Over $107M for UK Fleet Support, a sole-source contract awarded to Lockheed Martin

Contract Overview

Contract Amount: $107,438,483 ($107.4M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2015-10-01

End Date: 2019-08-31

Contract Duration: 1,430 days

Daily Burn Rate: $75.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: FY16 UK FLEET SUPPORT IGF::CT::IGF

Place of Performance

Location: UNIONDALE, NASSAU County, NEW YORK, 11553

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $107.4 million to LOCKHEED MARTIN CORPORATION for work described as: FY16 UK FLEET SUPPORT IGF::CT::IGF Key points: 1. Contract awarded on a sole-source basis, limiting competitive pricing benefits. 2. Engineering services provided under a cost-plus-fixed-fee structure. 3. Contract duration of 1430 days, spanning nearly four years. 4. Significant value suggests a critical, long-term support requirement. 5. Geographic location of contractor in New York. 6. No small business set-aside indicated, potentially impacting smaller firms.

Value Assessment

Rating: fair

The contract value of over $107 million for engineering services is substantial. Without comparable sole-source contracts for similar UK fleet support, a direct value-for-money assessment is challenging. The cost-plus-fixed-fee (CPFF) pricing structure can lead to cost overruns if not managed diligently, as the contractor is reimbursed for allowable costs plus a fixed fee. Benchmarking this against other large-scale defense engineering contracts would be necessary for a more precise value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, security clearances, or proprietary knowledge to fulfill the requirement. The lack of competition means that taxpayers did not benefit from potential price reductions that could arise from a competitive bidding process.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage market competition to secure the best possible pricing, potentially leading to higher costs for taxpayers.

Public Impact

Benefits the United Kingdom's naval fleet through essential engineering support. Ensures the operational readiness and maintenance of critical defense assets. Supports specialized engineering expertise and technical services. Impacts the defense industrial base, particularly in areas requiring specialized naval engineering.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost-plus-fixed-fee contracts carry inherent risk of cost escalation.
Long contract duration requires sustained oversight.

Positive Signals

Award to a major defense contractor suggests capability and reliability.
Engineering services are critical for maintaining complex defense systems.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on engineering services for naval fleet support. The defense engineering services market is characterized by high barriers to entry, specialized technical requirements, and significant government investment. Lockheed Martin is a major player in this sector, often securing large, sole-source contracts for critical defense systems due to their established expertise and existing relationships. Comparable spending benchmarks would likely be found within other large-scale naval sustainment and engineering contracts.

Small Business Impact

The contract was not set aside for small businesses, nor does it indicate any subcontracting requirements for small businesses. This suggests that the primary contractor, Lockheed Martin, is expected to perform the majority of the work internally. The absence of small business participation could limit opportunities for smaller, specialized firms within the defense supply chain for this particular contract.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The cost-plus-fixed-fee structure necessitates close monitoring of costs and adherence to the fixed fee. Transparency would be enhanced through regular reporting requirements and potential audits by the Inspector General's office, though specific oversight mechanisms are not detailed in the provided data.

Related Government Programs

Naval Ship Maintenance and Repair
Defense Engineering Services
Foreign Military Sales Support
Fleet Modernization Programs

Risk Flags

Sole-source award
Cost-plus-fixed-fee pricing
Lack of small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $107.4 million to LOCKHEED MARTIN CORPORATION. FY16 UK FLEET SUPPORT IGF::CT::IGF

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 $107.4 million.

What is the period of performance?

Start: 2015-10-01. End: 2019-08-31.

What is the specific nature of the UK fleet support being provided by Lockheed Martin under this contract?

The provided data indicates the contract is for 'UK FLEET SUPPORT IGF::CT::IGF' and falls under the 'Engineering Services' NAICS code (541330). While the exact nature of the support is not detailed, it likely encompasses a range of engineering activities critical to the operation, maintenance, and sustainment of the United Kingdom's naval fleet. This could include design, analysis, testing, integration, and technical support for various naval platforms and systems. Given the sole-source nature and the contractor, it suggests highly specialized or proprietary services essential for the UK's defense capabilities.

How does the cost-plus-fixed-fee (CPFF) structure compare to other contract types for similar defense engineering services?

The Cost-Plus-Fixed-Fee (CPFF) structure is common for defense contracts, especially when the scope of work is not precisely defined at the outset or involves research and development where costs are uncertain. In CPFF, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This contrasts with fixed-price contracts, where the contractor agrees to a set price regardless of actual costs, offering greater cost certainty to the government but potentially higher risk for the contractor. CPFF can incentivize contractors to control costs to protect their fixed fee, but it also requires robust government oversight to prevent cost overruns and ensure fair pricing. Other contract types like Cost Plus Incentive Fee (CPIF) or Cost Plus Award Fee (CPAF) introduce performance incentives.

What are the potential risks associated with a sole-source award of this magnitude for defense engineering services?

The primary risk of a sole-source award of this magnitude is the lack of competitive pressure, which can lead to inflated pricing and reduced value for taxpayers. Without competing bids, the government may not secure the most cost-effective solution. Additionally, sole-source awards can create vendor lock-in, making it difficult to switch providers in the future even if performance or pricing becomes unsatisfactory. There's also a risk that the sole provider may not be as innovative or efficient as they would be under competitive pressure. Ensuring robust contract management and oversight becomes even more critical to mitigate these risks.

What is Lockheed Martin's track record with similar large-scale defense engineering contracts, particularly for international partners?

Lockheed Martin Corporation is a global leader in the aerospace, defense, and security industry, with an extensive track record of managing and executing large-scale, complex defense contracts for the U.S. government and numerous international partners. They are known for their work on major defense platforms, including naval systems, aircraft, and missile defense. Their experience with international clients, such as the UK Ministry of Defence, is substantial, often involving long-term sustainment, modernization, and engineering support programs. While specific details of past performance on similar UK fleet support contracts would require deeper research, Lockheed Martin's overall profile suggests a high capability to handle such requirements.

How does the $107 million contract value compare to overall UK defense spending on fleet support or engineering services?

The $107 million contract value represents a significant investment in engineering services for the UK fleet. To contextualize this, one would need to compare it against the UK's total defense budget, specifically allocations for naval sustainment, fleet modernization, and defense engineering services. While this single contract is substantial, it is likely one component of a broader strategy for maintaining and upgrading the UK's naval capabilities. Without access to the UK's specific defense procurement data and budget breakdowns for fleet support, a precise comparison is difficult, but it highlights the critical nature and cost associated with maintaining modern naval fleets.

What are the implications of the contract ending in August 2019 for future UK fleet support needs?

The contract's end date of August 31, 2019, signifies that the engineering support provided by Lockheed Martin under this specific award concluded then. For the UK's future fleet support needs, this implies that a new procurement process would have been initiated prior to this date, or alternative arrangements made. Whether the requirement was re-competed, extended, or awarded to a different contractor depends on the UK's defense strategy and procurement decisions made around that time. The transition from this contract would have required careful planning to ensure continuity of essential engineering services for the fleet.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: QUALITY CONTROL, TEST, INSPECTION › QUALITY CONTROL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0003016R0002

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 55 CHARLES LINDBERGH BLVD, UNIONDALE, NY, 11553

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

Financial Breakdown

Contract Ceiling: $142,730,671

Exercised Options: $127,438,353

Current Obligation: $107,438,483

Subaward Activity

Number of Subawards: 43

Total Subaward Amount: $5,725,572

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline