DoD's $18.7M IT contract with Lockheed Martin shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $18,774,107 ($18.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2002-12-31

End Date: 2005-11-01

Contract Duration: 1,036 days

Daily Burn Rate: $18.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: IT

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22201

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $18.8 million to LOCKHEED MARTIN CORPORATION for work described as: Key points: 1. Contract awarded to a single, large defense contractor, suggesting potential for higher pricing. 2. Limited competition may have reduced opportunities for innovative solutions or cost savings. 3. Contract duration and value indicate a significant, long-term IT support requirement. 4. Fixed-price contract shifts some performance risk to the contractor. 5. Geographic concentration in Virginia for a major defense IT service. 6. No small business set-aside, potentially limiting broader participation.

Value Assessment

Rating: fair

The contract's value of $18.7 million over approximately three years appears reasonable for a large IT support contract with a major defense contractor like Lockheed Martin. However, without specific benchmarks for the services provided (e.g., software maintenance, hardware support), a definitive value-for-money assessment is challenging. The fixed-price nature of the contract provides some cost certainty, but the lack of competitive bids means there's no direct market comparison to ascertain if this represents the best possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION,' but the data indicates only two bids were received. While technically open, a low number of bids can indicate barriers to entry, limited market interest, or a highly specialized requirement that only a few firms can meet. This level of competition may not have driven the most aggressive pricing or the widest array of technical solutions.

Taxpayer Impact: With only two bidders, taxpayers may not have benefited from the full potential of market competition, potentially leading to a higher overall cost than if more firms had vied for the contract.

Public Impact

The Department of Defense benefits from continued IT support services, ensuring operational readiness. Personnel within the Washington Headquarters Services are likely direct or indirect beneficiaries of the IT infrastructure maintained. The contract's impact is primarily concentrated in Virginia, where the services are likely performed or managed. Workforce implications include employment for IT professionals within Lockheed Martin and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may have resulted in a higher price than a more robustly competed contract.
Lack of small business participation could limit innovation and economic opportunities for smaller firms.
Contract duration of over three years might not allow for frequent reassessment of technology needs or vendor performance.

Positive Signals

Award to a well-established contractor like Lockheed Martin suggests a degree of reliability and experience.
Fixed-price contract provides budget predictability for the agency.
The contract falls under the broad category of IT services, a critical function for modern government operations.

Sector Analysis

This contract falls within the Information Technology sector, specifically focusing on IT services and equipment. The market for IT services to the federal government is substantial, with agencies constantly seeking to modernize infrastructure and enhance cybersecurity. Comparable spending benchmarks would typically involve analyzing other large IT support contracts awarded by the Department of Defense or other federal agencies for similar scope and duration.

Small Business Impact

The contract does not indicate any small business set-aside provisions, nor does it explicitly mention subcontracting goals for small businesses. This suggests that the primary awardee, Lockheed Martin, likely performed the majority of the work. The absence of small business participation in the prime contract could mean missed opportunities for smaller, specialized IT firms to contribute to this significant federal expenditure.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of Defense's contracting officers and program managers. The Washington Headquarters Services would be responsible for monitoring performance and ensuring compliance with contract terms. Transparency is generally facilitated through contract databases like FPDS, where basic award information is publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense IT Services
Information Technology Support Contracts
Large Prime Contractor IT Awards
Fixed-Price IT Contracts
Washington Headquarters Services Contracts

Risk Flags

Limited competition
Potential for higher pricing due to low bidder count
Lack of small business participation noted

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.8 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 (Washington Headquarters Services).

What is the total obligated amount?

The obligated amount is $18.8 million.

What is the period of performance?

Start: 2002-12-31. End: 2005-11-01.

What specific IT services were covered under this $18.7 million contract?

The provided data indicates the North American Industry Classification System (NAICS) code is 423430, which corresponds to 'Computer and Computer Peripheral Equipment and Software Merchant Wholesalers.' This suggests the contract likely involved the procurement and distribution of IT hardware, software, and related peripherals, rather than direct IT services like system integration or software development. The 'Computer and Computer Peripheral Equipment and Software Merchant Wholesalers' classification implies a focus on the supply chain and provision of IT goods.

How does the $18.7 million contract value compare to similar IT procurements by the DoD?

Comparing the $18.7 million contract value requires context on the specific services and duration. For a contract spanning over three years (December 2002 to November 2005), this amount is moderate for a large defense contractor like Lockheed Martin. However, without knowing the exact scope (e.g., number of users supported, types of hardware/software), direct comparison is difficult. Larger, more complex IT modernization or cybersecurity contracts awarded by the DoD often reach hundreds of millions or even billions of dollars. This contract appears to be for a specific, likely localized, IT equipment and software supply function.

What are the potential risks associated with awarding a contract of this size to a single large contractor?

Awarding a contract of this size to a single large contractor like Lockheed Martin can present several risks. Firstly, there's the risk of reduced price competition, potentially leading to higher costs for the government compared to a scenario with multiple bidders. Secondly, reliance on a single vendor can create vendor lock-in, making it difficult and costly to switch providers in the future. Thirdly, if the contractor experiences performance issues or financial instability, it could significantly disrupt the IT supply chain for the agency. Finally, a lack of small business involvement might limit access to specialized innovations or niche solutions that smaller firms could offer.

What does the 'FULL AND OPEN COMPETITION' designation mean given only two bids were received?

The 'FULL AND OPEN COMPETITION' designation means that the solicitation was made available to all responsible sources, and the contract was awarded based on the best value to the government. However, receiving only two bids indicates that while the process was open, the market response was limited. This could be due to various factors, such as the specialized nature of the requirement, high barriers to entry for potential bidders, or perhaps the timing and terms of the solicitation did not attract a wider range of interest. Despite the open process, the low number of bids suggests that the competitive pressure might not have been as intense as in a scenario with numerous proposals.

What is the historical spending pattern for IT equipment and software procurement by Washington Headquarters Services?

The provided data only pertains to this specific $18.7 million contract awarded in 2002. To understand historical spending patterns for IT equipment and software procurement by Washington Headquarters Services (WHS), a broader analysis of WHS's contract awards over several fiscal years would be necessary. This would involve examining FPDS or other federal procurement databases to identify trends in contract types, awardees, spending levels, and the specific categories of IT goods and services procured. Without this broader dataset, it's impossible to establish a historical spending pattern based solely on this single award.

How does the fixed-price contract type impact the government's risk exposure?

A Firm Fixed Price (FFP) contract type, as indicated for this award, generally shifts the majority of the cost risk from the government to the contractor. Under an FFP contract, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. This provides the government with cost certainty and budget predictability. The primary risk for the government in an FFP contract relates to contractor performance; if the contractor fails to deliver the required goods or services adequately, the government's recourse is typically through contract remedies, termination, or claims, rather than adjusting the price based on the contractor's cost overruns.

Industry Classification

NAICS: Wholesale Trade › Professional and Commercial Equipment and Supplies Merchant Wholesalers › Computer and Computer Peripheral Equipment and Software Merchant Wholesalers

Product/Service Code: INFORMATION TECHNOLOGY EQUIPMENT (INCLD FIRMWARE) SOFTWARE,SUPPLIES& SUPPORT EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 9500 GODWIN DR, MANASSAS, VA, 10

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline