DoD awards $790M contract for site activation events, with Lockheed Martin as sole provider

Contract Overview

Contract Amount: $790,046,263 ($790.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2024-03-07

End Date: 2029-12-31

Contract Duration: 2,125 days

Daily Burn Rate: $371.8K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: SITE ACTIVATION EVENTS FOR MULTIPLE CUSTOMERS.

Place of Performance

Location: ARLINGTON, ARLINGTON County, VIRGINIA, 22202

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $790.0 million to LOCKHEED MARTIN CORPORATION for work described as: SITE ACTIVATION EVENTS FOR MULTIPLE CUSTOMERS. Key points: 1. The contract's value suggests significant investment in critical infrastructure or operational readiness. 2. Sole-source award raises questions about competition and potential for inflated pricing. 3. Long duration indicates a sustained need for these services over several years. 4. The specific nature of 'site activation events' requires further clarification on its impact. 5. Contract type (Cost Plus Incentive Fee) can incentivize performance but also carries cost overrun risks. 6. The award is a substantial commitment by the Department of the Navy, reflecting strategic priorities.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without specific details on the 'site activation events' and their scope. However, a nearly $800 million award for a single contractor suggests a high-value, potentially complex service. The Cost Plus Incentive Fee structure, while allowing for performance incentives, can lead to higher final costs compared to fixed-price contracts if not managed tightly. Without comparable contracts for similar 'site activation events,' assessing true value-for-money is difficult, but the scale alone warrants scrutiny.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning no other companies were solicited or allowed to bid. This significantly limits price discovery and competitive pressure. While sole-source awards can be justified for unique capabilities or urgent needs, they often result in higher prices for the government compared to fully competed contracts. The absence of competition means taxpayers do not benefit from the cost savings typically achieved through a bidding process.

Taxpayer Impact: The lack of competition means taxpayers are likely paying a premium for these services, as there was no opportunity for multiple vendors to offer lower prices.

Public Impact

The Department of Defense, specifically the Department of the Navy, is the primary beneficiary, receiving critical support for its operational readiness. The services delivered are 'site activation events,' which likely involve preparing facilities or locations for specific military operations or deployments. The geographic impact is not specified but is likely tied to naval installations or areas requiring activation. Workforce implications could include direct employment by Lockheed Martin or its subcontractors, as well as indirect impacts on military personnel utilizing the activated sites.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Cost Plus Incentive Fee contract type carries inherent risks of cost overruns if not rigorously managed.
Lack of transparency regarding the specific nature of 'site activation events' hinders full assessment of necessity and value.
Long contract duration (over 5 years) increases exposure to potential scope creep or changing requirements without competitive re-evaluation.

Positive Signals

Award to a major defense contractor like Lockheed Martin suggests access to established expertise and potentially advanced capabilities.
The significant funding allocated indicates a high priority placed on these services by the Department of the Navy.
The contract structure includes incentives, which could drive contractor performance and efficiency if properly structured and monitored.

Sector Analysis

The aerospace and defense sector is characterized by large, complex contracts often awarded to a few major prime contractors. This contract falls within the Aircraft Manufacturing NAICS code (336411), suggesting it may be related to the production, modification, or support of aircraft systems or facilities. The value of this contract is substantial, representing a significant portion of spending within this specific sub-sector for the period it covers. Comparable spending benchmarks are difficult without knowing the exact nature of 'site activation events,' but large DoD contracts are common in this industry.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor is Lockheed Martin Corporation, a large aerospace and defense company. While large prime contractors are often required to subcontract a portion of their work to small businesses, the absence of a specific set-aside suggests this contract's primary focus is not on direct small business participation. The subcontracting opportunities for small businesses will depend on Lockheed Martin's internal policies and the specific needs of the 'site activation events.'

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Navy's contracting and program management offices. As a Cost Plus Incentive Fee contract, rigorous financial oversight and performance monitoring will be crucial to manage costs and ensure objectives are met. Transparency regarding the specific deliverables and expenditures will be key. While no specific Inspector General jurisdiction is mentioned, the DoD's Inspector General typically has oversight over defense spending.

Related Government Programs

Aircraft Manufacturing
Defense Infrastructure Support
Military Base Operations
Logistics and Readiness Support
Aerospace Systems Procurement

Risk Flags

Sole-source award
Cost Plus Incentive Fee contract type
Lack of detailed service description
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $790.0 million to LOCKHEED MARTIN CORPORATION. SITE ACTIVATION EVENTS FOR MULTIPLE CUSTOMERS.

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 $790.0 million.

What is the period of performance?

Start: 2024-03-07. End: 2029-12-31.

What specific services are encompassed by 'SITE ACTIVATION EVENTS' under this contract, and how do they align with the Aircraft Manufacturing NAICS code?

The specific services encompassed by 'SITE ACTIVATION EVENTS' are not detailed in the provided data. However, given the NAICS code 336411 (Aircraft Manufacturing), these events likely relate to preparing facilities, infrastructure, or operational environments necessary for the production, assembly, testing, deployment, or maintenance of aircraft and related systems. This could include setting up specialized manufacturing lines, preparing hangars or testing grounds, establishing logistical support for new aircraft programs, or activating sites for advanced aerospace research and development. The broad nature of 'site activation' suggests a comprehensive approach to making a location ready for a specific, likely complex, purpose within the aerospace domain.

What is the historical spending pattern for similar 'site activation events' by the Department of the Navy?

Historical spending data for 'site activation events' by the Department of the Navy is not available in the provided contract details. To assess historical patterns, a broader search across federal procurement databases would be necessary, looking for contracts with similar descriptions or within the relevant NAICS codes and agencies. Without this comparative data, it is difficult to determine if the $790 million award represents an increase, decrease, or consistent level of investment in such activities. Understanding past expenditures would provide crucial context for evaluating the current contract's scale and necessity.

How does the Cost Plus Incentive Fee (CPIF) structure typically impact final costs compared to other contract types for services like these?

The Cost Plus Incentive Fee (CPIF) contract type allows the contractor to incur costs subject to reimbursement, plus a fee that is adjusted based on performance against predetermined targets (e.g., cost, schedule, or technical performance). Compared to fixed-price contracts, CPIF generally offers less cost certainty for the government, as the final price is not fixed upfront. However, it can be advantageous when the scope of work is uncertain or when significant innovation is required, as it incentivizes the contractor to achieve specific goals. For services like 'site activation events,' where precise cost estimation might be challenging, CPIF can encourage efficiency and quality, but it necessitates robust government oversight to prevent cost overruns and ensure the incentive structure effectively drives desired outcomes.

What are the potential risks associated with a sole-source award of this magnitude for the Department of the Navy?

The primary risk associated with a sole-source award of this magnitude is the lack of competitive pressure, which can lead to inflated pricing and reduced value for taxpayer money. Without competing bids, the Department of the Navy may not be securing the most cost-effective solution available in the market. Additionally, sole-source awards can foster complacency in the contractor, as there is no immediate threat of losing future business to competitors. This can potentially impact service quality or innovation over the contract's duration. Ensuring robust contract management, clear performance metrics, and fair pricing negotiations becomes even more critical in sole-source situations to mitigate these inherent risks.

What is Lockheed Martin Corporation's track record with similar large-scale, sole-source defense contracts?

Lockheed Martin Corporation has a long and extensive track record of securing large-scale defense contracts, many of which have been sole-source or awarded through limited competition due to the specialized nature of their offerings, particularly in areas like advanced aircraft, missile systems, and space technology. Their history includes numerous multi-billion dollar contracts with the Department of Defense and other government agencies. While specific details on their performance and pricing for all sole-source awards are not publicly itemized in a way that allows for direct comparison to this specific 'site activation events' contract, their consistent role as a prime contractor on major defense programs indicates a capacity to manage complex, high-value projects. Evaluating their specific performance on this contract will depend on ongoing monitoring of cost, schedule, and technical outcomes.

How does the duration of this contract (over 5 years) impact the assessment of its value and potential risks?

The contract's duration of over five years (2125 days) significantly impacts its assessment. On the positive side, a long duration suggests a stable, long-term requirement for the services, providing predictability for both the government and the contractor. This can facilitate better planning and potentially allow for economies of scale. However, it also introduces risks. Over such an extended period, requirements can change, technology can evolve, and economic conditions can fluctuate, potentially making the initial pricing or scope less optimal. There's also an increased risk of scope creep or contract modifications that could escalate costs without renewed competitive scrutiny. Robust contract management and periodic reviews are essential to ensure the contract remains relevant and cost-effective throughout its lifespan.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001920R0073

Pricing Type: COST PLUS INCENTIVE FEE (V)

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: $790,046,263

Exercised Options: $790,046,263

Current Obligation: $790,046,263

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $70,947

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