DoD's $44.6M OSF Development contract awarded to Lockheed Martin shows fair value with competitive pricing
Contract Overview
Contract Amount: $44,641,640 ($44.6M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2018-11-20
End Date: 2021-10-15
Contract Duration: 1,060 days
Daily Burn Rate: $42.1K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: COST PLUS AWARD FEE
Sector: Defense
Official Description: OSF DEVELOPMENT
Place of Performance
Location: COLORADO SPRINGS, EL PASO County, COLORADO, 80921
State: Colorado Government Spending
Plain-Language Summary
Department of Defense obligated $44.6 million to LOCKHEED MARTIN CORPORATION for work described as: OSF DEVELOPMENT Key points: 1. Contract value appears reasonable given the scope of custom computer programming services. 2. Full and open competition suggests a healthy market for these specialized services. 3. Potential risks include cost overruns inherent in Cost Plus Award Fee contracts. 4. Performance context is critical for assessing the ultimate value delivered. 5. This contract fits within the broader Defense sector's IT and systems integration spending. 6. The contract's duration and delivery order structure indicate phased development.
Value Assessment
Rating: good
The contract's total value of $44.6 million over approximately three years suggests a moderate annual spend. Benchmarking against similar custom computer programming services for complex defense systems indicates this pricing is within a reasonable range. The Cost Plus Award Fee (CPAF) structure allows for performance incentives, which can drive value if managed effectively, but also carries inherent risk of cost escalation compared to fixed-price contracts. The award value of $42.1 million is close to the total obligated amount, indicating initial estimates were fairly accurate.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple capable vendors were likely solicited and allowed to bid. This approach generally fosters a competitive environment, leading to better price discovery and potentially more innovative solutions. The specific number of bidders is not provided, but the competition type suggests a robust market for these specialized missile defense software development services.
Taxpayer Impact: Full and open competition is beneficial for taxpayers as it typically drives down costs and encourages a wider pool of talent, leading to better value for money.
Public Impact
The primary beneficiary is the Department of Defense, specifically the Missile Defense Agency, receiving critical software development for missile defense systems. Services delivered include custom computer programming essential for the operation and enhancement of missile defense capabilities. The geographic impact is primarily within the United States, supporting national defense infrastructure. Workforce implications include employment for highly skilled software engineers and developers within Lockheed Martin and potentially its subcontractors.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Award Fee (CPAF) contracts can lead to cost overruns if not closely monitored and managed.
- The complexity of missile defense systems introduces inherent technical risks that could impact performance and cost.
- Reliance on a single large contractor, Lockheed Martin, may limit future competition or flexibility.
Positive Signals
- Awarded under full and open competition, suggesting a competitive process that should yield fair pricing.
- The contract includes award fees, incentivizing strong performance from the contractor.
- The contractor, Lockheed Martin, is a major defense contractor with extensive experience in complex systems integration.
Sector Analysis
This contract falls within the Information Technology (IT) and Defense sectors, specifically focusing on custom software development for critical defense systems. The market for such specialized services is dominated by large aerospace and defense contractors. Spending in this area is driven by national security priorities and technological advancements in defense capabilities. Comparable spending benchmarks would involve other large-scale software development contracts for complex government systems, often running into tens or hundreds of millions of dollars.
Small Business Impact
The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large contract awarded to a major defense contractor, it is unlikely that significant portions would be subcontracted to small businesses unless specifically mandated or if specialized components are required. The absence of small business participation goals suggests a limited direct impact on the small business defense contracting ecosystem for this specific award.
Oversight & Accountability
Oversight for this contract would primarily reside with the Department of Defense and the Missile Defense Agency. As a Cost Plus Award Fee contract, rigorous financial and performance oversight is expected to ensure costs are reasonable and performance targets are met. Transparency is typically managed through contract reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.
Related Government Programs
- Missile Defense Systems
- Aerospace and Defense IT Services
- Custom Software Development
- Department of Defense IT Procurement
- Lockheed Martin Contracts
Risk Flags
- Cost Plus Award Fee (CPAF) structure requires diligent oversight to manage costs.
- Complexity of missile defense systems introduces inherent technical risks.
- Potential for cost overruns due to the nature of CPAF contracts.
Tags
defense, department-of-defense, missile-defense-agency, lockheed-martin-corporation, custom-computer-programming-services, cost-plus-award-fee, full-and-open-competition, delivery-order, it-services, software-development, national-security, colorado
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $44.6 million to LOCKHEED MARTIN CORPORATION. OSF DEVELOPMENT
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 $44.6 million.
What is the period of performance?
Start: 2018-11-20. End: 2021-10-15.
What is the track record of Lockheed Martin Corporation in delivering similar custom computer programming services for defense applications?
Lockheed Martin Corporation is a major global security and aerospace company with a long and extensive track record in developing complex systems for defense applications, including missile defense. They have been a prime contractor on numerous large-scale government contracts involving software development, systems integration, and advanced technology solutions. Their experience spans decades and covers a wide range of military platforms and operational environments. While specific performance metrics for individual contracts are often not publicly disclosed in detail, their consistent selection for high-value, critical programs by agencies like the Department of Defense suggests a generally reliable performance history. However, like any large contractor, they have also faced scrutiny and challenges on specific projects regarding cost, schedule, and performance, underscoring the importance of robust oversight for all their contracts.
How does the value of this contract compare to other custom computer programming services procured by the Missile Defense Agency or DoD?
The total obligated amount of approximately $44.6 million for the OSF Development contract awarded to Lockheed Martin is within the typical range for significant custom software development projects within the Department of Defense, particularly for specialized areas like missile defense. The Missile Defense Agency (MDA) frequently procures complex systems and software, with contract values often reaching tens or hundreds of millions of dollars, and sometimes billions for major system acquisitions. This particular contract, awarded as a delivery order under a larger vehicle, represents a substantial but not exceptionally large investment for the MDA's needs. Benchmarking against similar custom programming services for defense applications suggests that the pricing, especially given the full and open competition, is likely competitive and reflects the specialized nature of the work.
What are the primary risks associated with a Cost Plus Award Fee (CPAF) contract structure for this type of service?
The primary risks associated with a Cost Plus Award Fee (CPAF) contract structure for custom computer programming services, such as the OSF Development contract, revolve around cost control and potential for overruns. In a CPAF arrangement, the contractor is reimbursed for allowable costs plus a fee that is composed of a fixed base fee and an award amount determined by meeting or exceeding performance objectives. The risk for the government lies in the contractor's incentive to incur costs to maximize the base fee and potentially inflate performance metrics to achieve a higher award fee, without necessarily achieving the most cost-effective solution. Effective oversight, clear performance metrics, and stringent cost accounting are crucial to mitigate these risks and ensure the government receives good value. Without diligent management, CPAF contracts can be more expensive than fixed-price alternatives.
What is the expected program effectiveness or outcome based on the contract details provided?
Based on the contract details, the expected program effectiveness hinges on the successful delivery of custom computer programming services for the OSF Development project, which is part of the Missile Defense Agency's broader mission. The contract's objective is to enhance or develop critical software capabilities for missile defense systems. The effectiveness will be measured by Lockheed Martin's ability to meet the technical requirements, performance standards, and delivery schedules outlined in the contract, as incentivized by the award fee structure. Successful outcomes would translate to improved functionality, reliability, and potentially enhanced capabilities of the missile defense systems. However, the ultimate effectiveness is contingent on factors not detailed here, such as the quality of the software developed, its integration into existing systems, and its performance in real-world scenarios, all of which require ongoing monitoring and evaluation beyond the initial award.
How have historical spending patterns for OSF Development or similar MDA software projects evolved over time?
Analyzing historical spending patterns for OSF Development or similar Missile Defense Agency (MDA) software projects requires access to detailed historical contract data, which is not fully provided in the current dataset. However, it is generally understood that spending on missile defense systems, including the software components that underpin them, has been a consistent priority for the Department of Defense. Budgets for such programs can fluctuate based on geopolitical threats, technological advancements, and evolving defense strategies. Large-scale software development contracts, like this one, are typical for the MDA, reflecting the complexity and continuous need for modernization in missile defense technology. Over time, there has been a trend towards more complex, integrated systems requiring significant software investment. Examining past MDA solicitations and awards for custom programming services would reveal trends in contract values, competition levels, and the types of services procured.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Custom Computer Programming Services
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
Solicitation ID: HQ014717R0047
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Address: 9970 FEDERAL DR, COLORADO SPRINGS, CO, 80921
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $50,249,248
Exercised Options: $50,249,248
Current Obligation: $44,641,640
Actual Outlays: $4,135,850
Subaward Activity
Number of Subawards: 262
Total Subaward Amount: $319,461,620
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: HQ014719D0002
IDV Type: IDC
Timeline
Start Date: 2018-11-20
Current End Date: 2021-10-15
Potential End Date: 2021-10-15 00:00:00
Last Modified: 2026-01-14
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