DoD's $32.7M Technical Services Contract Awarded to Lockheed Martin Corp. Faces Scrutiny for Competition and Value
Contract Overview
Contract Amount: $32,732,017 ($32.7M)
Contractor: Lockheed Martin Corp
Awarding Agency: Department of Defense
Start Date: 2015-04-01
End Date: 2019-03-31
Contract Duration: 1,460 days
Daily Burn Rate: $22.4K/day
Competition Type: NOT AVAILABLE FOR COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: FY16 UK TECHNICAL SERVICES CONTRACT. IGF::OT::IGF
Place of Performance
Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089
Plain-Language Summary
Department of Defense obligated $32.7 million to LOCKHEED MARTIN CORP for work described as: FY16 UK TECHNICAL SERVICES CONTRACT. IGF::OT::IGF Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant contract value for engineering services, raising questions about cost-effectiveness. 3. Long contract duration (1460 days) may not reflect evolving technical needs. 4. Lack of competition indicators suggests potential for reduced value for taxpayer dollars. 5. Contractor's extensive experience in defense may have influenced sole-source justification. 6. Performance context is limited due to 'NOT AVAILABLE FOR COMPETITION' status. 7. Geographic concentration in California for contract performance.
Value Assessment
Rating: questionable
The contract's value of $32.7 million for engineering services warrants careful review, especially given its sole-source nature. Without competitive bidding, it's difficult to benchmark the pricing against market rates or similar contracts. The cost-plus-fixed-fee structure, while common, can incentivize cost overruns if not rigorously managed. The absence of comparative data makes a definitive value assessment challenging, but the lack of competition inherently raises concerns about achieving optimal value for taxpayer funds.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning there was no open competition. The justification for this approach is not detailed in the provided data, but it typically implies that only one source was deemed capable of fulfilling the requirement. The lack of multiple bidders means that price discovery through competitive negotiation was bypassed, which can lead to higher costs for the government.
Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible pricing, potentially resulting in higher expenditures for taxpayers compared to a competitively bid contract.
Public Impact
The Department of Defense benefits from specialized engineering services provided by Lockheed Martin. Technical expertise is delivered to support naval operations and readiness. Contract performance is geographically concentrated in California. The contract supports a highly skilled technical workforce within Lockheed Martin.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pressure on pricing.
- Cost-plus-fixed-fee contract type can lead to cost overruns if not managed effectively.
- Long contract duration may not align with rapidly changing technological requirements.
- Lack of transparency regarding the justification for sole-source award.
- Limited public data on performance metrics and outcomes.
Positive Signals
- Award to a large, established defense contractor with significant experience.
- Contract aims to fulfill critical engineering service needs for the Navy.
- Definitive contract type provides a clear framework for service delivery.
- Fixed fee component provides some cost certainty for the government.
Sector Analysis
This contract falls within the Engineering Services sector, a critical component of the broader defense industrial base. The market for specialized engineering services supporting military applications is dominated by large, experienced contractors like Lockheed Martin. Spending in this area is substantial, driven by the need for advanced technological solutions and ongoing support for complex defense systems. Benchmarking this contract's value is difficult without more specific service details, but its sole-source nature is a key factor in assessing its market dynamics.
Small Business Impact
The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses stemming from a set-aside provision. The prime contractor, Lockheed Martin, is a large corporation, and while they may engage small businesses as subcontractors on various projects, this specific contract's structure does not mandate it.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Inspector General (IG) jurisdiction would apply for investigations into fraud, waste, or abuse. Transparency is limited by the 'NOT AVAILABLE FOR COMPETITION' status, which often accompanies justifications that are not publicly detailed. Accountability would be managed through contract performance reviews and adherence to the cost-plus-fixed-fee terms.
Related Government Programs
- Naval Engineering Services
- Defense Research and Development
- Aerospace Engineering Support
- Technical Consulting Services
Risk Flags
- Sole-source award lacks competitive justification.
- Potential for cost overruns due to CPFF contract type.
- Long contract duration may not adapt to technological changes.
- Limited transparency on specific service details and performance metrics.
Tags
defense, department-of-defense, department-of-the-navy, engineering-services, lockheed-martin-corp, definitive-contract, cost-plus-fixed-fee, sole-source, california, large-contract, technical-services
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $32.7 million to LOCKHEED MARTIN CORP. FY16 UK TECHNICAL SERVICES CONTRACT. IGF::OT::IGF
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 $32.7 million.
