DoD's $212M logistics consulting contract awarded to Lockheed Martin raises value-for-money questions

Contract Overview

Contract Amount: $21,232,240 ($21.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2005-09-26

End Date: 2015-04-27

Contract Duration: 3,500 days

Daily Burn Rate: $6.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Other

Place of Performance

Location: CENTREVILLE, FAIRFAX County, VIRGINIA, 20120, UNITED STATES OF AMERICA

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $21.2 million to LOCKHEED MARTIN CORPORATION for work described as: Key points: 1. The contract's significant value suggests a need for rigorous performance evaluation and cost-benefit analysis. 2. Competition dynamics for this large-scale consulting service warrant scrutiny to ensure optimal pricing. 3. Long contract duration and firm-fixed-price structure may limit flexibility and incentivize cost overruns. 4. Performance context is crucial to understand if the delivered services align with initial objectives. 5. Sector positioning within defense logistics consulting highlights the importance of specialized expertise. 6. The absence of small business involvement raises questions about broader economic impact.

Value Assessment

Rating: questionable

With a total award of over $212 million, this contract represents a substantial investment in logistics consulting services. Benchmarking against similar large-scale defense consulting contracts is essential to determine if the pricing is competitive and reflects fair market value. The firm-fixed-price structure, while offering cost certainty, can sometimes lead to higher initial bids if not carefully negotiated. Without detailed performance metrics and cost breakdowns, it is difficult to definitively assess the value for money delivered over the contract's nearly decade-long period.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. However, the number of actual bidders is not specified, which is critical for assessing the true level of competition. A robust competitive process typically drives down prices and encourages innovation. If only a few bids were received, it could suggest barriers to entry or a lack of widespread interest, potentially impacting price discovery.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it aims to secure the best value through market forces. However, the ultimate benefit depends on the number and quality of bids received and the effectiveness of the evaluation process.

Public Impact

The Department of Defense, specifically the Department of the Navy, is the primary beneficiary, receiving logistics consulting services. Services delivered likely include optimizing supply chains, improving distribution networks, and enhancing operational efficiency for naval forces. The geographic impact is likely nationwide, supporting naval operations across various bases and deployment locations. Workforce implications could involve the utilization of specialized consultants, potentially impacting internal DoD logistics personnel roles and training needs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep given the long duration and consulting nature of the contract.
Risk of contractor lock-in due to specialized knowledge gained over the contract period.
Difficulty in measuring tangible outcomes and return on investment for consulting services.
Over-reliance on external consultants may hinder internal capability development within the DoD.

Positive Signals

Awarded through full and open competition, suggesting a competitive bidding process.
Firm-fixed-price contract type provides cost certainty for the government.
Long-term nature allows for sustained focus on complex logistics challenges.
Contractor's established presence in defense contracting may indicate relevant experience.

Sector Analysis

This contract falls within the professional, scientific, and technical services sector, specifically focusing on management and technical consulting for logistics. The defense industry relies heavily on such services to maintain and improve the efficiency of complex supply chains and operational support. Comparable spending benchmarks would involve analyzing other large-scale consulting contracts awarded by the DoD and other federal agencies for similar services, considering the scale and duration.

Small Business Impact

The data indicates that small business participation was not a specific set-aside for this contract (sb: false). This suggests that the primary award went to a large corporation, Lockheed Martin. There is no explicit information on subcontracting plans for small businesses. The absence of a small business set-aside for a contract of this magnitude means that opportunities for small businesses to contribute to these critical logistics services may be limited, potentially impacting the broader small business ecosystem within the defense industrial base.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant program management office within the Department of the Navy. Accountability measures would be tied to the performance work statement and delivery milestones. Transparency is facilitated through contract databases like FPDS, which provide award details. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Logistics Agency (DLA) Operations Support
Naval Supply Systems Command (NAVSUP) Services
Department of Defense Consulting Services
Supply Chain Management Consulting
Military Transportation and Distribution Services

Risk Flags

Long contract duration may lead to scope creep and reduced flexibility.
Potential for contractor lock-in due to specialized knowledge.
Value for money assessment is difficult without detailed performance data.
Limited transparency on the number of bidders in the full and open competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $21.2 million to LOCKHEED MARTIN CORPORATION. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $21.2 million.

What is the period of performance?

Start: 2005-09-26. End: 2015-04-27.

What specific logistics challenges was Lockheed Martin contracted to address for the Department of the Navy?

The contract's description, 'Process, Physical Distribution, and Logistics Consulting Services,' suggests a broad mandate to improve the efficiency and effectiveness of the Navy's logistics operations. This could encompass a wide range of areas, including optimizing supply chain management, enhancing inventory control, streamlining transportation and distribution networks, improving warehousing operations, and potentially advising on the implementation of new logistics technologies or methodologies. The long duration and substantial value indicate that the scope likely involved complex, systemic issues rather than short-term tactical problems. Specific details would typically be found in the Statement of Work (SOW) or Performance Work Statement (PWS) associated with the contract, which are not publicly available in this data snippet.

How does the $212 million award compare to typical spending on logistics consulting by the Department of Defense?

An award of $212 million for logistics consulting is substantial, even within the large budget of the Department of Defense. While the DoD spends billions annually on a wide array of services, including consulting, the exact benchmark for logistics consulting varies significantly based on the specific needs, duration, and scope. Contracts of this magnitude often involve long-term strategic support or encompass major system-wide improvements. To provide a precise comparison, one would need to analyze historical spending data for similar 'Process, Physical Distribution, and Logistics Consulting Services' (NAICS code 541614) awarded by the DoD over comparable periods. However, it is safe to say that this contract represents a significant investment, placing it among the larger awards for this type of service.

What are the potential risks associated with a firm-fixed-price contract of this size and duration?

Firm-fixed-price (FFP) contracts aim to provide cost certainty for the government. However, for a large, long-duration contract like this ($212M over nearly 10 years), several risks emerge. Firstly, the contractor may build significant contingency into the price to cover unforeseen issues, potentially leading to a higher overall cost than a cost-reimbursable contract if risks do not materialize. Secondly, the long timeframe can lead to contractor 'lock-in,' where the government becomes heavily reliant on the incumbent, potentially reducing leverage in future negotiations. Thirdly, if the scope of work is not perfectly defined or if requirements evolve significantly, managing changes under an FFP contract can become complex and contentious. Finally, the contractor might be incentivized to cut corners on quality or service delivery to maximize profit if oversight is not rigorous.

What does the 'Process, Physical Distribution, and Logistics Consulting Services' classification imply about the nature of the work performed?

The NAICS code 541614, 'Process, Physical Distribution, and Logistics Consulting Services,' indicates that the contractor provided expert advice and assistance to government clients on improving their logistics and supply chain operations. This involves analyzing existing processes, identifying inefficiencies, and recommending solutions related to the physical movement and storage of goods. Services could include optimizing transportation routes, managing inventory levels, improving warehouse operations, designing distribution networks, and advising on the adoption of logistics technologies. It's a broad category focused on the practical, operational aspects of moving and managing resources efficiently.

How might the contractor's track record influence the performance and value of this contract?

Lockheed Martin is a major defense contractor with extensive experience across various domains, including logistics and systems integration. A strong track record in delivering complex projects on time and within budget would suggest a higher likelihood of successful performance under this contract. Conversely, any past issues with performance, cost overruns, or quality on similar contracts could raise concerns about the potential value and effectiveness of this award. Evaluating Lockheed Martin's specific performance history on prior DoD logistics contracts, including client satisfaction and adherence to contract terms, would be crucial for a comprehensive risk assessment. Their established infrastructure and expertise are generally seen as positive signals for capability.

Given the contract's duration (2005-2015), how does it fit into the broader historical spending patterns for defense logistics consulting?

This contract, spanning a decade from 2005 to 2015, falls within a period of significant military operations and subsequent focus on optimizing defense logistics. During this era, the U.S. military was engaged in large-scale operations in Iraq and Afghanistan, which placed immense strain on logistics systems and highlighted the need for efficiency improvements. Consequently, spending on logistics consulting services likely saw an increase as the DoD sought to modernize its supply chains and distribution networks to support these ongoing conflicts and prepare for future challenges. This contract's substantial value aligns with the trend of investing in external expertise to address complex logistical demands during that time.

Industry Classification

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

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SEALED BID

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 5870 TRINITY PKWY STE 400, CENTREVILLE, VA, 20120

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

Contract Characteristics

Cost or Pricing Data: NO

Timeline