DoD's $24.9M Lockheed Martin Contract for Technical Services: A Cost Plus Fixed Fee Engagement

Contract Overview

Contract Amount: $24,874,361 ($24.9M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2009-04-01

End Date: 2011-06-30

Contract Duration: 820 days

Daily Burn Rate: $30.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: U.K. TECHNICAL SERVICES CONTRACT; ENG/TECH SUPPORT SERVICES

Place of Performance

Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $24.9 million to LOCKHEED MARTIN CORP for work described as: U.K. TECHNICAL SERVICES CONTRACT; ENG/TECH SUPPORT SERVICES Key points: 1. Contract awarded to a single, large defense contractor, raising questions about competition. 2. The Cost Plus Fixed Fee (CPFF) structure can incentivize cost overruns. 3. Duration of 820 days suggests a significant, ongoing need for services. 4. The contract falls under Guided Missile and Space Vehicle Manufacturing, a specialized sector. 5. Lack of competition may limit price discovery and potentially increase costs for taxpayers. 6. The contract's value, while substantial, needs benchmarking against similar technical support services.

Value Assessment

Rating: fair

The contract's total value is approximately $24.9 million over 820 days. Without specific details on the services rendered and their criticality, a direct value-for-money assessment is challenging. The Cost Plus Fixed Fee (CPFF) pricing structure, while common for complex or uncertain scope work, carries inherent risks of cost escalation if not rigorously managed. Benchmarking against similar technical support contracts for guided missile and space vehicle manufacturing would be necessary to determine if the fixed fee and overall cost are competitive.

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. This approach is typically justified when only one source can provide the required goods or services, often due to proprietary technology, unique capabilities, or urgent needs. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices or spurred innovation from multiple vendors. The absence of multiple bidders limits the government's ability to compare offers and ensure the best possible value.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the most competitive pricing. Without a competitive bidding process, there's a reduced incentive for the contractor to offer the lowest possible price, potentially leading to higher overall expenditure for the government.

Public Impact

The primary beneficiary is the Department of Defense, specifically entities requiring technical support for guided missile and space vehicle manufacturing. Services delivered likely include engineering, technical assistance, and program support critical to defense operations. The geographic impact is centered in California, where the contract is managed. Workforce implications may involve specialized engineers and technical personnel employed by Lockheed Martin and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential innovation.
Cost Plus Fixed Fee (CPFF) structure can lead to cost overruns if not managed tightly.
Lack of detailed performance metrics makes it difficult to assess efficiency.
Contract duration suggests a long-term reliance, potentially hindering market diversification.

Positive Signals

Award to a large, established contractor like Lockheed Martin suggests access to significant expertise.
Definitive contract type implies a clear, though potentially evolving, scope of work.
The contract supports a critical defense manufacturing sector.

Sector Analysis

This contract operates within the defense manufacturing sector, specifically focusing on guided missile and space vehicle production. This is a highly specialized and capital-intensive industry dominated by a few large prime contractors. Spending in this area is driven by national security requirements and technological advancements. Comparable spending benchmarks would involve analyzing other technical support contracts within the aerospace and defense industry, particularly those related to missile systems, to gauge cost-effectiveness and pricing structures.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the contractor, Lockheed Martin, is a large prime contractor. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan for this contract is not detailed here. The absence of a set-aside suggests that the primary award was not targeted at small businesses, and the impact on the small business ecosystem would depend on the extent of subcontracting opportunities generated.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractors meet their contractual obligations. The specific oversight mechanisms would include monitoring performance, costs, and compliance with contract terms. Transparency is often limited in sole-source defense contracts, but reporting requirements are usually stipulated. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Guided Missile and Space Vehicle Manufacturing
Defense Technical Support Services
Aerospace and Defense Contracting
Cost Plus Fixed Fee Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.9 million to LOCKHEED MARTIN CORP. U.K. TECHNICAL SERVICES CONTRACT; ENG/TECH SUPPORT SERVICES

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $24.9 million.

What is the period of performance?

Start: 2009-04-01. End: 2011-06-30.

What specific technical services were provided under this contract, and how did they contribute to the Department of Defense's mission?

The contract data indicates the services fall under NAICS code 336414, Guided Missile and Space Vehicle Manufacturing. This suggests the technical services provided were specialized engineering, design, testing, integration, or maintenance support directly related to the production or sustainment of guided missiles and space vehicles. These services are critical for ensuring the operational readiness and technological superiority of U.S. defense assets. Without more granular data, the exact nature of the support (e.g., software development, hardware integration, systems engineering, lifecycle support) remains unspecified, but its direct link to advanced weaponry underscores its strategic importance to national security.

How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types for similar defense technical support services?

Cost Plus Fixed Fee (CPFF) contracts are often used when the scope of work is not precisely defined or involves significant uncertainty, such as in research and development or complex system integration. The government agrees to pay the contractor's actual costs plus a fixed fee representing profit. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers more flexibility for the government if requirements change but carries a higher risk of cost overruns, as the contractor is incentivized to incur costs to achieve the fixed fee. Other types like Cost Plus Incentive Fee (CPIF) or Cost Plus Award Fee (CPAF) introduce performance-based incentives. For routine technical support with a well-defined scope, FFP is generally preferred for cost control. The choice of CPFF here suggests a high degree of complexity or evolving requirements in missile and space vehicle manufacturing support.

What are the potential risks associated with a sole-source award for a contract of this magnitude and duration?

A sole-source award, especially for a contract valued at nearly $25 million over more than two years, presents several risks. Primarily, the lack of competition means the government may not achieve the best possible price, as there's no market pressure from competing bids. This can lead to higher costs for taxpayers. Additionally, sole-source awards can stifle innovation, as potential competitors are excluded from the outset. There's also a risk of vendor lock-in, where the government becomes overly reliant on a single provider, potentially reducing leverage in future negotiations. Without a competitive process, it's harder to ensure the chosen contractor is truly the most capable or offers the most efficient solution, increasing the risk of suboptimal performance or cost inefficiencies.

What is Lockheed Martin's track record with similar Department of Defense technical support contracts?

Lockheed Martin Corporation is a major defense contractor with extensive experience in providing technical support services across numerous Department of Defense programs, including those related to guided missiles and space vehicles. Their track record generally involves large-scale, complex projects requiring advanced engineering and program management capabilities. While specific performance data for individual contracts is often proprietary or requires deep analysis of contract databases, Lockheed Martin is a recognized leader in this sector. However, like any large contractor, they have likely encountered performance challenges or cost variances on some contracts, which would be subject to government oversight and reporting. A comprehensive assessment would involve reviewing past performance evaluations and any documented issues on comparable contracts.

How does the $24.9 million contract value compare to historical spending on technical support within the Guided Missile and Space Vehicle Manufacturing sector?

The $24.9 million contract value represents a significant, but not extraordinary, investment for technical support within the specialized Guided Missile and Space Vehicle Manufacturing sector. This sector is characterized by high-value, long-duration programs where technical support is crucial for system development, testing, and sustainment. Historical spending in this area is substantial, often running into billions of dollars annually across the entire defense industrial base. This specific contract, awarded in 2009-2011, would need to be benchmarked against similar contracts awarded during that period or subsequent periods to assess its relative size and cost-effectiveness. Factors like the specific systems supported, the level of technological sophistication, and the duration of the support significantly influence contract values in this domain.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: QUALITY CONTROL, TEST, INSPECTION › OTHER QUALITY, TEST, INSPECT SVCS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 1111 LOCKHEED MARTIN WAY BLDG 157, SUNNYVALE, CA, 94089

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

Financial Breakdown

Contract Ceiling: $25,075,455

Exercised Options: $25,075,455

Current Obligation: $24,874,361

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline