DHS Coast Guard awards $23.7M engineering services contract to Lockheed Martin, raising value-for-money questions

Contract Overview

Contract Amount: $23,680,777 ($23.7M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Homeland Security

Start Date: 2016-11-04

End Date: 2021-09-15

Contract Duration: 1,776 days

Daily Burn Rate: $13.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: TIME AND MATERIALS

Sector: Other

Official Description: IGF::OT::IGF

Place of Performance

Location: MOORESTOWN, BURLINGTON County, NEW JERSEY, 08057

State: New Jersey Government Spending

Plain-Language Summary

Department of Homeland Security obligated $23.7 million to LOCKHEED MARTIN CORPORATION for work described as: IGF::OT::IGF Key points: 1. Contract awarded on a sole-source basis, limiting price competition and potentially increasing costs. 2. Significant contract duration of nearly five years suggests a long-term need for these services. 3. The use of Time and Materials pricing can lead to cost overruns if not closely managed. 4. Engineering services are critical for infrastructure and operational support, but require careful oversight. 5. Lack of competition raises concerns about whether the government received the best possible value. 6. Contractor's extensive experience may justify the sole-source award, but requires verification.

Value Assessment

Rating: questionable

The contract's value of $23.7 million for engineering services over almost five years warrants scrutiny, especially given the sole-source award. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar government contracts. The Time and Materials (T&M) pricing structure, while flexible, carries inherent risks of cost escalation if not meticulously monitored. A thorough review of the contractor's proposed labor rates and estimated hours against industry standards is crucial to determine if fair value was achieved.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Lockheed Martin Corporation, was solicited. This approach bypasses the standard competitive procurement process, which typically involves soliciting bids from multiple qualified vendors. While sole-source awards can be justified under specific circumstances (e.g., unique capabilities or urgent needs), they inherently limit price discovery and can reduce the government's leverage in negotiating favorable terms. The absence of competition means taxpayers may not benefit from the cost savings typically achieved through a bidding process.

Taxpayer Impact: The lack of competition means taxpayers did not benefit from potential cost reductions that could have arisen from a bidding process. This could translate to higher overall expenditure for the services rendered.

Public Impact

The U.S. Coast Guard benefits from specialized engineering services essential for maintaining and improving its operational infrastructure and assets. Services likely include design, analysis, and technical support for various Coast Guard projects, ensuring mission readiness. The contract's impact is primarily national, supporting Coast Guard operations across its various missions. Specialized engineering expertise is required, potentially impacting the availability of such talent for other government projects.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs.
Time and Materials pricing structure increases risk of cost overruns without strict oversight.
Lack of transparency in the justification for sole-source award.
Contract duration of nearly five years may indicate a lack of agile procurement strategies.

Positive Signals

Award to a large, established defense contractor like Lockheed Martin suggests access to significant technical expertise.
Engineering services are critical for maintaining essential government infrastructure and operational capabilities.
The contract supports a vital national security agency, the U.S. Coast Guard.

Sector Analysis

The engineering services sector is a critical component of government contracting, supporting a wide array of agencies in areas ranging from infrastructure development to complex system design. This contract falls within the broader professional, scientific, and technical services category. The market for specialized engineering services is often characterized by a mix of large prime contractors and smaller niche firms. Government spending in this area is substantial, with agencies relying on these services to maintain and modernize their assets and capabilities. Benchmarking this contract's value would require comparing its rates and scope against other engineering service contracts awarded by the Department of Defense and other federal agencies.

Small Business Impact

This contract was not awarded as a small business set-aside, and there is no indication of subcontracting requirements for small businesses. The award to a large prime contractor like Lockheed Martin suggests that the primary focus was on the prime contractor's capabilities rather than fostering small business participation. This approach may limit opportunities for small businesses to engage in providing specialized engineering services to the U.S. Coast Guard on this particular contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the U.S. Coast Guard's contracting and program management offices. Given the sole-source nature and T&M pricing, rigorous oversight is essential to monitor labor hours, costs, and adherence to the contract's scope of work. The Department of Homeland Security's Office of Inspector General (OIG) would have jurisdiction to audit and investigate this contract if any concerns regarding fraud, waste, or abuse arise. Transparency could be enhanced by publicly detailing the justification for the sole-source award and providing regular performance reports.

Related Government Programs

Department of Homeland Security - Other Engineering Services
U.S. Coast Guard - Ship and Aircraft Maintenance
Federal Engineering Services Contracts
Sole-Source Defense Contracts
Time and Materials Contract Awards

Risk Flags

Sole-source award
Time and Materials pricing
Lack of competition
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $23.7 million to LOCKHEED MARTIN CORPORATION. IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Coast Guard).

What is the total obligated amount?

The obligated amount is $23.7 million.

What is the period of performance?

Start: 2016-11-04. End: 2021-09-15.

What specific engineering services are being provided under this contract, and how do they align with the U.S. Coast Guard's mission priorities?

The contract data indicates 'Engineering Services' (NAICS 541330) were awarded to Lockheed Martin Corporation. While the specific breakdown of services is not detailed in the provided data, engineering services for the U.S. Coast Guard typically encompass a broad range of activities. These can include the design, development, testing, and sustainment of maritime assets such as cutters and aircraft, as well as shore-based infrastructure. Services might also involve systems engineering, technical support for command and control systems, cybersecurity engineering, and environmental engineering solutions. The alignment with mission priorities would depend on the specific projects undertaken, but generally, these services are crucial for maintaining operational readiness, enhancing platform capabilities, and ensuring the safety and security of maritime operations.

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

The provided data explicitly states the contract was 'NOT COMPETED' (CT: NOT COMPETED), indicating a sole-source award. Federal procurement regulations allow for sole-source awards under specific circumstances, such as when only one responsible source can provide the required supplies or services, or when there is a compelling urgency. For a contract of this magnitude and duration, the justification would typically involve demonstrating that Lockheed Martin possesses unique capabilities, proprietary technology, or an established infrastructure directly relevant to the Coast Guard's specific needs that cannot be met by other contractors. The agency would need to document this justification thoroughly, often requiring approval from higher authorities, to ensure compliance with procurement laws designed to promote full and open competition.

How does the Time and Materials (T&M) pricing structure potentially impact the overall cost and value for the government?

The Time and Materials (T&M) pricing structure, used in this $23.7 million contract, allows the contractor to bill the government for the actual cost of labor (at specified hourly rates) and materials, plus a fixed fee or percentage for overhead and profit. While T&M offers flexibility, especially for projects with uncertain scope or duration, it shifts much of the cost risk to the government. Unlike fixed-price contracts, where the contractor assumes the risk of cost overruns, T&M contracts can lead to higher overall costs if not managed stringently. Effective oversight is critical to ensure that labor hours are reasonable, rates are fair, and materials are necessary and cost-effective. Without robust monitoring, T&M contracts can exceed initial estimates significantly, potentially diminishing the overall value for money.

What is Lockheed Martin Corporation's track record with the U.S. Coast Guard and similar federal agencies for engineering services?

Lockheed Martin Corporation is a major defense contractor with extensive experience across various U.S. federal agencies, including the Department of Defense and the Department of Homeland Security (which oversees the Coast Guard). Their track record typically involves large-scale, complex projects requiring advanced engineering and technological solutions. While specific details of their past performance with the Coast Guard for engineering services would require deeper research into contract databases and performance reports, Lockheed Martin is generally recognized for its capabilities in areas such as aerospace, naval systems, and information technology. Their history suggests they possess the technical expertise and capacity to handle significant engineering contracts, though the value and efficiency of their past performance would be subject to agency evaluations and oversight.

Are there any comparable engineering service contracts awarded by the U.S. Coast Guard or DHS that could serve as a benchmark for this contract's value?

To establish a benchmark for this $23.7 million contract, one would need to identify comparable engineering service contracts awarded by the U.S. Coast Guard or the broader Department of Homeland Security. Key comparison points would include the contract's scope of work (e.g., systems engineering, infrastructure design, technical support), duration, pricing structure (T&M vs. fixed-price), and the level of competition. Analyzing the average hourly labor rates, overhead percentages, and total contract values for similar services procured through competitive processes would provide insight into whether the $23.7 million awarded to Lockheed Martin represents fair market value. Without access to detailed historical contract data and performance metrics, a precise benchmark is difficult to establish, but comparing against competitively awarded contracts for similar engineering disciplines is the standard approach.

What are the potential risks associated with the long duration (1776 days) of this contract?

A contract duration of 1776 days, approximately 4.86 years, presents several potential risks. Firstly, it ties up significant funding and resources for an extended period, potentially limiting the agency's flexibility to adapt to changing requirements or technological advancements. Secondly, long-term T&M contracts increase the risk of cost escalation over time due to inflation, evolving labor rates, and potential scope creep that may be harder to control over a longer period. Thirdly, it could reduce the incentive for the contractor to innovate or optimize processes if they are assured of continued work regardless of efficiency. Finally, it may limit opportunities for other contractors to compete for these services over the contract's lifespan, potentially hindering market innovation and broader small business participation.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HSCG2316RC4ISR

Offers Received: 1

Pricing Type: TIME AND MATERIALS (Y)

Evaluated Preference: NONE

Contractor Details

Address: 199 BORTON LANDING RD, MOORESTOWN, NJ, 08057

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

Financial Breakdown

Contract Ceiling: $23,680,777

Exercised Options: $23,680,777

Current Obligation: $23,680,777

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline