DoD awards $63M engineering services contract to Lockheed Martin Sippican, Inc. for transition and planning

Contract Overview

Contract Amount: $62,961,079 ($63.0M)

Contractor: Lockheed Martin Sippican, Inc.

Awarding Agency: Department of Defense

Start Date: 2018-03-21

End Date: 2023-03-20

Contract Duration: 1,825 days

Daily Burn Rate: $34.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: TRANSITION AND PLANNING

Place of Performance

Location: LIVERPOOL, ONONDAGA County, NEW YORK, 13088

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $63.0 million to LOCKHEED MARTIN SIPPICAN, INC. for work described as: TRANSITION AND PLANNING Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract type is Cost Plus Incentive Fee, which can incentivize cost control but also carries inherent risk. 3. The duration of 1825 days (5 years) indicates a long-term need for these services. 4. The base value of $34.5M suggests significant initial funding, with potential for growth based on incentives. 5. The North American Industry Classification System (NAICS) code 541330 points to engineering services, a critical support function. 6. The contract is managed by the Defense Contract Management Agency, indicating a focus on defense-related needs. 7. The awardee, Lockheed Martin Sippican, Inc., is a known entity in the defense sector.

Value Assessment

Rating: fair

Benchmarking the value of this Cost Plus Incentive Fee contract is challenging without detailed cost breakdowns and performance metrics. The base value of $34.5M over five years suggests an average annual cost of approximately $6.9M for engineering services. This figure needs to be compared against similar transition and planning contracts within the Department of Defense and across other agencies to assess its reasonableness. The incentive fee structure implies that actual costs could exceed the base, making a definitive value assessment difficult at this stage. Further analysis of the incentive clauses and achieved performance would be necessary for a more robust value-for-money evaluation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit bids. The presence of two bids suggests a moderate level of competition for this specific requirement. While two bidders are better than one, a higher number of bids typically leads to more robust price discovery and potentially lower costs for the government. The specific details of the bidding process, including the evaluation criteria and the nature of the proposals submitted, would provide further insight into the effectiveness of the competition.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it aims to secure the best value through a broad range of offers. However, with only two bids, there is a possibility that a more competitive environment could have yielded even better pricing or innovative solutions.

Public Impact

The primary beneficiaries are likely Department of Defense entities requiring specialized engineering support for transition and planning phases of programs. Services delivered include critical engineering expertise essential for program continuity and strategic development. The geographic impact is primarily within the United States, with potential for deployment to operational areas as needed. Workforce implications include the employment of engineers and technical specialists by Lockheed Martin Sippican, Inc.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Incentive Fee contracts can lead to costs exceeding initial estimates if not managed tightly.
Limited competition (two bidders) may reduce the pressure on the contractor to offer the lowest possible price.
The long contract duration could lead to scope creep or evolving requirements that are not fully captured in the initial pricing.

Positive Signals

Awarded through full and open competition, indicating an effort to maximize the pool of potential offerors.
Lockheed Martin Sippican, Inc. is an established defense contractor with a track record in engineering services.
The contract addresses a specific need for transition and planning, suggesting a well-defined requirement.

Sector Analysis

This contract falls within the Engineering Services sector, a vital component of the broader aerospace and defense industry. The market for defense engineering services is substantial, driven by the continuous need for modernization, research, development, and sustainment of military platforms and systems. Companies like Lockheed Martin Sippican, Inc. operate in a highly specialized segment, often requiring deep technical expertise and security clearances. Comparable spending benchmarks would involve analyzing other large-scale engineering support contracts awarded by the DoD and other federal agencies for similar services.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses stemming from a set-aside provision. However, the prime contractor, Lockheed Martin Sippican, Inc., may engage small businesses as subcontractors for specialized services or components, depending on their subcontracting plan and the nature of the work required. The absence of a small business set-aside means that large businesses were the primary focus of this competition.

Oversight & Accountability

Oversight for this contract is likely managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with contract terms and conditions, including cost, schedule, and performance. Accountability measures would be embedded within the Cost Plus Incentive Fee structure, linking contractor performance to financial incentives. Transparency is facilitated through contract awards databases, though detailed performance reports and cost breakdowns may be proprietary. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Engineering Services
Program Management Support
Aerospace and Defense Contracting
Cost Plus Contracts
Transition Planning Services

Risk Flags

Potential for cost overruns due to CPIF contract type.
Limited competition may impact price optimization.
Long contract duration requires careful monitoring of scope and performance.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $63.0 million to LOCKHEED MARTIN SIPPICAN, INC.. TRANSITION AND PLANNING

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN SIPPICAN, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $63.0 million.

What is the period of performance?

Start: 2018-03-21. End: 2023-03-20.

What is Lockheed Martin Sippican, Inc.'s track record with similar DoD contracts?

Lockheed Martin Sippican, Inc., as part of the larger Lockheed Martin corporation, has a significant track record in providing engineering, manufacturing, and support services to the Department of Defense. Their experience spans various defense platforms, including naval systems, aerospace, and electronics. For contracts specifically related to 'transition and planning' and 'engineering services' under a Cost Plus Incentive Fee structure, their history would likely show numerous awards and completions. Analyzing past performance reviews, contract modifications, and any past performance issues or commendations would provide a clearer picture of their reliability and effectiveness in executing similar complex, long-term defense contracts. Specific data on their performance on prior contracts of similar scope and value would be crucial for a comprehensive assessment.

How does the $63M total contract value compare to similar engineering services contracts awarded by the DoD?

The total potential value of $63 million for this definitive contract, awarded over five years, averages to $12.6 million annually. To benchmark this, one would need to compare it against other definitive contracts for 'Engineering Services' (NAICS 541330) awarded by the Department of Defense within the last few fiscal years. Key comparison points would include contract duration, contract type (e.g., CPFF, FFP), and the specific services procured. For instance, if similar transition and planning engineering support contracts for major defense programs typically range from $10M to $20M annually, then this contract appears to be within a reasonable range. However, if comparable contracts are significantly lower or higher, it would warrant further investigation into the unique requirements or market conditions associated with this specific award.

What are the primary risks associated with a Cost Plus Incentive Fee (CPIF) contract for engineering services?

The primary risks associated with a Cost Plus Incentive Fee (CPIF) contract for engineering services revolve around cost control and potential for cost overruns. While the incentive fee aims to motivate the contractor to meet or exceed targets (e.g., cost, schedule, performance), the government still bears the risk of the incurred costs. If the contractor fails to meet the target cost, the government may end up paying more than initially anticipated, even with the incentive structure. There's also a risk that the contractor might focus excessively on achieving the incentive targets at the expense of other critical aspects of the service, or that the targets themselves are poorly defined, leading to disputes. Effective oversight and clear, measurable performance metrics are crucial to mitigate these risks.

What is the typical duration for DoD contracts of this nature (transition and planning engineering services)?

The typical duration for Department of Defense contracts involving complex engineering services, particularly for transition and planning phases of major programs, can vary significantly but often extends over multiple years. A five-year period, as seen in this $63 million contract (1825 days), is not uncommon for requirements that demand sustained support, ongoing development, or phased implementation. Shorter durations might be suitable for specific, well-defined tasks, while longer periods are often necessary for projects with evolving requirements, extensive research and development components, or long lead times. The DoD frequently utilizes multi-year contracts or indefinite-delivery/indefinite-quantity (IDIQ) vehicles with longer ordering periods to ensure continuity of essential services like engineering support.

How does the geographic location of the awardee (New York) impact the delivery of defense engineering services?

The geographic location of the awardee, Lockheed Martin Sippican, Inc., in New York (ST: NY, SN: NEW YORK) is relevant primarily in terms of operational logistics and potential for on-site support. While many engineering and planning services can be performed remotely, defense contracts often require personnel to be located at government facilities, shipyards, or program offices. New York has a significant defense industrial base, and proximity to relevant DoD installations or program management centers could be advantageous for collaboration and oversight. However, for a company of Lockheed Martin's scale, their ability to deploy personnel or establish project sites globally is generally well-established, meaning the specific New York location might be less of a constraint than the contractor's overall capacity to meet the DoD's geographic support requirements.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002416R6405

Offers Received: 2

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 497 ELECTRONICS PARKWAY, LIVERPOOL, NY, 13088

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: $64,662,056

Exercised Options: $64,662,056

Current Obligation: $62,961,079

Actual Outlays: $6,695,297

Subaward Activity

Number of Subawards: 17

Total Subaward Amount: $795,795

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline