DoD's $52M R&D contract with Lockheed Martin shows limited competition and raises value questions

Contract Overview

Contract Amount: $52,173,040 ($52.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2006-04-28

End Date: 2011-12-31

Contract Duration: 2,073 days

Daily Burn Rate: $25.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Place of Performance

Location: MANASSAS, PRINCE WILLIAM County, VIRGINIA, 20110

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $52.2 million to LOCKHEED MARTIN CORPORATION for work described as: Key points: 1. The contract's cost-plus-fixed-fee structure may incentivize higher spending. 2. Limited competition suggests potential for suboptimal pricing. 3. The long duration of the contract (over 5 years) warrants scrutiny of ongoing costs. 4. Research and Development in Physical, Engineering, and Life Sciences is a critical but complex sector for oversight. 5. The contract's significant value necessitates robust performance monitoring. 6. The absence of small business set-asides is noted.

Value Assessment

Rating: questionable

Benchmarking the value of this specific R&D contract is challenging due to its specialized nature and the lack of publicly available comparable data for similar research efforts. The cost-plus-fixed-fee (CPFF) pricing structure, while common for R&D where scope can evolve, can lead to higher overall costs compared to fixed-price contracts if not managed diligently. Without detailed cost breakdowns and performance metrics, it's difficult to definitively assess if the $52 million represents excellent value for the research outcomes achieved. Further analysis would require access to the contractor's cost submissions and the government's evaluation of technical progress.

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. This typically occurs when a specific contractor possesses unique capabilities, intellectual property, or is the only source capable of meeting the requirement. While sole-source awards can be necessary in certain circumstances, they limit the government's ability to leverage competitive pressures to secure the best possible pricing and terms. The lack of competition here means taxpayers did not benefit from potential cost savings that might have arisen from a bidding process.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as competitive market forces are absent. This contract's value of over $52 million underscores the importance of ensuring that sole-source justifications are rigorous and that pricing is independently validated.

Public Impact

The Department of Defense benefits from advanced research and development capabilities. The contract supports innovation in physical, engineering, and life sciences, potentially leading to future technological advancements. The primary beneficiary is the U.S. military, through potential enhancements in defense technology. The contract likely supports a specialized workforce within Lockheed Martin, contributing to high-skill employment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee structure may lead to cost overruns if not tightly managed.
Sole-source award limits price discovery and potential savings.
Long contract duration increases the risk of scope creep and cost escalation.
Lack of transparency in R&D outcomes makes value assessment difficult.
Absence of small business participation limits broader economic impact.

Positive Signals

Lockheed Martin is a reputable contractor with extensive experience in defense R&D.
The contract addresses critical research needs for the Department of Defense.
The fixed fee component provides some cost certainty for the government.
The contract is managed by the Defense Contract Management Agency, indicating oversight.

Sector Analysis

The contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. This is a high-value, knowledge-intensive industry critical for national security and technological advancement. The U.S. government is a significant investor in R&D, with a substantial portion allocated to defense-related research. Comparable spending benchmarks are difficult to establish for highly specialized R&D, but the overall federal R&D budget runs into the hundreds of billions annually, with defense R&D being a major component.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Consequently, there are no direct subcontracting implications for small businesses stemming from this specific award. The absence of small business participation means that opportunities to leverage the innovation and agility of smaller firms within this R&D effort were not pursued through this contract mechanism. This could limit the broader economic impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract is provided by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The contract type (Cost Plus Fixed Fee) necessitates close monitoring of costs and progress to prevent overruns. Transparency regarding the specific research outcomes and their alignment with DoD objectives would be crucial for accountability. The Inspector General's office within the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse related to this contract.

Related Government Programs

Department of Defense Research and Development Programs
Advanced Technology Development Contracts
Aerospace and Defense Sector Spending
Lockheed Martin Corporation Contracts

Risk Flags

Sole-source award limits competition.
Cost-plus-fixed-fee contract type carries inherent cost escalation risk.
Long contract duration increases exposure to scope changes and cost growth.
Lack of detailed public information on R&D outcomes hinders value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $52.2 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 $52.2 million.

What is the period of performance?

Start: 2006-04-28. End: 2011-12-31.

What specific research and development activities were undertaken under this contract?

The data provided indicates the contract was for 'Research and Development in the Physical, Engineering, and Life Sciences' (NAICS 541710). However, the specific nature of the R&D activities is not detailed in the provided data. Typically, such contracts with Lockheed Martin for the Department of Defense could encompass a wide range of areas, including but not limited to advanced materials, propulsion systems, sensor technology, cyber capabilities, or biomedical research relevant to military applications. Without access to the contract's statement of work or technical reports, the precise R&D focus remains unspecified. Further inquiry would require accessing contract documentation beyond the basic award details.

How does the $52 million contract value compare to similar R&D efforts within the DoD?

Directly comparing the $52 million value to similar R&D efforts is challenging without more specific information on the contract's scope and objectives. The Department of Defense funds numerous R&D contracts annually, varying significantly in size and complexity. Contracts for basic research might be smaller, while those for advanced development of major weapon systems could be substantially larger. Lockheed Martin, as a major defense contractor, handles a wide portfolio of contracts. To benchmark this $52 million, one would need to identify contracts with similar NAICS codes (541710), similar contract types (CPFF), and similar developmental stages. However, given the duration and the sole-source nature, this represents a significant investment in a specific R&D area.

What are the key risks associated with a Cost Plus Fixed Fee (CPFF) contract for R&D?

The primary risk with a CPFF contract, especially for R&D, is the potential for cost overruns. While the 'fixed fee' provides a ceiling on the contractor's profit, the 'cost plus' element means the government reimburses the contractor for all allowable costs incurred. If the R&D effort proves more complex or time-consuming than initially estimated, the total cost to the government can escalate significantly. This structure can also reduce the contractor's incentive to control costs rigorously, as their profit margin is fixed regardless of the final cost. Effective oversight, detailed cost tracking, and robust negotiation of the fee are crucial to mitigate these risks.

What is the track record of Lockheed Martin in executing similar R&D contracts for the DoD?

Lockheed Martin has a long and extensive track record of executing complex R&D contracts for the Department of Defense across various domains, including aerospace, defense systems, and advanced technologies. As one of the largest defense contractors globally, the company possesses significant resources, technical expertise, and established processes for managing large-scale R&D programs. While specific performance metrics for individual contracts are often not public, Lockheed Martin is generally considered a capable contractor for high-priority defense research. However, like any large contractor, they have also faced scrutiny and challenges on specific programs regarding cost, schedule, and performance.

How has federal spending in the 'Research and Development in the Physical, Engineering, and Life Sciences' sector evolved over time?

Federal spending in the R&D sector, particularly within physical, engineering, and life sciences, has historically been substantial and subject to fluctuations based on national priorities, budget cycles, and geopolitical events. The Department of Defense is consistently one of the largest federal funders of R&D. While specific year-over-year trends require detailed budget analysis, overall federal R&D investment tends to increase during periods of perceived national security threats or technological competition. Conversely, budget constraints or shifts in priorities can lead to reductions. The sustained investment in this sector reflects its critical importance for maintaining technological superiority and addressing complex challenges.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 9500 GODWIN 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