DoD's $656M Orbital Operations Contract Awarded to Lockheed Martin Raises Questions on Competition
Contract Overview
Contract Amount: $656,212,169 ($656.2M)
Contractor: Lockheed Martin Corp
Awarding Agency: Department of Defense
Start Date: 2021-06-01
End Date: 2025-05-31
Contract Duration: 1,460 days
Daily Burn Rate: $449.5K/day
Competition Type: NOT COMPETED
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Defense
Official Description: COMBINED ORBITAL OPERATIONS, LOGISTICS, AND RESILIENCY CORE SUSTAINMENT.
Place of Performance
Location: LITTLETON, DOUGLAS County, COLORADO, 80125
State: Colorado Government Spending
Plain-Language Summary
Department of Defense obligated $656.2 million to LOCKHEED MARTIN CORP for work described as: COMBINED ORBITAL OPERATIONS, LOGISTICS, AND RESILIENCY CORE SUSTAINMENT. Key points: 1. Significant contract value of $656.2 million for orbital operations and sustainment. 2. Sole awardee, Lockheed Martin, suggests potential lack of competition. 3. Cost-plus incentive fee contract type may lead to cost overruns. 4. Engineering services sector, with a focus on defense, is highly specialized.
Value Assessment
Rating: questionable
The contract's cost-plus incentive fee structure, while aiming for performance, can incentivize higher costs. Benchmarking against similar complex orbital sustainment contracts is difficult due to the specialized nature, but the lack of competitive pricing is a concern.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This significantly limits price discovery and potentially leads to higher costs for taxpayers as there is no market pressure to offer the best value.
Taxpayer Impact: The lack of competition for a substantial contract raises concerns about whether taxpayers are receiving the best possible value for these critical orbital operations and sustainment services.
Public Impact
Ensures continued operation and resilience of critical orbital assets. Supports national security through sustained space-based capabilities. Potential for increased costs due to non-competitive award.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Cost-plus contract type
- High contract value
Positive Signals
- Ensures critical orbital asset sustainment
- Supports national security
Sector Analysis
This contract falls within the Engineering Services sector, specifically supporting the Department of Defense's advanced orbital operations and logistics. Spending in this niche area is often high due to the complexity and critical nature of space-based assets.
Small Business Impact
The data provided does not indicate any specific allocation or consideration for small businesses in this contract award. Large, specialized contracts like this often involve prime contractors who may subcontract, but direct small business participation is not evident.
Oversight & Accountability
The non-competitive nature of this award warrants close oversight to ensure cost controls and performance metrics are rigorously monitored. Accountability for cost overruns under the incentive fee structure will be crucial.
Related Government Programs
- Engineering Services
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Potential for inflated costs due to lack of competition.
- Cost-plus contract type increases financial risk.
- Lack of transparency in pricing and value.
- Risk of vendor lock-in and reduced future innovation.
Tags
engineering-services, department-of-defense, co, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $656.2 million to LOCKHEED MARTIN CORP. COMBINED ORBITAL OPERATIONS, LOGISTICS, AND RESILIENCY CORE SUSTAINMENT.
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 $656.2 million.
What is the period of performance?
Start: 2021-06-01. End: 2025-05-31.
What is the justification for awarding this critical orbital sustainment contract on a sole-source basis?
The justification for a sole-source award typically involves unique capabilities, proprietary technology, or urgent needs where only one contractor can fulfill the requirement. Without further details, it's difficult to assess the validity of this justification and whether alternatives were truly explored.
How will the cost-plus incentive fee structure be managed to prevent excessive spending on this non-competed contract?
Effective management requires stringent oversight of cost reporting, clear performance metrics tied to incentives, and regular audits. The government must actively negotiate fee structures and challenge any unjustified cost increases to mitigate risks associated with cost-plus contracts, especially when competition is absent.
What are the long-term implications for technological advancement and cost-efficiency in orbital sustainment given this sole-source award?
Sole-source awards can stifle innovation by reducing the incentive for competitors to develop advanced solutions. Over time, this can lead to higher costs and slower technological progress compared to a market driven by competition. It may also create a dependency on a single provider.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Pricing Type: COST PLUS INCENTIVE FEE (V)
Evaluated Preference: NONE
Contractor Details
Address: 12257 S WADSWORTH BLVD, LITTLETON, CO, 80125
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $659,217,071
Exercised Options: $659,217,071
Current Obligation: $656,212,169
Subaward Activity
Number of Subawards: 373
Total Subaward Amount: $270,137,104
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: FA882320D0001
IDV Type: IDC
Timeline
Start Date: 2021-06-01
Current End Date: 2025-05-31
Potential End Date: 2025-05-31 00:00:00
Last Modified: 2025-12-12
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