What is the period of performance?
Start: 2015-04-01. End: 2019-03-31.
What specific engineering services are being provided under this contract?
The provided data indicates the contract is for 'Engineering Services' (nd: Engineering Services) and falls under the North American Industry Classification System (NAICS) code 541330. However, the specific nature of these services is not detailed. Given the awarding agency (Department of the Navy) and the contractor (Lockheed Martin), it is highly probable that these services relate to naval systems, platforms, or related technologies. This could encompass a wide range of activities, including design, analysis, testing, integration, and lifecycle support for naval vessels, aircraft, or weapon systems. Without further documentation, the precise scope remains unspecified.
How does the $32.7 million contract value compare to similar engineering services contracts awarded by the Department of the Navy?
Comparing the $32.7 million value requires access to a broader dataset of similar contracts. However, for a single definitive contract awarded on a sole-source basis, this amount is substantial. The Department of the Navy procures a wide array of engineering services, ranging from small, specialized tasks to large, multi-year programs. Without knowing the specific technical domain and duration of services, a direct comparison is difficult. Generally, sole-source awards of this magnitude warrant scrutiny to ensure fair pricing and necessity, as competitive contracts often yield better value. Further analysis would involve identifying comparable competitively awarded contracts for similar engineering disciplines within the Navy.
What are the primary risks associated with a sole-source award for engineering services?
The primary risk associated with a sole-source award is the lack of competitive pressure, which can lead to inflated pricing and reduced value for money. Without competing bids, the government may pay more than necessary for the services. Another risk is the potential for complacency from the contractor, as there is no immediate threat of losing future business to competitors. Furthermore, the justification for a sole-source award must be robust; if the justification is weak or flawed, it raises concerns about the procurement process itself. Finally, it limits the opportunity for innovative solutions that might emerge from a broader pool of potential bidders.
What is the significance of the 'Cost Plus Fixed Fee' (CPFF) contract type in this context?
The Cost Plus Fixed Fee (CPFF) contract type means the contractor is reimbursed for all allowable costs incurred, plus a fixed fee representing profit. This structure is often used when the scope of work is not precisely defined or is expected to evolve, as is common in complex engineering projects. For the government, the fixed fee provides some level of profit certainty. However, the primary risk with CPFF is that the contractor has less incentive to control costs, as their profit is fixed regardless of the total cost incurred. Effective government oversight and cost monitoring are crucial to mitigate potential cost overruns and ensure the contractor exercises due diligence in managing expenses.
What does the contract duration of 1460 days (approximately 4 years) imply for the nature of the services?
A contract duration of 1460 days (approximately 4 years) suggests that the engineering services required are likely long-term and potentially complex, involving ongoing support, development, or sustainment activities. Such durations are common for major defense programs where stability and continuity of service are paramount. This extended period allows for in-depth work, integration into existing systems, and potentially research and development phases. However, it also carries the risk that the defined requirements might become outdated over time, especially in rapidly evolving technological fields. Regular reviews and potential modifications would be necessary to ensure continued relevance and value.
How does the geographic location (California) impact the contract's execution and oversight?
The concentration of contract performance in California, a major hub for the aerospace and defense industry, likely facilitates access to specialized talent and facilities for Lockheed Martin. It may also align with the location of key Navy assets or research centers in the region. From an oversight perspective, having the contractor's primary performance location in California could streamline on-site inspections and communication for Navy contracting officers or program managers based in or near the state. However, it also means that a significant portion of the contract value is directed towards a single geographic region, potentially limiting broader economic impact across other areas.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: TECHNICAL REPRESENTATIVE SVCS. › TECHNICAL REPRESENTATIVE SERVICES
Competition & Pricing
Extent Competed: NOT AVAILABLE FOR COMPETITION
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0003015R0023
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: $32,732,017
Exercised Options: $32,732,017
Current Obligation: $32,732,017
Subaward Activity
Number of Subawards: 8
Total Subaward Amount: $414,587
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2015-04-01
Current End Date: 2019-03-31
Potential End Date: 2019-03-31 00:00:00
Last Modified: 2021-02-05
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