DoD's Vulture System of Systems Development contract awarded to Lockheed Martin for over $55.7M

Contract Overview

Contract Amount: $55,771,341 ($55.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2019-04-09

End Date: 2022-04-30

Contract Duration: 1,117 days

Daily Burn Rate: $49.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: VULTURE SYSTEM OF SYSTEMS DEVELOPMENT

Place of Performance

Location: OWEGO, TIOGA County, NEW YORK, 13827

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $55.8 million to LOCKHEED MARTIN CORPORATION for work described as: VULTURE SYSTEM OF SYSTEMS DEVELOPMENT Key points: 1. Contract value represents a significant investment in advanced defense systems. 2. Competition dynamics suggest a robust bidding process for complex engineering services. 3. Performance risks may be elevated due to the 'system of systems' nature of the project. 4. The contract duration of over three years indicates a long-term development effort. 5. Engineering services sector is characterized by high technical expertise and specialized requirements. 6. The award falls within a broad category of engineering services for defense applications.

Value Assessment

Rating: good

The contract value of $55.7 million for engineering services is substantial. Benchmarking against similar 'system of systems' development contracts is challenging due to their unique complexity. However, the Cost Plus Fixed Fee (CPFF) pricing structure suggests that while costs are monitored, there's an incentive for the contractor to manage expenses efficiently to maximize their fixed fee. Further analysis would require comparing specific task orders and deliverables against industry standards for similar advanced defense system development.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This approach typically fosters a competitive environment, potentially leading to better pricing and innovative solutions. The fact that it was a single award delivery order suggests that Lockheed Martin was selected as the best value among the bidders.

Taxpayer Impact: Full and open competition generally benefits taxpayers by encouraging a wider range of proposals and driving down costs through market forces, ensuring the government receives optimal value for its investment.

Public Impact

The primary beneficiaries are the Department of Defense, which receives advanced capabilities for national security. The contract supports the development and integration of complex defense systems. The geographic impact is primarily within the United States, with potential implications for defense industry hubs. The contract supports a highly skilled workforce in engineering and defense technology sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Complexity of 'system of systems' development can lead to integration challenges and cost overruns.
Reliance on a single contractor for a critical system may pose long-term dependency risks.
The CPFF contract type, while common, requires diligent oversight to ensure cost control.

Positive Signals

Awarded through full and open competition, suggesting a competitive selection process.
Lockheed Martin is a major defense contractor with extensive experience in complex systems.
The contract duration allows for phased development and testing, potentially mitigating some risks.

Sector Analysis

The defense engineering services sector is a critical component of the aerospace and defense industry, characterized by high barriers to entry due to specialized knowledge, security clearances, and significant R&D investment. This contract for a 'system of systems' development fits within this high-value segment, focusing on integrating multiple complex technologies into a cohesive defense capability. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of such projects, but overall DoD spending on engineering and technical services runs into billions annually.

Small Business Impact

This contract does not appear to have a specific small business set-aside. Given the scale and complexity of developing a 'system of systems,' it is likely that the prime contractor, Lockheed Martin, will engage subcontractors. Analysis of subcontracting plans would be necessary to determine the extent of small business participation and its impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), ensuring compliance with contract terms, quality standards, and delivery schedules. The CPFF structure necessitates robust financial oversight to monitor expenditures and ensure the fixed fee is earned appropriately. Transparency is generally maintained through contract reporting requirements, though specific details of system development may be sensitive.

Related Government Programs

Advanced Weapons Systems Development
Aerospace Engineering Services
Defense System Integration
Command and Control Systems
Intelligence, Surveillance, and Reconnaissance (ISR) Platforms

Risk Flags

Potential for cost overruns due to CPFF structure.
Integration challenges inherent in 'system of systems' development.
Long-term sustainment and upgrade path requires careful planning.
Dependency on specific technological advancements.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $55.8 million to LOCKHEED MARTIN CORPORATION. VULTURE SYSTEM OF SYSTEMS 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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $55.8 million.

What is the period of performance?

Start: 2019-04-09. End: 2022-04-30.

What is Lockheed Martin's track record with similar 'system of systems' development contracts for the Department of Defense?

Lockheed Martin has a long and extensive history of developing complex defense systems, including numerous 'system of systems' programs for the DoD across various domains such as air, space, and cyber. They have been involved in major initiatives like the F-35 Joint Strike Fighter program, which integrates numerous subsystems and technologies, and various satellite and missile defense systems. Their experience includes managing large, multi-year, multi-billion dollar projects, navigating intricate technical challenges, and coordinating with numerous suppliers and government stakeholders. While specific details of past performance on analogous 'system of systems' projects are often sensitive, their overall portfolio demonstrates a significant capability in this area. However, the success of such large-scale endeavors can vary, with some facing schedule delays or cost challenges, underscoring the inherent risks in this type of complex development.

How does the $55.7 million contract value compare to typical spending on advanced defense system development projects?

The $55.7 million contract value for the Vulture System of Systems Development is a significant sum, but it represents a moderate investment within the broader landscape of advanced defense system development. Major platform programs, such as new fighter jets, naval vessels, or strategic missile systems, often involve contract values in the billions of dollars over their lifecycle. However, this $55.7 million could represent a crucial phase, such as initial design, prototyping, integration of specific subsystems, or a specific delivery order within a larger, undefined program. When compared to the total annual DoD budget for research, development, testing, and evaluation (RDT&E), which runs into tens of billions, this contract is a notable but not exceptionally large allocation. Its true significance lies in its specific purpose within the 'system of systems' architecture.

What are the primary risks associated with developing a 'system of systems' under a Cost Plus Fixed Fee (CPFF) contract?

Developing a 'system of systems' inherently carries risks related to integration complexity, interoperability, evolving requirements, and technological maturity. Under a CPFF contract, the government bears the cost of all allowable expenses plus a predetermined fixed fee for the contractor's profit. The primary risk for the government is cost overrun, as the contractor is incentivized to incur costs to complete the work, and the fixed fee remains constant regardless of the final cost. While the CPFF structure aims to provide the contractor with a reasonable profit while allowing flexibility for unforeseen technical challenges, it requires stringent government oversight to manage costs effectively. The contractor's risk is primarily related to managing the project within the estimated cost base to ensure their fixed fee is profitable; if costs significantly exceed estimates without adequate justification, their profit margin shrinks.

What does the 'system of systems' designation imply about the nature and scope of the Vulture contract?

The 'system of systems' (SoS) designation implies that the Vulture contract is not focused on developing a single, standalone piece of equipment, but rather on integrating multiple independent systems to achieve a synergistic capability that is greater than the sum of its parts. This means the contract likely involves the design, development, and integration of various hardware, software, and potentially human elements that must communicate and operate together seamlessly. The scope could encompass command and control, intelligence gathering, communication networks, and operational platforms. This approach is common in modern defense acquisition, aiming for flexibility, adaptability, and enhanced mission effectiveness by leveraging existing or newly developed systems in concert, rather than relying on monolithic, bespoke solutions.

How does the contract's duration (1117 days) influence the assessment of its value and risk?

The contract duration of 1117 days, approximately just over three years, suggests a substantial development and integration effort. This extended timeline is typical for complex engineering projects, allowing for phased development, testing, and refinement. From a value perspective, a longer duration can indicate a more thorough approach to problem-solving and risk mitigation, potentially leading to a more robust final product. However, it also increases the exposure to changing technological landscapes, evolving threats, and potential budget fluctuations over the period. For risk assessment, the duration itself isn't inherently positive or negative, but it necessitates continuous oversight and adaptive management to ensure the project stays on track and remains relevant throughout its lifecycle. Shorter durations might indicate simpler tasks or pre-existing mature technologies, while longer ones point to innovation and complexity.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: HQ072715R0001

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 1801 STATE RT 17 C, OWEGO, NY, 13827

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: $55,771,341

Exercised Options: $55,771,341

Current Obligation: $55,771,341

Actual Outlays: $6,601,968

Subaward Activity

Number of Subawards: 154

Total Subaward Amount: $24,997,316

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HQ072716D0001

IDV Type: IDC

Timeline