Lockheed Martin awarded $40.7M for missile defense field support, raising questions on competition and value

Contract Overview

Contract Amount: $40,697,277 ($40.7M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2017-12-11

End Date: 2020-06-08

Contract Duration: 910 days

Daily Burn Rate: $44.7K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: TFSC BATTERY FIELD SUPPORT ACTIVITIES

Place of Performance

Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $40.7 million to LOCKHEED MARTIN CORPORATION for work described as: TFSC BATTERY FIELD SUPPORT ACTIVITIES Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant duration of 910 days suggests a long-term need for these specialized services. 3. The contract type (Cost Plus Incentive Fee) can incentivize cost overruns if not closely monitored. 4. High dollar value indicates a critical support function within the Missile Defense Agency. 5. Lack of competition raises concerns about whether the government secured the best possible price. 6. Performance in Texas suggests a localized operational focus for this support.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specialized services provided. The Cost Plus Incentive Fee (CPIF) contract type, while offering flexibility, carries inherent risks of cost escalation if not managed with rigorous oversight. Without competitive bids, it's difficult to ascertain if the $40.7 million represents a fair market price for the logistics consulting services rendered. The awarded amount is significantly higher than the base contract value of $4.47 million, indicating substantial growth or scope expansion over the contract's life.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Missile Defense Agency did not solicit bids from multiple potential contractors. This approach is typically justified when only one contractor possesses the unique capabilities or proprietary knowledge required for the service. However, the absence of competition means there was no direct price comparison or incentive for contractors to offer their most competitive rates, potentially leading to a higher overall cost for the government.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage market competition to drive down prices, potentially resulting in less favorable terms for taxpayers. This approach necessitates strong internal justification and oversight to ensure the selected contractor's pricing is reasonable.

Public Impact

The primary beneficiaries are the Department of Defense and specifically the Missile Defense Agency, which receives critical logistical support for its operations. Services delivered include process, physical distribution, and logistics consulting, essential for maintaining complex defense systems. The contract's performance location in Texas indicates a geographic focus on supporting defense infrastructure within that state. This contract likely supports a specialized workforce within Lockheed Martin, requiring expertise in defense logistics and missile systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
CPIF contract type can incentivize cost overruns without stringent oversight.
Lack of transparency in the procurement process due to sole-source nature.
High contract value without clear competitive benchmarks makes value assessment difficult.

Positive Signals

Award to a major defense contractor (Lockheed Martin) suggests access to specialized expertise.
Long contract duration (910 days) indicates a sustained need and potential for stable support.
Performance in Texas may align with specific regional defense infrastructure needs.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically focusing on logistics and management consulting. The defense industry, a major consumer of such services, relies heavily on specialized support for complex systems like missile defense. Comparable spending in this niche often involves significant dollar values due to the high-stakes nature of national security and the specialized knowledge required. The market for defense logistics support is dominated by large, established contractors with proven track records.

Small Business Impact

This contract was not set aside for small businesses, nor does it indicate any subcontracting requirements for small businesses. The award to Lockheed Martin, a large prime contractor, suggests that the primary focus was on securing specialized capabilities rather than promoting small business participation. This approach may limit opportunities for small businesses to engage in this specific defense logistics support domain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, with potential involvement from the Missile Defense Agency's Inspector General. Given the sole-source nature and CPIF structure, rigorous oversight is crucial to monitor costs, ensure performance standards are met, and prevent potential fraud or abuse. Transparency regarding the justification for the sole-source award and detailed performance reports would be key accountability measures.

Related Government Programs

Missile Defense Systems Support
Logistics Consulting Services
Department of Defense Contracts
Cost Plus Incentive Fee Contracts
Sole Source Procurements
Defense Logistics Agency Support

Risk Flags

Sole Source Justification
Cost Plus Incentive Fee Risk
Lack of Competition
Limited Transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $40.7 million to LOCKHEED MARTIN CORPORATION. TFSC BATTERY FIELD SUPPORT ACTIVITIES

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Missile Defense Agency).

What is the total obligated amount?

The obligated amount is $40.7 million.

What is the period of performance?

Start: 2017-12-11. End: 2020-06-08.

What specific logistics and distribution challenges does the Missile Defense Agency face that necessitated a sole-source award to Lockheed Martin?

The Missile Defense Agency (MDA) likely faces highly specialized logistics challenges related to the maintenance, deployment, and operational readiness of complex missile defense systems. These systems often involve proprietary technology, unique sustainment requirements, and stringent security protocols. A sole-source award to Lockheed Martin, a primary contractor for many MDA programs, suggests that they possess unique institutional knowledge, technical expertise, or access to critical components and data essential for providing this specific field support. This could include managing the supply chain for specialized parts, coordinating maintenance schedules for unique hardware, or providing technical consultation on the integration and operation of these advanced systems, which may not be readily available from other vendors.

How does the Cost Plus Incentive Fee (CPIF) structure potentially impact the final cost of this $40.7 million contract?

The Cost Plus Incentive Fee (CPIF) contract structure allows the contractor (Lockheed Martin) to incur costs, and then receive a fee that is adjusted based on performance against pre-determined targets. In this case, the fee would be adjusted based on achieving specific objectives related to the logistics support activities. While CPIF aims to incentivize efficiency and cost savings by sharing the benefits of exceeding targets, it also carries the risk of cost overruns. If the targets are not set aggressively enough, or if oversight is insufficient, the contractor might not be strongly motivated to control costs, potentially leading to a final price higher than anticipated. The base contract value was $4.47 million, and the final award reached $40.7 million, indicating significant cost growth, the drivers of which would need careful examination under the CPIF terms.

What are the risks associated with awarding a contract of this magnitude on a sole-source basis?

The primary risk of a sole-source award, especially for a contract valued at $40.7 million, is the lack of competitive pressure. Without competing bids, the government cannot be certain it has obtained the best possible price or the most innovative solutions. This can lead to inflated costs for taxpayers and potentially less favorable contract terms. Furthermore, sole-source awards can create a perception of favoritism or a lack of due diligence in exploring alternative providers. It also reduces opportunities for other capable companies, including small businesses, to enter the market or gain experience with the agency. Robust justification and transparent documentation are crucial to mitigate these risks and demonstrate that the sole-source decision was indeed in the government's best interest.

Can the performance metrics and outcomes of this contract be objectively assessed given its sole-source nature?

Assessing the performance of this sole-source contract requires a strong framework of objective metrics defined within the contract itself. While competition is absent, the Missile Defense Agency (MDA) should have established Key Performance Indicators (KPIs) related to the logistics support provided. These could include metrics such as on-time delivery of parts, response times for technical support, inventory management accuracy, and overall system availability influenced by the support. The CPIF structure inherently includes performance targets that should be measurable. However, without a competitive baseline, 'good' performance is relative to the contract's own goals rather than market standards, making objective assessment reliant on the quality of the initial contract negotiation and ongoing program management oversight.

What is Lockheed Martin's track record with the Missile Defense Agency, and how does this inform the justification for a sole-source award?

Lockheed Martin is a major defense contractor and a key player in numerous missile defense programs, including significant contributions to the MDA's portfolio. Their extensive history and deep involvement with MDA systems suggest they possess unparalleled expertise, proprietary knowledge, and established infrastructure for supporting these complex technologies. This long-standing relationship and specialized capability are often the primary justifications for sole-source awards in the defense sector. The agency likely relies on Lockheed Martin's intimate understanding of the systems' lifecycles, maintenance requirements, and operational nuances, which would be difficult and time-consuming for a new contractor to replicate, thus supporting the rationale for a sole-source decision based on unique qualifications.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Process, Physical Distribution, and Logistics Consulting Services

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS INCENTIVE FEE (V)

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, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $44,071,882

Exercised Options: $44,071,882

Current Obligation: $40,697,277

Actual Outlays: $1,032,747

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HQ014710D0001

IDV Type: IDC

Timeline