DoD's $80.9M R&D contract with Lockheed Martin saw 8 years of performance with cost-plus incentives

Contract Overview

Contract Amount: $80,894,482 ($80.9M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2006-04-18

End Date: 2014-04-30

Contract Duration: 2,934 days

Daily Burn Rate: $27.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: R&D

Place of Performance

Location: MANASSAS, PRINCE WILLIAM County, VIRGINIA, 20110

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $80.9 million to LOCKHEED MARTIN CORPORATION for work described as: Key points: 1. Contract utilized cost-plus incentive fee structure, aligning contractor and government interests for performance. 2. Long contract duration of nearly 8 years suggests a sustained need for the R&D services. 3. Sole-source award indicates potential lack of market competition or unique contractor capabilities. 4. Performance period spanned significant technological development cycles. 5. Focus on R&D in physical, engineering, and life sciences points to advanced technological advancement. 6. Contract awarded by Defense Contract Management Agency, suggesting robust oversight. 7. The contract's value, while substantial, needs to be benchmarked against similar R&D efforts.

Value Assessment

Rating: fair

Benchmarking the value of this $80.9 million contract is challenging without specific details on the R&D outcomes and comparable projects. The cost-plus incentive fee (CPIF) structure aims to control costs while incentivizing performance, but its effectiveness depends heavily on the defined targets and incentives. Given the long duration and sole-source nature, a detailed review of cost efficiency and value for money would be warranted, comparing the final costs against initial estimates and the achieved technological advancements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the government's requirements. The lack of competition means that price discovery through market forces was limited, potentially leading to higher costs than if multiple bids had been solicited.

Taxpayer Impact: For taxpayers, a sole-source award means the government did not benefit from competitive bidding, which could have driven down prices. It also raises questions about whether alternative solutions or contractors were adequately explored.

Public Impact

The primary beneficiaries are likely the Department of Defense, which gains access to advanced research and development capabilities. The contract supports the development of new technologies and scientific advancements within the physical, engineering, and life sciences sectors. Geographic impact is concentrated within the areas where Lockheed Martin conducts its R&D operations. Workforce implications include employment for highly skilled scientists, engineers, and researchers at Lockheed Martin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus contracts can incentivize spending if not tightly managed.
Long contract duration may lead to scope creep or evolving requirements.
Lack of detailed performance metrics makes value assessment difficult.

Positive Signals

Cost-plus incentive fee structure aims to align contractor and government goals.
Long-term engagement suggests a critical and sustained need for the R&D.
Award to a major defense contractor implies access to significant expertise and resources.
R&D focus indicates investment in future technological capabilities.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. This is a critical area for defense innovation, aiming to develop next-generation technologies. The market for such specialized R&D is often dominated by a few large, experienced contractors like Lockheed Martin, due to the high barriers to entry, including intellectual property, specialized facilities, and skilled personnel. Comparable spending benchmarks would involve looking at other large-scale, long-term R&D contracts within the defense sector.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Given the sole-source nature and the prime contractor being Lockheed Martin, it's unlikely that significant subcontracting opportunities for small businesses were mandated or specifically targeted within this award. The focus is on the prime contractor's capabilities, rather than fostering small business participation.

Oversight & Accountability

The contract was managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractors meet their contractual obligations and that government funds are used appropriately. Oversight mechanisms would typically include regular progress reviews, cost monitoring, and performance evaluations. Transparency is generally maintained through contract reporting requirements, though specific details of R&D progress may be sensitive.

Related Government Programs

Department of Defense Research and Development Programs
Advanced Technology Development Contracts
Lockheed Martin Defense Contracts
Cost-Plus Incentive Fee Contracts

Risk Flags

Sole-source award may indicate limited competition.
Cost-plus contract type requires careful monitoring of expenditures.
Long performance period increases risk of scope creep or requirement changes.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $80.9 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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $80.9 million.

What is the period of performance?

Start: 2006-04-18. End: 2014-04-30.

What specific R&D objectives were pursued under this contract, and what were the key technological advancements achieved?

The provided data does not detail the specific R&D objectives or the technological advancements achieved. The contract number (if available) or a more detailed description from the awarding agency would be necessary to research the project's scope and outcomes. Typically, R&D contracts in physical, engineering, and life sciences aim to develop new materials, improve system performance, create novel processes, or enhance scientific understanding relevant to defense applications. Without further information, it's impossible to quantify the specific achievements or their impact.

How did the final cost compare to the initial estimated cost for this contract?

The data indicates a 'br' (budgeted or baseline cost) of 27571, which appears to be significantly lower than the awarded amount of $80,894,482. This discrepancy could represent an initial baseline estimate that was later revised, or it might be an incomplete data point. To assess cost performance, one would need to compare the final incurred costs against the final negotiated cost baseline. The 'cost plus incentive fee' structure suggests that costs were tracked closely and incentives were tied to performance metrics, but the exact cost variance is not derivable from the provided summary data.

What were the performance metrics used to determine incentive fees for Lockheed Martin?

The specific performance metrics tied to the incentive fees for this contract are not detailed in the provided data. Under a Cost Plus Incentive Fee (CPIF) contract, these metrics are typically negotiated and defined in the contract's schedule. They could relate to achieving specific technical milestones, delivering prototypes by certain dates, meeting performance specifications (e.g., speed, efficiency, reliability), or managing costs within target ranges. The effectiveness of the CPIF structure hinges on the clarity and measurability of these metrics and the alignment of incentives with government objectives.

Were there any challenges or issues encountered during the contract's performance period (2006-2014)?

The provided data does not explicitly list any challenges or issues encountered during the contract's performance period from April 18, 2006, to April 30, 2014. However, given the nearly 8-year duration and the nature of R&D, it is common for such projects to face technical hurdles, evolving requirements, or unforeseen complexities. A thorough review would require accessing contract performance reports, modification histories, or any associated Inspector General reports that might document specific difficulties or disputes that arose.

What is the typical market rate or benchmark for similar R&D services provided by large defense contractors?

Determining a precise market rate for highly specialized R&D services is complex, as it depends heavily on the specific technology domain, the level of innovation required, and the contractor's unique expertise. However, contracts of this magnitude ($80.9M over 8 years) for advanced R&D by major contractors like Lockheed Martin are substantial investments. Benchmarking would involve comparing the contract's total value, duration, and scope against other similar sole-source or competed R&D efforts within the DoD or other federal agencies. The 'cost plus incentive fee' structure itself suggests a premium is paid for performance and innovation, rather than a fixed-price, off-the-shelf service.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences

Product/Service Code: SHIPS, SMALL CRAFT, PONTOON, DOCKS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 9500 GODWIN DR, MANASSAS, VA, 20110

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline