DoD's $96.7M engineering services contract awarded to Lockheed Martin Corporation raises questions about competition and value
Contract Overview
Contract Amount: $96,682,257 ($96.7M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2007-10-24
End Date: 2010-04-01
Contract Duration: 890 days
Daily Burn Rate: $108.6K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Defense
Official Description: ENGINEERING SERVICES
Place of Performance
Location: UNIONDALE, NASSAU County, NEW YORK, 11553
State: New York Government Spending
Plain-Language Summary
Department of Defense obligated $96.7 million to LOCKHEED MARTIN CORPORATION for work described as: ENGINEERING SERVICES Key points: 1. Contract awarded on a non-competitive basis, limiting price discovery and potentially increasing costs. 2. Significant duration of 890 days suggests a long-term need for these engineering services. 3. Cost-plus incentive fee contract type can incentivize cost overruns if not managed tightly. 4. The contract's value of $96.7 million places it in the mid-to-large tier for engineering services. 5. Lack of competition raises concerns about whether the government received the best possible value. 6. The specific engineering services provided are not detailed, making direct performance benchmarking difficult.
Value Assessment
Rating: questionable
Benchmarking the value of this contract is challenging due to the lack of competitive bids and specific service details. However, the $96.7 million price tag for 890 days of engineering services warrants scrutiny. Without a competitive process, it's difficult to ascertain if this price reflects fair market value or if alternative, more cost-effective solutions were overlooked. The cost-plus incentive fee structure, while offering flexibility, also carries inherent risks of cost escalation if not rigorously overseen.
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 bypasses the standard procurement process designed to foster competition and achieve optimal pricing. The absence of bidders means there was no direct comparison of capabilities or pricing, potentially leading to a higher cost for the government than if multiple firms had vied for the contract.
Taxpayer Impact: Sole-source awards limit the government's ability to leverage competition to drive down prices, potentially resulting in taxpayer funds being spent at a higher rate than necessary.
Public Impact
The Department of Defense benefits from specialized engineering services crucial for its operations. This contract supports national security objectives by ensuring the availability of critical engineering expertise. The services likely impact various defense programs requiring advanced engineering solutions. Workforce implications may include employment for engineers and technical staff within Lockheed Martin and its subcontractors.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition on a large-value contract increases risk of overpayment.
- Cost-plus incentive fee contracts require robust oversight to prevent cost overruns.
- Limited transparency on specific services makes performance assessment difficult.
Positive Signals
- Award to a major defense contractor like Lockheed Martin suggests access to specialized expertise.
- Long contract duration indicates a sustained need and potential for deep integration of services.
Sector Analysis
This contract falls within the broad engineering services sector, a critical component of the defense industrial base. The market for defense engineering services is substantial, with significant government spending allocated annually. Contracts of this magnitude are common within the aerospace and defense industry, often involving complex technical requirements and specialized knowledge. Benchmarking against similar sole-source engineering contracts within the DoD would be necessary for a more precise value assessment.
Small Business Impact
The data indicates this contract was not awarded to small businesses (sb: false) and does not specify any small business set-aside provisions (ss: false). Therefore, there are no direct subcontracting implications for small businesses stemming from this award. The absence of small business participation in this specific contract means opportunities for smaller, innovative firms to contribute to these engineering services were not pursued through this award mechanism.
Oversight & Accountability
Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance. The cost-plus incentive fee structure necessitates diligent monitoring of costs and performance against established targets. Transparency regarding the specific engineering tasks and outcomes is crucial for effective accountability, though detailed public reporting on such contracts can be limited.
Related Government Programs
- Defense Engineering Services
- Lockheed Martin Contracts
- Department of Defense Procurement
- Sole-Source Defense Contracts
Risk Flags
- Sole-source award
- Cost-plus incentive fee contract type
- Lack of detailed service description
- Potential for cost overruns
Tags
defense, department-of-defense, lockheed-martin-corporation, engineering-services, definitive-contract, cost-plus-incentive-fee, sole-source, new-york, large-contract, non-competitive
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $96.7 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 $96.7 million.
What is the period of performance?
Start: 2007-10-24. End: 2010-04-01.
What specific engineering services were provided under this contract, and how do they align with current DoD needs?
The provided data categorizes the contract under 'Engineering Services' (NAICS 541330) but does not detail the specific nature of these services. Given the contractor (Lockheed Martin) and the agency (Department of Defense), it is highly probable that these services relate to complex defense systems, aerospace engineering, or advanced technological development. Without more granular information, it's impossible to definitively state how they align with current DoD needs, though the contract's duration suggests a sustained requirement. Further investigation into contract line item numbers (CLINs) or associated documentation would be necessary to ascertain the precise technical scope.
How does the $96.7 million contract value compare to similar engineering services contracts awarded by the DoD?
The $96.7 million value for engineering services is a significant sum, placing it in the mid-to-large contract category within the defense sector. While direct comparisons are difficult without knowing the exact scope and duration of services, the DoD frequently awards contracts in the tens to hundreds of millions of dollars for specialized engineering support. However, the key differentiator here is the sole-source nature of this award. If this contract had been competed, its value could potentially have been lower. Benchmarking against other sole-source, cost-plus incentive fee engineering contracts of similar duration and complexity would provide a more relevant comparison, but such data is not readily available.
What are the primary risks associated with a sole-source, cost-plus incentive fee contract for engineering services?
The primary risks associated with this contract structure are twofold. Firstly, the sole-source award means the government did not benefit from competitive bidding, which could lead to paying a premium for the services. There's a reduced incentive for the contractor to offer the lowest possible price. Secondly, the Cost-Plus Incentive Fee (CPIF) structure, while designed to motivate performance, carries the risk of cost escalation. If the target costs and incentive formulas are not meticulously defined and monitored, the contractor may incur higher costs than anticipated, with the government bearing a significant portion of that increase, especially if performance targets are met or exceeded. Robust oversight is critical to mitigate these risks.
What is Lockheed Martin Corporation's track record with similar DoD engineering contracts?
Lockheed Martin Corporation is a major defense contractor with an extensive history of performing complex engineering services for the Department of Defense across numerous programs and platforms. They are known for their work in areas such as aerospace, defense systems, and advanced technologies. While specific details of their performance on this particular $96.7 million contract are not provided, their general track record with the DoD is extensive, involving both successes and, like any large contractor, occasional challenges or scrutiny on specific contracts. Their deep involvement in defense R&D and systems integration suggests a strong capability set relevant to such engineering requirements.
How has DoD spending on engineering services evolved over the years, and where does this contract fit?
DoD spending on engineering services has historically been substantial and tends to fluctuate based on geopolitical conditions, technological advancements, and specific program needs. This contract, awarded in 2007 and ending in 2010, represents a snapshot of spending during that period. The $96.7 million figure for engineering services is consistent with the scale of contracts the DoD awards for complex technical support. Over the years, the DoD has increasingly focused on areas like cybersecurity, AI, and advanced manufacturing, which likely influence the nature of engineering services procured. This contract fits within the broader trend of the DoD outsourcing specialized technical expertise to large defense firms to support its vast array of defense systems and future development.
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: 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: 55 CHARLES LINDBERGH BLVD, UNIONDALE, NY, 11553
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $628,569,315
Exercised Options: $539,158,547
Current Obligation: $96,682,257
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2007-10-24
Current End Date: 2010-04-01
Potential End Date: 2010-04-01 00:00:00
Last Modified: 2021-09-09
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