DoD's $202M Engineering Services Contract Awarded to Lockheed Martin Corporation

Contract Overview

Contract Amount: $202,474,462 ($202.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2009-02-09

End Date: 2017-12-31

Contract Duration: 3,247 days

Daily Burn Rate: $62.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING SERVICES

Place of Performance

Location: MOORESTOWN, BURLINGTON County, NEW JERSEY, 08057

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $202.5 million to LOCKHEED MARTIN CORPORATION for work described as: ENGINEERING SERVICES Key points: 1. Contract awarded for engineering services, indicating a need for specialized technical expertise. 2. The significant value suggests a long-term, complex project or a broad scope of services. 3. Awarded to a single, large defense contractor, raising questions about competition and potential for cost efficiencies. 4. The contract duration of over 8 years points to a sustained requirement for these services. 5. The 'Cost Plus Fixed Fee' pricing structure can incentivize cost overruns if not closely monitored. 6. The absence of small business participation suggests a focus on prime contractor capabilities.

Value Assessment

Rating: fair

The contract's value of over $202 million for engineering services is substantial. Without specific benchmarks for comparable engineering services contracts within the Department of Defense or for similar complex projects, it is difficult to definitively assess value for money. The 'Cost Plus Fixed Fee' (CPFF) contract type, while allowing for flexibility, carries inherent risks of cost escalation if not managed rigorously. Benchmarking against industry standards for similar engineering support would be necessary for a more precise evaluation of pricing and value.

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 approach is typically used when a specific contractor possesses unique capabilities, proprietary technology, or when urgent circumstances preclude a competitive process. The lack of competition means that the government did not benefit from the price discovery and innovation that typically arise from a bidding process, potentially leading to higher costs.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible pricing through competitive bidding, potentially resulting in less favorable terms for taxpayers.

Public Impact

The primary beneficiaries are the Department of Defense, which receives essential engineering support for its programs. The services delivered likely encompass design, development, testing, and sustainment of complex defense systems. The geographic impact is primarily within New Jersey, where the contractor is located, but the services support national defense objectives. The contract supports a workforce of engineers and technical specialists employed by Lockheed Martin Corporation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Cost Plus Fixed Fee structure requires diligent oversight to prevent cost overruns.
Lack of small business involvement may limit broader economic participation.

Positive Signals

Award to a major defense contractor suggests access to specialized expertise and proven capabilities.
Long contract duration indicates a stable, ongoing need for critical engineering services.
The contract supports essential defense functions, contributing to national security.

Sector Analysis

This contract falls within the broader aerospace and defense sector, a significant segment of the U.S. economy characterized by high technological complexity and substantial government procurement. The market is dominated by a few large prime contractors, like Lockheed Martin, who possess the scale and expertise to handle large, complex defense engineering projects. Spending in this sector is driven by national security requirements and technological advancements, with contracts often involving long development cycles and substantial R&D investment.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, Lockheed Martin Corporation, is a large business. This suggests that the scope of work was deemed to require the capabilities of a major prime contractor, and there may not have been specific opportunities identified for small business participation as prime contractors or through set-asides. Subcontracting opportunities for small businesses may exist, but are not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), as indicated by the 'sa' field. DCMA is responsible for ensuring contractor compliance with contract terms, quality standards, and delivery schedules. The 'Cost Plus Fixed Fee' nature of the contract necessitates robust financial oversight to monitor expenditures and ensure that costs remain within agreed-upon parameters. Transparency would be facilitated through regular reporting requirements and audits.

Related Government Programs

Defense Engineering Services
Aerospace and Defense Contracting
Lockheed Martin Corporation Contracts
Department of Defense Procurement
Cost Plus Fixed Fee Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $202.5 million to LOCKHEED MARTIN CORPORATION. ENGINEERING SERVICES

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 $202.5 million.

What is the period of performance?

Start: 2009-02-09. End: 2017-12-31.

What is the historical spending pattern for engineering services by the Department of Defense, and how does this contract compare?

The Department of Defense is a massive procurer of engineering services, with annual spending often in the tens of billions of dollars across various categories. This $202 million contract represents a significant, but not extraordinary, investment for a specific engineering services requirement over its duration. Historical data would show that the DoD consistently relies on large, established defense contractors for complex engineering needs, often through sole-source or limited-competition awards for specialized systems. Comparing this contract's value to the overall DoD engineering services budget would place it as a substantial single award, but within the context of a much larger overall spending landscape. Trends might also reveal shifts towards specific types of engineering, such as cybersecurity or AI integration, which may or may not be reflected in this particular contract's scope.

What are the typical risks associated with 'Cost Plus Fixed Fee' contracts in the defense sector?

Cost Plus Fixed Fee (CPFF) contracts, like the one awarded to Lockheed Martin, present specific risks. The primary risk is the potential for cost overruns. While the contractor receives a fixed fee, they are reimbursed for allowable costs incurred. If costs escalate beyond initial estimates, the government bears the burden of these increased expenses, up to the contract's ceiling. This structure can reduce the contractor's incentive to control costs aggressively, as their profit (the fixed fee) is guaranteed regardless of efficiency. Effective oversight by the contracting agency, including rigorous auditing of expenses and performance monitoring, is crucial to mitigate these risks and ensure value for taxpayer money. Without strong management, CPFF contracts can become significantly more expensive than initially projected.

How does the sole-source nature of this award impact potential innovation and cost savings for the government?

A sole-source award, by definition, bypasses the competitive process. This means that the government did not solicit bids from multiple qualified vendors. Consequently, the government misses out on the potential benefits of competition, such as lower prices driven by vendor proposals and the introduction of innovative solutions that different companies might offer. While sole-source awards are justified in specific circumstances (e.g., unique capabilities, urgent needs), they inherently reduce the government's leverage in negotiating terms and pricing. This can lead to higher costs for taxpayers and potentially slower adoption of cutting-edge technologies compared to a scenario where multiple firms vie for the contract.

What is Lockheed Martin Corporation's track record with large federal engineering service contracts?

Lockheed Martin Corporation is one of the largest defense contractors globally and has an extensive track record of performing large-scale engineering and technical services contracts for the U.S. Department of Defense and other federal agencies. They are involved in numerous complex programs across air, space, and defense systems. Their history includes managing multi-billion dollar contracts, often involving advanced research, development, integration, and sustainment. While specific performance metrics for every contract are not publicly detailed, their continued success in securing major awards suggests a generally strong capability in delivering complex engineering solutions. However, like any large contractor, they may have faced scrutiny or challenges on specific projects regarding cost, schedule, or performance, which would be detailed in contract performance reports and agency evaluations.

What are the implications of awarding a contract of this size and duration to a single large prime contractor?

Awarding a contract valued at over $202 million and spanning nearly nine years to a single large prime contractor like Lockheed Martin has several implications. It signifies a reliance on the contractor's established infrastructure, expertise, and capacity to handle a significant and potentially long-term requirement. This can ensure continuity and deep institutional knowledge. However, it also concentrates risk with one entity and reduces opportunities for smaller businesses to participate directly as prime contractors. Furthermore, the lack of competition inherent in a sole-source award means the government may not achieve the most competitive pricing or benefit from a wider array of innovative approaches that could emerge from a more open bidding process. It underscores the government's strategy of leveraging large, capable primes for critical, complex defense needs.

Industry Classification

NAICS: Manufacturing › Other Electrical Equipment and Component Manufacturing › All Other Miscellaneous Electrical Equipment and Component Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002408R5110

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 199 BORTON LANDING RD, MOORESTOWN, NJ, 08057

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

Financial Breakdown

Contract Ceiling: $203,362,136

Exercised Options: $202,947,136

Current Obligation: $202,474,462

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline