DoD awards $33.4M for Windows migration, raising questions about competition and value

Contract Overview

Contract Amount: $33,410,889 ($33.4M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2023-09-29

End Date: 2027-12-31

Contract Duration: 1,554 days

Daily Burn Rate: $21.5K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: WINDOWS MIGRATION DELIVERY ORDER

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32825

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $33.4 million to LOCKHEED MARTIN CORPORATION for work described as: WINDOWS MIGRATION DELIVERY ORDER Key points: 1. The contract's value is significant, but the lack of competition warrants scrutiny. 2. Pricing mechanisms for this Cost Plus Fixed Fee contract need careful monitoring. 3. The duration of the contract suggests a complex and potentially lengthy migration process. 4. Performance context is limited due to the 'Not Available for Competition' status. 5. This award falls within the broader IT services sector, supporting critical defense infrastructure. 6. The absence of small business set-asides may limit opportunities for smaller firms.

Value Assessment

Rating: questionable

Benchmarking the value of this $33.4 million award is challenging without comparable contract data, especially given its sole-source nature. The Cost Plus Fixed Fee (CPFF) pricing structure means costs can escalate, and the fixed fee component needs to be assessed for reasonableness against industry standards for similar IT migration projects. Without competitive bids, it's difficult to ascertain if the government is receiving optimal value for its investment. The total contract value, including potential modifications, could exceed the initial award amount.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a 'Not Available for Competition' basis, indicating that a full and open competition was not conducted. This typically occurs when only one source is capable of meeting the agency's needs, or in cases of urgent requirements. The lack of multiple bidders means there was no direct price competition, potentially leading to higher costs for the government compared to a competed procurement. The rationale for sole-source award needs to be thoroughly documented and justified.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. The government did not leverage market forces to drive down costs, potentially resulting in a less favorable price than could have been achieved through a competitive process.

Public Impact

The Department of Defense benefits from the migration of its Windows operating systems, enhancing cybersecurity and operational efficiency. Essential IT services will be delivered to support the Navy's operational readiness. The geographic impact is concentrated in Florida, where the contract will be performed. Workforce implications include potential employment opportunities for IT specialists involved in the migration.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
CPFF contract type introduces cost escalation risks.
Limited transparency into the sole-source justification.
Potential for scope creep without robust oversight.
Dependency on a single contractor for critical IT infrastructure.

Positive Signals

Award to a large, established defense contractor with significant experience.
Contract aims to modernize critical IT systems.
Clear performance period with defined end date.
Focus on a specific, essential IT function (Windows migration).

Sector Analysis

This contract falls within the broader Information Technology (IT) services sector, specifically focusing on IT infrastructure modernization and support. The IT services market is vast and highly competitive, with significant government spending allocated to software development, cloud computing, cybersecurity, and system integration. Comparable spending benchmarks for large-scale operating system migrations within the federal government can vary widely based on complexity, scope, and the specific technologies involved. This award represents a portion of the Department of Defense's ongoing efforts to maintain and upgrade its vast IT network.

Small Business Impact

This contract does not appear to include a small business set-aside, as indicated by 'sb': false. Consequently, there are no direct subcontracting requirements mandated for small businesses within this award. The absence of a set-aside means that large businesses, like Lockheed Martin, are the primary recipients of the contract funds. This could limit opportunities for small businesses to participate in this specific project, although they may be involved in other defense IT procurements or as subcontractors to larger firms on different contracts.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Navy, a component of the Department of Defense. As a Cost Plus Fixed Fee contract, rigorous financial oversight and auditing will be crucial to ensure that costs are reasonable and allocable. Transparency will depend on the agency's reporting practices and the public availability of contract modifications and performance reports. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Defense-wide IT Modernization Programs
Navy IT Infrastructure Support Contracts
Windows Operating System Support Services
Federal IT Services Procurements
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Sole-source award lacks competitive pricing.
CPFF contract type poses cost overrun risks.
Long contract duration may lead to technology obsolescence.
Limited public information on justification for sole-source.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.4 million to LOCKHEED MARTIN CORPORATION. WINDOWS MIGRATION DELIVERY ORDER

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 $33.4 million.

What is the period of performance?

Start: 2023-09-29. End: 2027-12-31.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was awarded under 'NOT AVAILABLE FOR COMPETITION'. This designation typically implies that the agency determined, after market research, that only one responsible source could provide the required services or that an exception to full and open competition applied. Common justifications include urgent and compelling needs, specialized capabilities only available from a single source, or situations where a follow-on contract is awarded to the original source of a system. Without further documentation from the agency (e.g., a Justification and Approval document), the precise reason remains unconfirmed. This lack of transparency is a common concern with sole-source awards, as it limits the public's ability to understand why competitive market forces were bypassed.

How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types for IT migration projects?

Cost Plus Fixed Fee (CPFF) contracts reimburse the contractor for allowable costs incurred and provide a predetermined fixed fee as profit. This structure is often used when the scope of work is not precisely defined at the outset or involves a high degree of uncertainty, such as complex IT migrations. However, CPFF contracts carry inherent risks for the government, primarily the potential for cost overruns, as the contractor is incentivized to incur costs to cover their overhead and the fixed fee is earned regardless of efficiency. In contrast, Firm-Fixed-Price (FFP) contracts offer greater cost certainty for the government, as the price is set upfront, but they require a well-defined scope and can lead to contractor risk if estimates are inaccurate. Other types like Cost Plus Incentive Fee (CPIF) or Cost Plus Award Fee (CPAF) introduce performance incentives. For a Windows migration, an FFP contract might be preferable if the scope is very clear, but CPFF is common for large, complex, and evolving IT projects.

What are the potential risks associated with a 1554-day contract duration for a Windows migration?

A contract duration of 1554 days (approximately 4.25 years) for a Windows migration is substantial and presents several potential risks. Firstly, technology evolves rapidly; by the end of the contract, the 'migrated' systems might be based on outdated versions of Windows or related infrastructure, requiring further updates or re-migration. Secondly, prolonged contracts can lead to 'vendor lock-in,' making it difficult and costly to switch providers or technologies. Thirdly, the longer the duration, the greater the potential for scope creep, where additional requirements are added without corresponding adjustments to the contract's competitive basis or pricing. Finally, maintaining consistent performance and oversight over such an extended period requires sustained agency focus and resources, which can be challenging.

What is Lockheed Martin Corporation's track record with similar IT migration contracts for the Department of Defense?

Lockheed Martin Corporation is a major defense contractor with extensive experience across various domains, including IT services and system integration. While specific data on their past Windows migration contracts for the DoD is not provided here, the company has a long history of managing large, complex technology programs for government agencies. Their portfolio often includes cybersecurity, enterprise IT solutions, and software development. Given their scale and expertise, it is probable they have executed numerous IT modernization and migration projects. However, the success and value-for-money of those past projects would require a separate, detailed analysis of their performance history, contract modifications, and cost performance on similar engagements.

How does this $33.4 million award compare to overall DoD spending on IT services?

The Department of Defense is one of the largest federal spenders on IT services, with annual expenditures often running into the tens of billions of dollars. A single award of $33.4 million, while substantial for a specific project, represents a relatively small fraction of the DoD's total IT budget. This contract is likely part of a larger strategy for IT modernization or sustainment. To put it in perspective, the DoD's overall IT spending encompasses a vast array of services, including cybersecurity, network infrastructure, software development, cloud computing, data analytics, and end-user support across all branches of the military. This specific award focuses on a critical but narrow aspect: Windows migration.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001920R0073

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 1 LOCKHEED BLVD BLDG 10, FORT WORTH, TX, 76108

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: $33,410,889

Exercised Options: $33,410,889

Current Obligation: $33,410,889

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001923D0010

IDV Type: IDC

Timeline