Lockheed Martin awarded $227.9M for engineering and technical services by the Department of the Navy

Contract Overview

Contract Amount: $227,878,649 ($227.9M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2019-02-15

End Date: 2024-02-14

Contract Duration: 1,825 days

Daily Burn Rate: $124.9K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: IDIQ ENGINEERING AND TECHNICAL SERVICES

Place of Performance

Location: LIVERPOOL, ONONDAGA County, NEW YORK, 13088

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $227.9 million to LOCKHEED MARTIN CORPORATION for work described as: IDIQ ENGINEERING AND TECHNICAL SERVICES Key points: 1. Contract awarded via full and open competition, suggesting a robust market. 2. Cost Plus Incentive Fee (CPIF) contract type indicates shared risk and reward. 3. Long duration of 1825 days (5 years) suggests a significant, ongoing need. 4. The contract's value places it within a substantial spending category for defense engineering. 5. Performance period spans from February 2019 to February 2024. 6. The North American Industry Classification System (NAICS) code 334511 points to specialized instrument manufacturing.

Value Assessment

Rating: good

The contract's total value of $227.9 million over five years averages to approximately $45.6 million annually. Benchmarking this against similar large-scale engineering and technical services contracts within the Department of Defense is challenging without more specific service details. However, the CPIF contract type suggests an effort to control costs while incentivizing performance, which can be a value-for-money approach when managed effectively. The pricing structure will be heavily influenced by the specific performance metrics and incentive targets.

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 specific number of bidders is not provided, but this procurement method generally fosters a competitive environment, which is expected to lead to more favorable pricing and innovative solutions for the government. The breadth of competition is a positive indicator for price discovery.

Taxpayer Impact: Full and open competition is the most taxpayer-friendly approach, as it maximizes the potential for cost savings by encouraging multiple companies to vie for the contract, driving down prices and improving service quality.

Public Impact

The Department of the Navy benefits from advanced engineering and technical support for its systems. This contract likely supports the development, maintenance, and enhancement of critical defense technologies. The geographic impact is primarily centered in New York (ST), where the contractor is located. Workforce implications include employment opportunities for engineers, technicians, and support staff at Lockheed Martin and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

CPIF contracts can lead to cost overruns if not closely monitored and managed.
The long duration may present challenges in adapting to rapidly evolving technological requirements.
Reliance on a single large contractor could limit future flexibility or innovation from smaller firms.

Positive Signals

Awarded through full and open competition, suggesting a competitive process.
The CPIF structure aims to align contractor and government interests for better outcomes.
The contract supports critical defense systems, indicating a strategic investment.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on engineering and technical services for complex systems. The NAICS code 334511 relates to instrument manufacturing for search, detection, navigation, guidance, and aeronautical/nautical systems. The market for such specialized services is dominated by large defense contractors, with significant government spending allocated to R&D, sustainment, and modernization of defense platforms. Comparable spending benchmarks would typically be found within the broader DoD R&D and procurement budgets for similar system types.

Small Business Impact

The data indicates that this contract was not specifically set aside for small businesses (ss: false, sb: false). While Lockheed Martin is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting would depend on the prime contractor's subcontracting plan and the specific technical requirements of the work performed.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy contracting officers and program managers. The Cost Plus Incentive Fee (CPIF) structure necessitates robust monitoring of costs, performance metrics, and achievement of incentive targets. Transparency is generally maintained through contract reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Defense Engineering Services
Naval Systems Support
Aerospace and Defense Manufacturing
Advanced Technology Development
Government Contracting

Risk Flags

Potential for cost overruns due to CPIF structure.
Risk of technological obsolescence over the 5-year performance period.
Need for robust government oversight to ensure performance and cost control.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $227.9 million to LOCKHEED MARTIN CORPORATION. IDIQ ENGINEERING AND TECHNICAL 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 (Department of the Navy).

What is the total obligated amount?

The obligated amount is $227.9 million.

What is the period of performance?

Start: 2019-02-15. End: 2024-02-14.

What specific engineering and technical services are encompassed by this contract?

The provided data offers limited detail on the specific services. However, the NAICS code 334511 ('Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing') suggests the services are related to the design, development, testing, integration, and sustainment of sophisticated defense systems and instruments. This could include areas like radar systems, sonar, navigation equipment, guidance systems, and related software development or maintenance. The 'IDIQ ENGINEERING AND TECHNICAL SERVICES' designation implies a broad scope, likely covering a range of technical support activities required by the Department of the Navy for its various platforms and operational needs.

How does the Cost Plus Incentive Fee (CPIF) structure typically function, and what are its implications for this contract?

A Cost Plus Incentive Fee (CPIF) contract is a type of cost-reimbursement contract where the contractor is reimbursed for allowable costs and also receives an incentive fee based on meeting predetermined performance objectives. The government and contractor negotiate a target cost, a target fee, and a sharing formula for cost variances. If the final cost is below the target cost, both parties share in the savings according to the formula. If the final cost exceeds the target cost, the contractor's fee is reduced. For this Lockheed Martin contract, the CPIF structure incentivizes the contractor to control costs while achieving specific performance goals related to the engineering and technical services provided. This requires clear definition of performance metrics and diligent government oversight to ensure both cost control and desired outcomes are achieved.

What is the significance of the contract being awarded under 'FULL AND OPEN COMPETITION'?

Awarding a contract under 'Full and Open Competition' signifies that the Department of the Navy solicited bids from all responsible sources capable of meeting the contract requirements. This is the preferred method of government procurement because it maximizes competition, which is generally expected to result in better pricing, higher quality services, and more innovative solutions for the government. It implies that the government did not impose restrictive specifications or limitations that would favor a particular contractor. The absence of specific bidder numbers in the provided data means we cannot quantify the level of competition, but the method itself is a strong indicator of a competitive process.

What are the potential risks associated with a 5-year contract for engineering and technical services?

A 5-year contract duration for engineering and technical services presents several potential risks. Firstly, technology can evolve rapidly in the defense sector; a long-term contract might lock the government into using older technologies or approaches if not structured with flexibility for upgrades and adaptation. Secondly, the contractor's strategic priorities or financial stability could change over such a long period, potentially impacting performance or commitment. Thirdly, the CPIF structure, while incentivizing, requires continuous and rigorous oversight to prevent cost creep and ensure performance targets remain relevant and achievable throughout the contract's life. Finally, market conditions and threat landscapes can shift, potentially making the original scope of work less relevant or requiring significant modifications.

How does the NAICS code 334511 relate to the services provided under this contract?

The North American Industry Classification System (NAICS) code 334511, 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing,' provides a specific industry classification for the contractor's activities. For this contract, it indicates that the engineering and technical services provided by Lockheed Martin are likely focused on the development, production, integration, testing, and support of complex systems and instruments used for military purposes, particularly in areas of sensing, locating, and directing. This could encompass a wide range of defense technologies, from radar and sonar systems to GPS and inertial navigation units, and associated software.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002418R6200

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Address: 497 ELECTRONICS PKWY BLDG 5, 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: $230,797,277

Exercised Options: $230,797,277

Current Obligation: $227,878,649

Actual Outlays: $24,691,075

Subaward Activity

Number of Subawards: 468

Total Subaward Amount: $155,267,438

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0002419D6200

IDV Type: IDC

Timeline