DoD's $293M C2BMC software development contract awarded to Lockheed Martin raises value and competition concerns

Contract Overview

Contract Amount: $293,327,998 ($293.3M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2021-04-09

End Date: 2026-09-30

Contract Duration: 2,000 days

Daily Burn Rate: $146.7K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS INCENTIVE FEE

Sector: IT

Official Description: SPIRAL 8.2-7 SOFTWARE DEVELOPMENT - DEVELOP AND DEPLOY THE COMMAND AND CONTROL, BATTLE MANAGEMENT AND COMMUNICATIONS (C2BMC) CAPABILITY IN MULTIPLE PHASES THROUGH FY 2024 AND PLANNING FOR FUTURE BMDS INCREMENTS.

Place of Performance

Location: COLORADO SPRINGS, EL PASO County, COLORADO, 80921

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $293.3 million to LOCKHEED MARTIN CORPORATION for work described as: SPIRAL 8.2-7 SOFTWARE DEVELOPMENT - DEVELOP AND DEPLOY THE COMMAND AND CONTROL, BATTLE MANAGEMENT AND COMMUNICATIONS (C2BMC) CAPABILITY IN MULTIPLE PHASES THROUGH FY 2024 AND PLANNING FOR FUTURE BMDS INCREMENTS. Key points: 1. The contract's significant value suggests a need for robust performance metrics and cost controls. 2. Lack of competition indicates potential for inflated pricing and reduced innovation. 3. The sole-source award warrants scrutiny of the justification for not opening the contract to broader bidding. 4. Performance context is crucial, given the complexity of Command and Control, Battle Management, and Communications systems. 5. This contract positions Lockheed Martin as a key provider within the Missile Defense Agency's critical infrastructure. 6. The extended duration and phased approach require careful management to ensure timely delivery and adapt to evolving needs.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specialized C2BMC capability. However, the substantial award amount necessitates a close examination of cost efficiency and whether the pricing reflects fair market value for custom computer programming services. Without competitive bids, it's difficult to definitively assess value for money, but the scale of the investment suggests a high expectation for return in terms of national security capabilities.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. The justification for this approach is not detailed in the provided data. Sole-source awards can limit price discovery and potentially lead to higher costs for the government compared to a competitive process. The absence of multiple bidders means taxpayers do not benefit from the cost-saving pressures that competition typically generates.

Taxpayer Impact: The lack of competition means taxpayers may be paying a premium for this critical software development. Without competitive bids, there is less pressure on the contractor to offer the most cost-effective solution.

Public Impact

The primary beneficiaries are the Department of Defense and the Missile Defense Agency, who receive enhanced Command and Control, Battle Management, and Communications capabilities. The services delivered include the development and deployment of complex software for the C2BMC system. The geographic impact is likely national, supporting strategic defense operations. Workforce implications include specialized software development roles, potentially within Lockheed Martin and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
The substantial contract value requires rigorous oversight to ensure efficient use of taxpayer funds.
The complexity of C2BMC systems presents inherent technical and execution risks.
Long contract duration increases the risk of scope creep and cost overruns if not managed effectively.

Positive Signals

Award to a single, established contractor like Lockheed Martin may ensure continuity and leverage existing expertise.
The phased approach allows for iterative development and adaptation to evolving threats and technologies.
The contract's focus on a critical defense capability addresses a significant national security need.

Sector Analysis

This contract falls within the Information Technology sector, specifically custom computer programming services. The market for defense-related software development is highly specialized, with a limited number of large contractors possessing the necessary security clearances and technical expertise. Spending in this area is driven by national security priorities and the need for advanced technological capabilities in command and control systems. Comparable spending benchmarks would typically involve other large-scale defense IT development contracts.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false) and does not explicitly mention subcontracting goals for small businesses (sb: false). This suggests that the primary awardee, Lockheed Martin, is a large business, and opportunities for small businesses may be limited to subcontracting roles, if any are mandated or pursued. The lack of a small business set-aside means direct opportunities for small businesses to compete for the prime contract are absent.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense and the Missile Defense Agency. Given the contract type (Cost Plus Incentive Fee), performance and cost monitoring are critical. Accountability measures would be tied to meeting performance milestones and managing costs within the incentive framework. Transparency may be limited due to the sole-source nature and national security implications, but contract awards and modifications are typically reported.

Related Government Programs

Missile Defense Systems
Command and Control Systems
Battle Management Systems
Department of Defense IT Procurement
Custom Software Development Contracts

Risk Flags

Sole-source award
High contract value
Complex system development
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $293.3 million to LOCKHEED MARTIN CORPORATION. SPIRAL 8.2-7 SOFTWARE DEVELOPMENT - DEVELOP AND DEPLOY THE COMMAND AND CONTROL, BATTLE MANAGEMENT AND COMMUNICATIONS (C2BMC) CAPABILITY IN MULTIPLE PHASES THROUGH FY 2024 AND PLANNING FOR FUTURE BMDS INCREMENTS.

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 $293.3 million.

What is the period of performance?

Start: 2021-04-09. End: 2026-09-30.

What is Lockheed Martin's track record with similar large-scale defense software development contracts?

Lockheed Martin has a long and extensive history of developing and delivering complex systems for the Department of Defense and other government agencies. They are a prime contractor on numerous large-scale programs, including various aspects of missile defense, aerospace, and C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance) systems. Their track record includes both successes and challenges, as is common with programs of this magnitude and complexity. Specific performance on past C2BMC phases or similar command and control software development efforts would be a key indicator of their capability and reliability for this contract. Analyzing their historical performance on cost, schedule, and technical execution for comparable projects is essential for a comprehensive risk assessment.

How does the pricing structure (Cost Plus Incentive Fee) typically perform in large defense contracts?

Cost Plus Incentive Fee (CPIF) contracts are designed to incentivize the contractor to control costs while achieving performance targets. In a CPIF structure, the final profit is adjusted based on the relationship between the final costs and the target costs, as well as the achievement of specific performance objectives. This type of contract is often used when the scope of work is not fully defined or when there is a high degree of technical uncertainty. While CPIF can encourage cost savings and performance improvements, it also requires robust government oversight to ensure that target costs are realistic and that the contractor is genuinely motivated to achieve efficiencies rather than simply increasing the cost base. Without strong oversight, there is a risk that costs could escalate, and the 'incentive' aspect may not yield the desired savings for the government.

What are the primary risks associated with developing and deploying a Command and Control, Battle Management, and Communications (C2BMC) capability?

Developing and deploying a C2BMC capability involves significant risks due to its critical nature and technical complexity. Key risks include integration challenges, as the system must interface with numerous other defense platforms and sensors. There are also risks related to cybersecurity, ensuring the system is resilient against sophisticated threats. Schedule delays are common in large software development projects, especially those involving cutting-edge technology and evolving requirements. Furthermore, the system's effectiveness relies heavily on the accuracy and timeliness of the data it processes, introducing risks related to data fusion and interpretation. Finally, ensuring the system remains adaptable to future threats and technological advancements presents an ongoing challenge throughout its lifecycle.

What is the historical spending trend for C2BMC or similar missile defense command and control systems within the Department of Defense?

Historical spending on missile defense command and control systems, including programs like C2BMC, has been substantial and generally increasing over the past two decades, driven by evolving geopolitical threats and technological advancements. The Missile Defense Agency (MDA) consistently receives significant budget allocations for developing and maintaining its layered defense architecture. Spending on C2BMC specifically has been phased over multiple years, reflecting the complexity and iterative nature of its development and deployment. While precise historical figures for C2BMC alone require detailed budget analysis, the overall trend for integrated air and missile defense systems indicates a sustained, high-priority investment by the DoD. This suggests that contracts like the one awarded to Lockheed Martin are part of a long-term, significant financial commitment to national security.

Given the sole-source nature, what mechanisms are in place to ensure fair pricing and prevent contractor overreach?

When a contract is awarded sole-source, ensuring fair pricing and preventing contractor overreach relies heavily on robust government oversight and negotiation. The government typically requires detailed cost proposals from the contractor, which are then scrutinized by contracting officers and technical experts. Techniques like should-cost analysis, should-cost/will-cost management, and benchmarking against similar, albeit not identical, services can be employed. The contract type itself, CPIF, includes incentive clauses that link contractor profit to cost and performance targets, providing a financial motivation for efficiency. Furthermore, the government reserves the right to audit contractor costs. Regular performance reviews and contract modifications require careful negotiation to ensure they align with the original intent and do not unduly inflate costs or expand scope without commensurate value.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HQ014711R0003

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 700 N FREDERICK AVE, GAITHERSBURG, MD, 20878

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: $332,585,751

Exercised Options: $332,585,751

Current Obligation: $293,327,998

Actual Outlays: $113,446,138

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HQ014712D0003

IDV Type: IDC

Timeline