Lockheed Martin awarded $28.2M contract for engineering services, with performance spanning over 2 years

Contract Overview

Contract Amount: $28,208,019 ($28.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2001-05-04

End Date: 2003-12-31

Contract Duration: 971 days

Daily Burn Rate: $29.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200108!005703!1700!D0222 !SPACE AND NAVAL WARFARE SYSTEMS !N0003900C2260 !A!N!*!N! !20010504!20010930!019710586!019710586!834951691!N!LOCKHEED MARTIN CORPORATION !9500 GOODWIN DR !MANASSAS !VA!20110!48952!683!51!MANASSAS !MANASSAS (CITY) !VIRGINIA !+000001218512!N!N!000000000000!R425!ENGINEERING TECHNICAL SERVICES !S1 !SERVICES !2000!NOT DISCERNABLE OR CLASSIFIED !541330!*!*!3! ! ! !*!*!*!B!*!*!A! !D !N!U!1!001!N!1A!Z!Y!Z! ! !N!C!N! ! ! !Z!Z!A!A!000!A!C!N! ! ! ! ! ! !0001!

Place of Performance

Location: MANASSAS, PRINCE WILLIAM County, VIRGINIA, 20110

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $28.2 million to LOCKHEED MARTIN CORPORATION for work described as: 200108!005703!1700!D0222 !SPACE AND NAVAL WARFARE SYSTEMS !N0003900C2260 !A!N!*!N! !20010504!20010930!019710586!019710586!834951691!N!LOCKHEED MARTIN CORPORATION !9500 GOODWIN DR !MANASSAS !VA!20110!48952!683!51!MANASSAS !MANAS… Key points: 1. Contract awarded to a single, large defense contractor, indicating potential for limited competition. 2. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed carefully. 3. Performance period of over two years suggests a significant, ongoing need for these engineering services. 4. The specific engineering services are not detailed, making it difficult to assess value for money. 5. The contract was not competed, raising questions about the procurement process and potential for better pricing. 6. The geographic location of the contractor is in Virginia, a hub for defense contracting.

Value Assessment

Rating: questionable

The awarded amount of $28.2 million for engineering services over approximately 2.75 years (971 days) averages to roughly $10.2 million per year. Without specific details on the nature of the engineering services, it is challenging to benchmark this against similar contracts. However, the Cost Plus Fixed Fee (CPFF) contract type, while common in R&D and complex services, carries inherent risks of cost escalation if the fixed fee is not adequately justified or if the costs incurred by the contractor are not rigorously scrutinized. The lack of competition further complicates a direct value-for-money assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as 'NOT COMPETED,' indicating a sole-source procurement. This means that only one offeror, Lockheed Martin Corporation, was solicited and considered. The reasons for this sole-source award are not provided in the data, but it typically occurs when only one source is capable of meeting the requirement, or in cases of urgent need. The lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to a higher price than if multiple vendors had competed.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without a competitive process, there is less assurance that the government secured the best possible price for these engineering services.

Public Impact

The primary beneficiary of this contract is Lockheed Martin Corporation, a major defense contractor. The contract is expected to deliver engineering technical services, likely supporting defense programs. The geographic impact is centered around the contractor's location in Manassas, Virginia, and potentially extends to the operational areas of the defense systems being supported. Workforce implications include employment opportunities for engineers and technical staff at Lockheed Martin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpayment and reduced incentive for cost efficiency.
The Cost Plus Fixed Fee contract type can incentivize contractors to increase costs to maximize their fee, if not properly managed.
The specific nature of the engineering services is not detailed, hindering a thorough assessment of the value delivered.
The contract duration of over two years requires sustained oversight to ensure performance and cost control.

Positive Signals

Awarded to a well-established defense contractor, Lockheed Martin, suggesting a high likelihood of technical capability.
The contract is for engineering technical services, which are critical for maintaining and developing complex defense systems.
The contract has a defined period of performance, providing a clear timeframe for service delivery.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting defense-related technical services. The North American Industry Classification System (NAICS) code 541330 (Engineering Services) is broad, encompassing a wide range of activities. The defense sector is a significant consumer of such services, often involving complex R&D, system design, integration, and testing. Comparable spending benchmarks are difficult to establish without knowing the precise nature of the engineering work, but the overall defense engineering services market is substantial, with major contractors like Lockheed Martin playing a key role.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'SB: false'. Furthermore, the award to Lockheed Martin Corporation, a large prime contractor, suggests that small businesses are unlikely to be directly involved as the prime awardee. Subcontracting opportunities for small businesses may exist, but this is not explicitly detailed in the provided data. The focus on a large prime contractor may limit direct opportunities for small businesses to compete for the prime contract itself.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of Defense, likely through the Defense Contract Management Agency (DCMA), which is listed as the 'Servicing Agency'. Accountability measures would be tied to the terms and conditions of the Cost Plus Fixed Fee contract, including cost reporting, performance metrics, and milestone achievement. Transparency is limited by the sole-source nature of the award and the lack of detailed public information on the specific services rendered. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract.

Related Government Programs

Naval Warfare Systems
Defense Engineering Services
Lockheed Martin Contracts
Cost Plus Fixed Fee Contracts
Sole Source Procurements

Risk Flags

Lack of Competition
Cost Plus Fixed Fee Contract Type
Undefined Scope of Services

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.2 million to LOCKHEED MARTIN CORPORATION. 200108!005703!1700!D0222 !SPACE AND NAVAL WARFARE SYSTEMS !N0003900C2260 !A!N!*!N! !20010504!20010930!019710586!019710586!834951691!N!LOCKHEED MARTIN CORPORATION !9500 GOODWIN DR !MANASSAS !VA!20110!48952!683!51!MANASSAS !MANASSAS (CITY) !VIRGINIA !+000001218512!N!N!000000000000!R425!ENGINEERING TECHNICAL SERVICES !S1 !SERVICES !2000!NOT DISCERNABLE OR CLASSIFIED !541330!*!*!3! ! ! !*!*!*!B!*!*!A!

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 $28.2 million.

What is the period of performance?

Start: 2001-05-04. End: 2003-12-31.

What specific engineering technical services are being procured under this contract?

The provided data indicates the contract is for 'ENGINEERING TECHNICAL SERVICES' under NAICS code 541330. However, the specific nature of these services is not detailed. This could range from research and development, system design, testing and evaluation, to technical support for naval warfare systems. Without further clarification, it is difficult to ascertain the exact scope of work, the technical challenges involved, or the specific defense platforms or programs this contract supports. This lack of specificity is a common challenge when analyzing high-level contract awards.

What is the justification for the sole-source award to Lockheed Martin Corporation?

The data explicitly states the contract was 'NOT COMPETED,' signifying a sole-source award. The specific justification for this determination is not provided. Common reasons for sole-source awards include: a) only one responsible source is available or uniquely qualified; b) an urgent and compelling need exists that cannot be satisfied by other sources; c) the agency has entered into a strategic partnership or other arrangement that restricts competition; or d) for follow-on work where a specific contractor's expertise is essential. Without the official justification document (e.g., a Justification and Approval - J&A), it is impossible to definitively state why Lockheed Martin was the sole awardee.

How does the Cost Plus Fixed Fee (CPFF) structure impact cost control and contractor incentives?

The Cost Plus Fixed Fee (CPFF) contract structure involves the contractor being reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used for research and development or services where the scope is not well-defined, making it difficult to estimate costs accurately upfront. While the fixed fee provides some incentive for the contractor to control costs (as the fee is fixed regardless of the final cost), it can also create an incentive to increase costs if the contractor believes it will lead to a higher overall profit margin, especially if the 'allowable costs' are broadly defined or loosely monitored. Effective oversight and rigorous auditing of incurred costs are crucial to mitigate potential cost overruns under a CPFF contract.

What is the historical spending pattern for similar engineering services contracts awarded by the Department of Defense?

Analyzing historical spending patterns for similar engineering services requires access to a broader dataset of federal contracts, specifically filtering for the Department of Defense, NAICS code 541330, and potentially contract types like CPFF or other cost-reimbursement structures. Without this broader data, it's impossible to provide a specific historical comparison. However, it is generally known that the Department of Defense is a major spender on engineering and technical services, with significant portions of its budget allocated to R&D, system sustainment, and modernization efforts. Large defense contractors like Lockheed Martin are consistently among the top recipients of such contracts. Trends often show increasing costs due to inflation, technological advancements, and evolving defense requirements.

What are the potential risks associated with awarding a contract of this magnitude without competition?

The primary risk associated with awarding a contract of this magnitude ($28.2 million) without competition is the potential for paying a higher price than necessary. A competitive bidding process typically drives down prices as contractors vie for the award. Without competition, the government lacks a benchmark to ensure it is receiving fair market value. Other risks include reduced innovation, as there is less pressure on the sole contractor to offer novel solutions or efficiencies, and a potential lack of transparency in the pricing structure. Furthermore, it can create a perception of favoritism or an inefficient use of taxpayer funds, even if the sole-source award is technically justified.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 9500 GOODWIN DR, MANASSAS, VA, 20110

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline