends in funding levels, major program investments, and the balance between R&D and procurement.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D 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 (UEI: 834951691)

Address: 230 MALL BLVD, KING OF PRUSSI, PA

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $2,154,612

Exercised Options: $2,154,612

Current Obligation: $18,493,731

Contract Characteristics

Cost or Pricing Data: YES

Timeline