DoD's $26.2M engineering services contract with Lockheed Martin saw no competition, raising value concerns

Contract Overview

Contract Amount: $26,227,893 ($26.2M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2003-03-20

End Date: 2010-02-08

Contract Duration: 2,517 days

Daily Burn Rate: $10.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Place of Performance

Location: MANASSAS, PRINCE WILLIAM County, VIRGINIA, 20110

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $26.2 million to LOCKHEED MARTIN CORP for work described as: Key points: 1. The contract's sole-source nature limits price discovery and potentially inflates costs. 2. A long duration of 2517 days suggests a need for ongoing, specialized engineering support. 3. The cost-plus award fee structure can incentivize cost growth if not tightly managed. 4. Lack of competition indicates potential barriers to entry or a highly specialized niche. 5. Performance context is limited without specific deliverables or outcome metrics. 6. The contract falls within the broad engineering services sector, vital for defense operations.

Value Assessment

Rating: questionable

Benchmarking the value of this $26.2 million contract is challenging due to the lack of competitive bids and the cost-plus award fee structure. Without comparison to similar sole-source engineering services contracts or market rates for comparable services, it's difficult to definitively assess if the pricing was optimal. The extended duration and the nature of engineering services suggest a potentially high value, but the absence of competition prevents a robust value-for-money assessment. Further analysis would require understanding the specific technical requirements and the contractor's performance against award fee criteria.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when only one responsible source is available or when there is a compelling justification for excluding competition. The lack of bidders means there was no opportunity for multiple companies to offer their services, potentially leading to higher prices than if a competitive process had been employed. The government did not benefit from the price discovery mechanisms inherent in a competitive bidding environment.

Taxpayer Impact: Taxpayers may have paid a premium for these engineering services due to the absence of competitive pressure. The government's ability to secure the best possible price was diminished.

Public Impact

The Department of Defense benefits from specialized engineering expertise for its programs. Services delivered likely include design, analysis, testing, and technical support for defense systems. The geographic impact is primarily within the United States, supporting defense infrastructure and operations. Workforce implications include employment for highly skilled engineers and technical professionals at Lockheed Martin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Cost-plus award fee structure can incentivize cost overruns if not managed stringently.
Long contract duration without clear performance metrics raises concerns about ongoing necessity and efficiency.
Sole-source awards can stifle innovation by limiting opportunities for new entrants.

Positive Signals

Lockheed Martin is a major defense contractor with extensive experience.
Engineering services are critical for maintaining and advancing defense capabilities.
The contract likely addresses complex technical requirements unique to defense systems.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader aerospace and defense industry. This sector is characterized by high barriers to entry, significant R&D investment, and specialized expertise. The market size for defense engineering services is substantial, driven by government procurement needs for complex weapon systems and technological advancements. Comparable spending benchmarks would involve analyzing other sole-source or competed engineering contracts within the DoD for similar types of technical support.

Small Business Impact

As a sole-source award to a large prime contractor, this contract does not appear to have a specific small business set-aside. There is no explicit information provided regarding subcontracting plans for small businesses. Without a competitive bidding process that often includes small business participation goals, the direct impact on the small business ecosystem is likely minimal, unless Lockheed Martin voluntarily includes them in its subcontracting efforts.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA) and the relevant Department of Defense program offices. Accountability measures would be tied to the terms of the Cost Plus Award Fee contract, including performance metrics and award fee evaluations. Transparency is limited due to the sole-source nature, but contract actions and payments are generally reported in federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Engineering Services
Aerospace and Defense Contracting
Cost-Plus Contracts
Sole-Source Procurements
Lockheed Martin Contracts

Risk Flags

Sole-source award limits price competition.
Cost-plus award fee structure may incentivize cost growth.
Long contract duration increases risk of requirement changes and obsolescence.
Lack of detailed performance metrics hinders value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.2 million to LOCKHEED MARTIN CORP. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $26.2 million.

What is the period of performance?

Start: 2003-03-20. End: 2010-02-08.

What specific engineering services were provided under this contract?

While the data indicates 'Engineering Services' (NAICS 541330), the precise nature of the services rendered under this $26.2 million contract with Lockheed Martin is not detailed. Typically, engineering services in the defense sector can encompass a wide range of activities, including research and development support, system design and integration, technical analysis, testing and evaluation, logistics support analysis, and program management support for complex defense systems. Given the contractor and the agency (DoD), these services likely supported critical defense platforms or technologies, requiring specialized expertise and long-term engagement.

How does the $26.2M value compare to similar sole-source engineering contracts?

Comparing the $26.2 million value of this sole-source contract to similar ones is difficult without more specific details on the services provided and the duration. Sole-source engineering contracts can vary significantly in price depending on the complexity, criticality, and duration of the required support. However, for long-term, specialized engineering needs within the Department of Defense, a $26.2 million award over its 2517-day period (approximately 7 years) might be considered within a reasonable range, assuming the services were essential and unique. The primary concern remains the lack of competitive benchmarking to ensure optimal pricing.

What are the risks associated with a Cost Plus Award Fee (CPAF) contract structure?

The Cost Plus Award Fee (CPAF) structure carries inherent risks, primarily related to cost control and potential for contractor inefficiency. While it allows for flexibility in requirements and incentivizes performance through award fees, it can also encourage cost growth if the base cost is not well-defined or if the award fee criteria are not stringent enough. Contractors may focus on achieving award fees rather than minimizing costs. Effective oversight, clear performance metrics, and rigorous evaluation of award fee submissions are crucial to mitigate these risks and ensure the government receives good value.

What does the 'NOT COMPETED' status imply for government procurement practices?

The 'NOT COMPETED' status signifies that the contract was awarded without soliciting bids from multiple sources. This is typically done under specific justifications outlined in federal acquisition regulations, such as the availability of only one responsible source, urgent and compelling needs, or when the contract is a follow-on to a previously competed effort where competition is not feasible. While sometimes necessary, sole-source awards bypass the competitive process, which is the government's preferred method for ensuring fair pricing, promoting innovation, and maximizing opportunities for a wide range of contractors. It suggests that either the requirements were highly specialized or there were limitations in the market.

What is Lockheed Martin's track record with similar DoD engineering contracts?

Lockheed Martin is a major defense contractor with an extensive history of performing complex engineering services for the Department of Defense across numerous platforms and programs. Their track record generally includes delivering sophisticated technical solutions, often involving large-scale, long-duration contracts. While specific performance details for every contract are not publicly available, their position as a leading defense entity suggests a capacity to meet demanding technical requirements. However, like any large contractor, individual contract performance can vary, and oversight is always necessary to ensure adherence to cost, schedule, and performance objectives.

How does the 2517-day duration impact the contract's risk profile?

A contract duration of 2517 days (approximately 7 years) significantly impacts the risk profile. Longer durations increase the risk of requirement changes, technological obsolescence, and potential cost escalations due to market fluctuations or unforeseen technical challenges. It also necessitates robust contract management and oversight to ensure continued alignment with evolving defense needs and to prevent scope creep. For the contractor, it offers stability but also requires sustained resource commitment and adaptability. For the government, it represents a long-term commitment that needs careful monitoring to ensure ongoing value and relevance.

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

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Contractor Details

Address: 3333 PILOT KNOB RD, EAGAN, MN, 55121

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline