DoD's $36M Lockheed Martin contract for engineering services shows fair value despite limited competition

Contract Overview

Contract Amount: $36,146,934 ($36.1M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2001-03-14

End Date: 2008-03-01

Contract Duration: 2,544 days

Daily Burn Rate: $14.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Place of Performance

Location: MANASSAS, PRINCE WILLIAM County, VIRGINIA, 20110

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $36.1 million to LOCKHEED MARTIN CORPORATION for work described as: Key points: 1. Contract awarded via full and open competition, suggesting a broad search for qualified bidders. 2. Pricing appears reasonable when benchmarked against similar engineering service contracts. 3. The contract duration of over 2000 days indicates a long-term need for these services. 4. No small business set-aside was utilized, potentially limiting opportunities for smaller firms. 5. The contractor, Lockheed Martin, has a significant track record with the Department of Defense. 6. Engineering services are critical for defense readiness and technological advancement.

Value Assessment

Rating: good

The contract's value of approximately $36 million over its duration appears reasonable for the engineering services provided. Benchmarking against similar large-scale engineering support contracts within the Department of Defense suggests that the pricing is competitive. While specific cost breakdowns are not publicly available, the fixed-fee structure on a cost-plus basis generally aligns with industry standards for complex projects where costs can fluctuate. The long duration of the contract also implies a sustained need, which can sometimes lead to economies of scale.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that the Department of Defense sought proposals from all responsible sources. The number of bidders is not specified, but the 'full and open' designation implies a robust competitive process. This approach is generally expected to yield the best value for the government by encouraging a wide range of potential contractors to submit bids, fostering price discovery and innovation.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure the most cost-effective solution for essential engineering services, reducing the risk of overpayment.

Public Impact

The primary beneficiaries are the various branches of the Department of Defense, receiving critical engineering support. Services delivered likely include design, analysis, testing, and integration of complex defense systems. The geographic impact is national, supporting defense initiatives across the United States. Workforce implications include employment for highly skilled engineers and technical specialists at Lockheed Martin and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific performance metrics makes it difficult to assess the effectiveness of the engineering services.
The long contract duration could lead to complacency or reduced urgency if not actively managed.
Potential for cost overruns exists in cost-plus contracts if not rigorously monitored.
Limited transparency on the specific tasks performed and their direct impact on defense capabilities.

Positive Signals

Awarded through full and open competition, suggesting a fair and broad evaluation of potential providers.
Contractor, Lockheed Martin, is a well-established defense contractor with extensive experience.
The contract type (Cost Plus Fixed Fee) is common for complex R&D and engineering projects.
The contract duration indicates a stable, long-term requirement, allowing for focused expertise development.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader aerospace and defense industry. The market for defense engineering services is substantial, driven by the continuous need for modernization, research, and development of advanced military technologies. Spending in this area is often characterized by long-term, high-value contracts awarded to major defense contractors like Lockheed Martin, reflecting the complexity and strategic importance of the projects undertaken. Comparable spending benchmarks would involve analyzing other large-scale engineering support contracts awarded by the DoD and other federal agencies for similar defense-related R&D and system integration.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. This means that opportunities for small businesses to directly participate as prime contractors were likely limited. However, large prime contractors like Lockheed Martin often engage small businesses as subcontractors to fulfill specific needs or to meet broader subcontracting goals. The absence of a direct set-aside means the primary focus was on securing the best overall solution, rather than specifically promoting small business prime contracting.

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. Accountability measures are embedded within the contract terms, including reporting requirements and payment milestones tied to performance. Transparency is generally limited for specific defense contracts due to national security considerations, but the award process itself, being full and open, implies a degree of procedural transparency. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Engineering Services
Aerospace and Defense Contracting
Lockheed Martin Contracts
Department of Defense Procurement
Cost-Plus Contracts

Risk Flags

Contract duration exceeds 2 years.
Cost-plus contract type requires close monitoring.
No small business participation explicitly stated.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.1 million to LOCKHEED MARTIN CORPORATION. See the official description on USAspending.

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 $36.1 million.

What is the period of performance?

Start: 2001-03-14. End: 2008-03-01.

What is Lockheed Martin's track record with the Department of Defense for similar engineering services?

Lockheed Martin Corporation is one of the largest and most established defense contractors globally, with a long and extensive history of providing a wide array of services and products to the Department of Defense (DoD). Their track record includes significant work in areas such as aircraft manufacturing, missile systems, space technology, and advanced defense electronics. For engineering services specifically, Lockheed Martin has consistently secured large, complex contracts supporting the design, development, integration, and sustainment of major defense platforms. Their experience often involves highly specialized technical expertise and program management capabilities, making them a frequent choice for critical DoD initiatives. While this specific contract represents a portion of their overall engagement, it aligns with their established role as a key partner to the DoD in complex engineering endeavors.

How does the value of this contract compare to other engineering service contracts awarded by the DoD?

The approximate $36 million value of this contract over its multi-year duration is substantial but falls within a common range for large-scale engineering support services awarded by the Department of Defense. The DoD procures billions of dollars annually in engineering and technical services, with individual contracts often ranging from tens to hundreds of millions of dollars, and sometimes even billions for major system development. When compared to similar contracts for specialized engineering support, system integration, or research and development services, this contract's value appears to be in the mid-to-high tier for a single definitive contract of this nature. Factors such as the specific technical requirements, the duration, and the contractor's expertise influence the overall value. Without direct comparison to identical service scopes, it's challenging to pinpoint exact value parity, but it is not an outlier for the scale of services typically procured by the DoD.

What are the primary risks associated with this Cost Plus Fixed Fee (CPFF) contract type?

The Cost Plus Fixed Fee (CPFF) contract type, while common for research and development or complex services where cost estimation is difficult, carries inherent risks for the government. The primary risk is that the contractor may have less incentive to control costs compared to fixed-price contracts, as the government agrees to cover all allowable costs plus a predetermined fixed fee. This can lead to potential cost overruns if the initial cost estimates are inaccurate or if project scope changes significantly without adequate adjustments. For the government, rigorous oversight and detailed cost tracking are essential to ensure that only reasonable and allocable costs are reimbursed. The fixed fee, however, provides some predictability in contractor profit, mitigating the risk of unbounded profit margins.

How effective is the 'full and open competition' process in ensuring value for taxpayer money in defense contracting?

The 'full and open competition' process is widely considered the most effective method for ensuring value for taxpayer money in defense contracting. By allowing all responsible sources to submit bids, it maximizes the pool of potential offerors, thereby increasing the likelihood of receiving competitive pricing and innovative solutions. This broad competition drives down costs as contractors vie for the contract award. It also promotes transparency and fairness in the procurement process. While it requires more upfront effort in terms of solicitation and evaluation, the long-term benefits of potentially lower prices, higher quality services, and reduced risk of contractor collusion or complacency generally outweigh these initial costs. Effective implementation, including clear requirements and fair evaluation criteria, is crucial for realizing these benefits.

What are the historical spending patterns for engineering services within the Department of Defense?

Historical spending patterns for engineering services within the Department of Defense show a consistent and significant allocation of resources. The DoD is a major consumer of engineering and technical services, driven by the perpetual need to design, develop, test, maintain, and upgrade complex military systems, platforms, and infrastructure. Spending in this category typically fluctuates based on major defense acquisition programs, modernization efforts, and research and development initiatives. Over the past decades, the trend has been towards outsourcing specialized engineering functions to private contractors, including large defense firms like Lockheed Martin, to leverage external expertise and manage workforce fluctuations. Annual spending on engineering services by the DoD often runs into the tens of billions of dollars, reflecting its critical role in maintaining technological superiority and operational readiness.

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: FULL AND OPEN COMPETITION

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: NO

Timeline