DoD's $808M Lockheed Martin contract for E&I Support shows limited competition, raising value concerns

Contract Overview

Contract Amount: $8,084,019 ($8.1M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2023-09-15

End Date: 2026-04-30

Contract Duration: 958 days

Daily Burn Rate: $8.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: E&I SUPPORT (YEAR 6&7)

Place of Performance

Location: MARIETTA, COBB County, GEORGIA, 30063

State: Georgia Government Spending

Plain-Language Summary

Department of Defense obligated $8.1 million to LOCKHEED MARTIN CORP for work described as: E&I SUPPORT (YEAR 6&7) Key points: 1. The contract's value of $808 million over its period of performance warrants scrutiny for cost-effectiveness. 2. Limited competition for this significant award may impact price discovery and potentially inflate costs. 3. The Cost Plus Fixed Fee (CPFF) contract type introduces potential for cost overruns if not managed tightly. 4. This award is part of a larger, ongoing effort for E&I Support, suggesting a long-term reliance on the contractor. 5. The specific nature of E&I support for Special Operations Command implies critical, specialized requirements. 6. The absence of small business set-asides or reported subcontracting raises questions about broader economic impact.

Value Assessment

Rating: questionable

Benchmarking the value of this $808 million contract is challenging without specific performance metrics and comparable contract data. However, the significant dollar amount and the CPFF structure necessitate close monitoring to ensure value for money. The lack of competition further complicates a direct value assessment, as it limits the ability to compare pricing against market alternatives. The contract's duration and the potential for follow-on work also mean that initial pricing decisions have long-term financial implications.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a 'NOT AVAILABLE FOR COMPETITION' basis, indicating a sole-source procurement. This means that the Department of Defense did not solicit bids from multiple potential offerors. Such awards are typically justified when only one source is capable of meeting the requirement, often due to proprietary technology, urgent needs, or unique capabilities. The lack of a competitive bidding process limits the government's ability to secure the most favorable pricing and terms.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the price reductions and innovations that typically arise from a competitive bidding environment. This can lead to higher overall costs for the government.

Public Impact

The primary beneficiaries are U.S. Special Operations Command (SOCOM) personnel who will receive enhanced E&I support. The services delivered are critical for the operational effectiveness and technological advantage of special operations forces. The geographic impact is likely focused on areas where SOCOM operates, both domestically and internationally. Workforce implications may include the retention and utilization of specialized technical and support personnel by Lockheed Martin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs for taxpayers.
Cost Plus Fixed Fee (CPFF) contract type can incentivize cost escalation if not rigorously managed.
Lack of transparency regarding the justification for sole-source award requires further investigation.
Absence of small business participation raises concerns about equitable distribution of federal contracting opportunities.
The significant dollar value of the contract warrants robust oversight to ensure performance and prevent waste.

Positive Signals

Contract supports critical E&I functions for U.S. Special Operations Command, indicating a vital need.
Lockheed Martin is a major defense contractor with extensive experience, suggesting a high likelihood of technical capability.
The contract is structured with a fixed fee component, which can provide some cost predictability.
The award is a delivery order under a larger contract, implying a structured and potentially phased approach to fulfilling requirements.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on electronic and intelligence support systems. The market for such specialized systems is often characterized by high barriers to entry due to technological complexity and security requirements. Major defense contractors like Lockheed Martin dominate this space. Comparable spending benchmarks would typically involve other large, sole-source or limited-competition contracts for similar specialized support services within the defense industry.

Small Business Impact

The data indicates that this contract was not awarded as a small business set-aside, nor is there information suggesting significant subcontracting opportunities for small businesses. This suggests that the primary contractor, Lockheed Martin, will likely perform the majority of the work. The lack of small business involvement means that this particular contract may not contribute to the government's small business contracting goals and could limit the ecosystem of smaller, innovative firms participating in defense contracts.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense and U.S. Special Operations Command. Given the sole-source nature and significant value, rigorous oversight is crucial. This would involve regular performance reviews, audits of costs, and adherence to the terms of the Cost Plus Fixed Fee agreement. Transparency may be limited due to the sole-source justification, but accountability should be maintained through contract management offices and potentially Inspector General reviews if performance or cost issues arise.

Related Government Programs

Defense Intelligence Agency Support Contracts
Special Operations Command Technology Development
Electronic Warfare Systems Procurement
Intelligence, Surveillance, and Reconnaissance (ISR) Systems

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
High contract value
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $8.1 million to LOCKHEED MARTIN CORP. E&I SUPPORT (YEAR 6&7)

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (U.S. Special Operations Command).

What is the total obligated amount?

The obligated amount is $8.1 million.

What is the period of performance?

Start: 2023-09-15. End: 2026-04-30.

What specific E&I support services are being provided under this contract, and how do they align with SOCOM's mission requirements?

The contract, 'E&I SUPPORT (YEAR 6&7)', awarded to Lockheed Martin Corp, likely encompasses a range of critical Electronic and Intelligence support functions essential for U.S. Special Operations Command (SOCOM). While specific details are often classified or proprietary, such services typically include the development, integration, maintenance, and operation of advanced electronic warfare systems, signals intelligence (SIGINT) capabilities, and intelligence analysis tools. These systems are vital for SOCOM's unique missions, which often involve clandestine operations, counter-terrorism, and special reconnaissance, requiring superior situational awareness, threat detection, and information superiority. The 'Year 6&7' designation suggests this is a continuation of an existing support effort, implying that the services are well-established and integral to ongoing SOCOM operations, providing critical technological advantages and operational support.

What is the justification for awarding this substantial contract to Lockheed Martin on a sole-source basis?

The justification for awarding the $808 million E&I Support contract to Lockheed Martin on a sole-source basis ('NOT AVAILABLE FOR COMPETITION') typically stems from unique capabilities, proprietary technology, or specific requirements that only Lockheed Martin can fulfill. For specialized defense systems, this often involves integration with existing platforms, unique intellectual property, or a proven track record with highly sensitive SOCOM operations. The government may have determined that soliciting bids from other contractors would be impractical, excessively costly, or would compromise national security due to the specialized nature of the E&I support required by SOCOM. Such sole-source awards are subject to specific federal acquisition regulations and require detailed justification to ensure they are in the government's best interest.

How does the Cost Plus Fixed Fee (CPFF) contract structure potentially impact cost control and value for money in this context?

The Cost Plus Fixed Fee (CPFF) contract structure means that Lockheed Martin will be reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. While the fixed fee provides some incentive for the contractor to control costs (as the fee doesn't increase with higher costs), it can also lead to cost overruns if the initial cost estimates are inaccurate or if unforeseen issues arise. Unlike fixed-price contracts, the government bears the risk of cost increases. For a complex, long-term contract like this E&I support for SOCOM, rigorous oversight, detailed cost tracking, and clear performance metrics are essential to ensure that the government receives good value for money and that costs remain within reasonable bounds.

What are the potential risks associated with limited competition for critical defense support services?

Limited competition, especially in sole-source awards for critical defense support services, carries several risks. Firstly, it can lead to higher prices for the government, as the absence of multiple bidders reduces the incentive for the contractor to offer the most competitive rates. Secondly, it may stifle innovation, as contractors may face less pressure to develop more efficient or advanced solutions. Thirdly, it can create vendor lock-in, making it difficult and costly to switch providers in the future. For SOCOM's E&I support, these risks could translate into inflated budgets, slower technological advancement, and a reduced ability to adapt to evolving threats if the sole provider's capabilities become outdated or their pricing becomes uncompetitive.

What is the historical spending trend for E&I support services by SOCOM, and how does this $808M contract fit within that pattern?

To accurately assess the historical spending trend for E&I support services by SOCOM and contextualize this $808 million contract, one would need access to historical contract databases and SOCOM's budget allocations for similar services over several fiscal years. Typically, specialized support for SOCOM is a consistent and significant expenditure due to the unique and technologically advanced nature of their operations. Contracts for E&I support often span multiple years and involve substantial sums, reflecting the complexity and criticality of the services. This $808 million award, designated for 'Year 6&7', suggests it is part of a larger, ongoing program. Without specific historical data, it's reasonable to infer that SOCOM's spending in this area is substantial and likely follows a pattern of long-term, high-value contracts to maintain its operational edge.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 86 SOUTH COBB DR, MARIETTA, GA, 30063

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

Financial Breakdown

Contract Ceiling: $8,084,019

Exercised Options: $8,084,019

Current Obligation: $8,084,019

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: H9240822D0001

IDV Type: IDC

Timeline