Lockheed Martin awarded $61M contract for Navy's FY24 Design Agent Engineering services

Contract Overview

Contract Amount: $60,952,648 ($61.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2024-01-04

End Date: 2027-01-03

Contract Duration: 1,095 days

Daily Burn Rate: $55.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: DESIGN AGENT ENGINEERING FOR FY24

Place of Performance

Location: LIVERPOOL, ONONDAGA County, NEW YORK, 13088

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $61.0 million to LOCKHEED MARTIN CORPORATION for work described as: DESIGN AGENT ENGINEERING FOR FY24 Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed carefully. 3. The duration of 1095 days indicates a long-term need for these engineering services. 4. The North American Industry Classification System (NAICS) code 334511 points to a specialized manufacturing sector. 5. The base award amount of $55.6M suggests potential for future task orders and modifications. 6. The contract is for Design Agent Engineering, crucial for system development and integration.

Value Assessment

Rating: fair

Benchmarking the value of this Cost Plus Fixed Fee contract is challenging without detailed cost breakdowns and performance metrics. The initial award amount of $60.9M for three years of engineering services needs to be compared against similar contracts for design agent engineering within the Department of Defense. The fixed fee component provides some cost certainty, but the cost-plus nature means the government bears the risk of actual costs incurred by the contractor. Further analysis would require understanding the scope of work and the contractor's historical performance on similar projects.

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 number of bidders is not specified, but this procurement method generally fosters price discovery and allows the government to select the best value offer. The competitive nature suggests that the pricing is likely to be more aligned with market rates compared to sole-source or limited competition awards.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it typically leads to more competitive pricing and a wider range of innovative solutions, maximizing the value of federal dollars spent.

Public Impact

The primary beneficiaries are the Department of the Navy, receiving critical engineering support for its systems. Services delivered include design agent engineering, essential for the development and maintenance of complex defense systems. The geographic impact is primarily within New York, where the contractor is located, but the services support naval operations nationwide and globally. Workforce implications include employment opportunities for engineers and technical staff at Lockheed Martin in New York.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contract type introduces potential for cost overruns if not closely monitored.
Long contract duration (3 years) requires sustained oversight to ensure continued value and performance.
Reliance on a single large contractor for critical engineering services may limit future flexibility.

Positive Signals

Awarded through full and open competition, indicating a robust and fair bidding process.
The contractor, Lockheed Martin, is a well-established defense contractor with significant experience.
The contract specifies a fixed fee, providing some level of cost predictability for the government.

Sector Analysis

The aerospace and defense industry is characterized by high R&D investment, complex supply chains, and significant government procurement. This contract falls within the defense sector's systems manufacturing and engineering services segment. Comparable spending benchmarks for design agent engineering services can vary widely based on system complexity and contract scope, but this award appears to be within a typical range for major defense contractors supporting naval systems.

Small Business Impact

This contract was awarded under full and open competition and does not indicate a specific small business set-aside. While Lockheed Martin is a large business, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting will depend on Lockheed Martin's own subcontracting plan and the specific requirements of the engineering services.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. Accountability measures will be tied to the performance work statement and milestones outlined in the Cost Plus Fixed Fee agreement. Transparency is generally maintained through contract award databases, though detailed cost breakdowns may be proprietary. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Naval Systems Engineering Support
Defense Contractor Services
Aerospace Engineering Contracts
FY24 Defense Procurement
Cost Plus Fixed Fee Contracts

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight to manage costs.
Long-term contract duration necessitates sustained performance monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $61.0 million to LOCKHEED MARTIN CORPORATION. DESIGN AGENT ENGINEERING FOR FY24

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 $61.0 million.

What is the period of performance?

Start: 2024-01-04. End: 2027-01-03.

What is Lockheed Martin's track record with similar Cost Plus Fixed Fee contracts for the Department of the Navy?

Lockheed Martin has a long history of performing complex engineering and manufacturing contracts for the Department of the Navy, many of which utilize Cost Plus Fixed Fee (CPFF) arrangements. CPFF contracts are common in defense acquisition where the final costs are uncertain at the outset, such as in research, development, and advanced engineering. While CPFF contracts offer flexibility, they also carry inherent risks of cost overruns if not meticulously managed and overseen. Lockheed Martin's performance on such contracts is generally considered robust, given their extensive experience and established processes. However, specific performance metrics, cost variances, and any past issues related to cost control on similar contracts would require a deeper dive into historical contract data and performance reviews. The government's oversight and the contractor's cost management discipline are critical factors in the success of CPFF contracts.

How does the $60.9 million award compare to similar Design Agent Engineering contracts awarded by the Navy in the past three years?

Comparing this $60.9 million award for three years of Design Agent Engineering services requires access to a comprehensive database of historical Navy contracts. However, preliminary analysis suggests that this figure is within a reasonable range for a major defense contractor like Lockheed Martin performing specialized engineering services for complex naval systems. Contracts for similar services can vary significantly based on the specific systems involved, the level of engineering required (e.g., conceptual design, detailed design, sustainment engineering), and the duration. Awards for large-scale defense engineering programs can range from tens of millions to billions of dollars. Without specific details on the scope of work and the systems supported by this contract, a precise benchmark is difficult. However, given the contractor's size and the nature of the services, the award amount appears commensurate with industry standards for such critical support.

What are the primary risks associated with a Cost Plus Fixed Fee contract for engineering services?

The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for engineering services revolve around cost control and potential for cost overruns. In a CPFF contract, the government reimburses the contractor for allowable costs incurred, plus a predetermined fixed fee representing profit. The risk to the contractor is that their actual costs might exceed the estimated costs, reducing their profit margin. Conversely, the risk to the government is that the contractor may have less incentive to control costs rigorously, as cost overruns are generally reimbursed, potentially leading to the project exceeding its allocated budget. Effective risk mitigation requires robust government oversight, detailed cost tracking, clear definition of allowable costs, and strong negotiation of the fixed fee based on realistic cost estimates and risk assessments. Scope creep is another significant risk, where the project's requirements expand beyond the original agreement, necessitating contract modifications and potentially increasing costs.

How effective is the 'full and open competition' procurement method in ensuring value for money for this type of specialized engineering service?

The 'full and open competition' procurement method is generally considered the most effective way to ensure value for money for specialized engineering services. By allowing all responsible sources to compete, it maximizes the pool of potential offerors, thereby increasing the likelihood of receiving competitive bids and innovative solutions. This competitive pressure incentivizes contractors to offer their best pricing and technical approaches to win the contract. For specialized services like Design Agent Engineering, where technical expertise and past performance are crucial, full and open competition allows the government to evaluate not only price but also the quality and suitability of the proposed solutions. While it requires more effort in terms of proposal evaluation, the potential for cost savings and superior technical outcomes typically outweighs these administrative costs, ultimately benefiting taxpayers by securing the best possible value.

What are the historical spending patterns for Design Agent Engineering services within the Department of the Navy?

Historical spending patterns for Design Agent Engineering services within the Department of the Navy (DoN) are characterized by consistent investment in maintaining and modernizing its complex fleet of ships, aircraft, and weapon systems. These services are critical throughout the lifecycle of naval assets, from initial concept development and design to upgrades and sustainment engineering. Spending in this category can fluctuate based on major shipbuilding programs, modernization initiatives, and the introduction of new technologies. The DoN typically awards numerous contracts, ranging from small, specialized engineering tasks to large, multi-year programs, often utilizing various contract types including CPFF, Fixed Price, and others, depending on the nature of the work. Analyzing historical data would reveal trends in contract values, durations, and the prime contractors most frequently awarded these types of services, providing context for the current $60.9 million award to Lockheed Martin.

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: N0002423R5510

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

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: $124,993,428

Exercised Options: $80,941,915

Current Obligation: $60,952,648

Subaward Activity

Number of Subawards: 32

Total Subaward Amount: $4,875,414

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline