DoD's $2.19B IGF Sustainment Contract with Lockheed Martin Faces Scrutiny Over Cost and Competition
Contract Overview
Contract Amount: $2,194,921,224 ($2.2B)
Contractor: Lockheed Martin Corp
Awarding Agency: Department of Defense
Start Date: 2013-03-15
End Date: 2025-04-30
Contract Duration: 4,429 days
Daily Burn Rate: $495.6K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: IGF::OT::IGF SUSTAINMENT SUPPORT FISCAL YEAR 12-16
Place of Performance
Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089
Plain-Language Summary
Department of Defense obligated $2.19 billion to LOCKHEED MARTIN CORP for work described as: IGF::OT::IGF SUSTAINMENT SUPPORT FISCAL YEAR 12-16 Key points: 1. Significant contract value of $2.19 billion over its life. 2. Lockheed Martin is the sole awardee, raising questions about competition. 3. Contract type (Cost Plus Fixed Fee) can incentivize cost overruns. 4. Long duration (2013-2025) suggests a critical, ongoing need for missile/space vehicle manufacturing support.
Value Assessment
Rating: questionable
The Cost Plus Fixed Fee (CPFF) contract type, while common for R&D, can lead to higher costs as the contractor is reimbursed for expenses plus a fixed fee. Without detailed cost breakdowns, it's difficult to assess if the $2.19B is competitive.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
Although listed as 'FULL AND OPEN COMPETITION', the awardee is Lockheed Martin Corp. Further investigation is needed to confirm if multiple bids were genuinely considered and if the pricing reflects competitive pressures or if it's a sole-source situation disguised as open competition.
Taxpayer Impact: The substantial value of this contract means taxpayers are funding a significant portion of the DoD's missile and space vehicle sustainment. Ensuring competitive pricing is crucial for maximizing taxpayer value.
Public Impact
Taxpayers are funding a large sustainment contract for critical defense assets. The long contract duration indicates ongoing reliance on these specific systems. Potential for cost overruns due to the CPFF contract type warrants close monitoring. Lack of transparency regarding the competitive process could lead to suboptimal pricing.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Contract type (CPFF) can lead to higher costs.
- Sole awardee raises competition concerns.
- Long contract duration.
- Lack of detailed cost transparency.
Positive Signals
- Supports critical defense capabilities.
- Long-term sustainment ensures operational readiness.
Sector Analysis
This contract falls under the Guided Missile and Space Vehicle Manufacturing sector, a high-cost, technologically advanced area within the defense industry. Spending benchmarks are difficult to establish due to the specialized nature, but large sustainment contracts are common.
Small Business Impact
There is no indication of small business participation in this contract. Given the prime contractor is Lockheed Martin and the nature of the work, it's unlikely small businesses are directly involved in the core sustainment activities, though they may be subcontractors.
Oversight & Accountability
The contract's long duration and significant value necessitate robust oversight from the Department of Defense's Inspector General and relevant oversight bodies to ensure cost control, performance, and adherence to contract terms.
Related Government Programs
- Guided Missile and Space Vehicle Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Potential for cost overruns due to CPFF contract type.
- Lack of clear evidence of robust competition despite 'full and open' designation.
- Long contract duration may indicate a lack of viable alternatives or market shifts.
- Limited transparency on specific cost drivers and performance metrics.
- Sole awardee raises concerns about market dynamics and pricing power.
Tags
guided-missile-and-space-vehicle-manufac, department-of-defense, ca, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $2.19 billion to LOCKHEED MARTIN CORP. IGF::OT::IGF SUSTAINMENT SUPPORT FISCAL YEAR 12-16
Who is the contractor on this award?
The obligated recipient is LOCKHEED MARTIN CORP.
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 $2.19 billion.
What is the period of performance?
Start: 2013-03-15. End: 2025-04-30.
What specific sustainment activities are covered under this $2.19B contract, and how do they align with the operational needs of the Air Force's guided missile and space vehicles?
The contract likely encompasses a broad range of sustainment activities including maintenance, repair, overhaul, logistics support, and potentially upgrades for specific guided missile and space vehicle systems. The alignment with operational needs would depend on the specific systems being supported and their lifecycle status, ensuring readiness and effectiveness of critical defense assets.
How was the 'full and open competition' process managed to ensure genuine price discovery and prevent potential contractor lock-in, given Lockheed Martin is the sole awardee?
Investigating the solicitation process, bid evaluation criteria, and the number of proposals received is crucial. If only one bid was submitted or if Lockheed Martin was the only viable option, the 'full and open' designation might be nominal. True price discovery requires a competitive environment where multiple bidders vie for the contract based on price and technical merit.
What measures are in place to control costs and ensure value for money under the Cost Plus Fixed Fee (CPFF) structure for this extensive, long-term contract?
Effective cost control under CPFF relies on stringent oversight, detailed cost reporting requirements, and clear performance metrics. The fixed fee provides some incentive alignment, but the government must actively monitor expenditures, validate costs, and ensure the contractor is operating efficiently to prevent unnecessary spending and maximize taxpayer value.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing
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
Offers Received: 2
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 1111 LOCKHEED MARTIN WAY BLDG 157, SUNNYVALE, CA, 94089
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $2,965,473,743
Exercised Options: $2,198,478,587
Current Obligation: $2,194,921,224
Actual Outlays: $49,357,089
Subaward Activity
Number of Subawards: 1050
Total Subaward Amount: $23,918,716,927
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2013-03-15
Current End Date: 2025-04-30
Potential End Date: 2025-04-30 00:00:00
Last Modified: 2025-11-26
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