DoD's $59.7M Lockheed Martin Contract for CMC Missile System Lacked Competition, Raising Cost Concerns
Contract Overview
Contract Amount: $59,659,374 ($59.7M)
Contractor: Lockheed Martin Corp
Awarding Agency: Department of Defense
Start Date: 2013-12-19
End Date: 2018-12-31
Contract Duration: 1,838 days
Daily Burn Rate: $32.5K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: CMC MISSILE SYSTEM
Place of Performance
Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089
Plain-Language Summary
Department of Defense obligated $59.7 million to LOCKHEED MARTIN CORP for work described as: CMC MISSILE SYSTEM Key points: 1. Significant spending on a complex missile system by the Department of the Navy. 2. Sole-source award to Lockheed Martin suggests limited market competition. 3. Potential for inflated costs due to lack of competitive bidding. 4. Engineering services sector, particularly defense-related, often involves high-value, specialized contracts.
Value Assessment
Rating: questionable
The contract's cost-plus-fixed-fee structure, combined with a lack of competition, raises concerns about cost efficiency. Without competitive benchmarks, it's difficult to assess if the $59.7 million awarded represents fair value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning no other vendors were considered. This significantly limits price discovery and potentially leads to higher costs for taxpayers.
Taxpayer Impact: The absence of competition likely resulted in a higher price than if multiple bids had been solicited, impacting taxpayer funds.
Public Impact
Taxpayers may have overpaid for critical missile system components due to a lack of competitive bidding. The Department of Defense's reliance on sole-source contracts can stifle innovation and reduce overall market efficiency. Lack of transparency in sole-source awards makes it harder for the public to scrutinize defense spending.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost-plus contract type
- Lack of competition
Positive Signals
- Awarded to a major defense contractor
- Contract duration aligns with system development needs
Sector Analysis
This contract falls within the Engineering Services sector, specifically for defense-related systems. Spending in this area is often characterized by high complexity, specialized expertise, and significant government investment, with benchmarks varying widely based on the specific technology and scope.
Small Business Impact
The contract was awarded to Lockheed Martin, a large prime contractor, and there is no indication of small business subcontracting. This suggests limited direct benefit to small businesses from this specific award.
Oversight & Accountability
The sole-source nature of this contract warrants closer oversight to ensure cost reasonableness and prevent potential waste. Accountability mechanisms should be robust given the lack of competitive pressure.
Related Government Programs
- Engineering Services
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Lack of competition
- Sole-source award
- Cost-plus contract type
- Potential for cost overruns
- Limited transparency
Tags
engineering-services, department-of-defense, ca, definitive-contract, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $59.7 million to LOCKHEED MARTIN CORP. CMC MISSILE SYSTEM
Who is the contractor on this award?
The obligated recipient is LOCKHEED MARTIN CORP.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Navy).
What is the total obligated amount?
The obligated amount is $59.7 million.
What is the period of performance?
Start: 2013-12-19. End: 2018-12-31.
What specific factors justified the sole-source award for the CMC Missile System, and were alternatives explored?
The justification for a sole-source award typically involves unique capabilities, proprietary technology, or urgent needs that only one contractor can meet. For the CMC Missile System, further investigation would be needed to determine if these criteria were met and if any market research was conducted to confirm the absence of viable alternatives. Without this information, the decision appears to bypass standard competitive procurement processes.
How does the cost-plus-fixed-fee structure impact the government's ability to control costs on this sole-source contract?
Cost-plus-fixed-fee contracts allow the contractor to recover all allowable costs plus a predetermined fixed fee. While the fee provides some incentive for efficiency, the lack of competition on this sole-source award means the government has less leverage to negotiate costs. This structure can lead to cost overruns if not meticulously monitored, as the contractor is reimbursed for expenses incurred.
What is the long-term strategic value of the CMC Missile System, and does the contract structure support its effective development and deployment?
The long-term strategic value of the CMC Missile System is crucial for assessing the overall effectiveness of this contract. If the system represents a critical advancement in defense capabilities, the investment may be justified. However, the contract's structure, particularly its sole-source nature and cost-plus elements, should be continuously evaluated to ensure it facilitates timely development and deployment without unnecessary cost escalation.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0003014Q0013
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: $59,660,912
Exercised Options: $59,660,912
Current Obligation: $59,659,374
Subaward Activity
Number of Subawards: 10
Total Subaward Amount: $1,017,866
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2013-12-19
Current End Date: 2018-12-31
Potential End Date: 2018-12-31 00:00:00
Last Modified: 2022-07-12
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