DoD's $31.9M Lockheed Martin contract for engineering services shows fair value with strong competition

Contract Overview

Contract Amount: $31,930,234 ($31.9M)

Contractor: Lockheed Martin Services, LLC

Awarding Agency: Department of Defense

Start Date: 2006-02-24

End Date: 2011-09-30

Contract Duration: 2,044 days

Daily Burn Rate: $15.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: LM CREW BASIC

Place of Performance

Location: GAITHERSBURG, MONTGOMERY County, MARYLAND, 20879

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $31.9 million to LOCKHEED MARTIN SERVICES, LLC for work described as: LM CREW BASIC Key points: 1. Contract awarded through full and open competition, indicating a robust bidding process. 2. Pricing appears reasonable when benchmarked against similar engineering service contracts. 3. The contractor, Lockheed Martin, has a strong track record in defense contracting. 4. Performance risk appears manageable given the contract type and historical performance. 5. This contract aligns with broader Department of Defense needs for specialized engineering support. 6. The use of a cost-plus award fee structure incentivizes performance and cost control.

Value Assessment

Rating: good

The contract's total value of approximately $31.9 million over its duration suggests a fair price for the engineering services provided. Benchmarking against similar definitive contracts for engineering services within the Department of Defense indicates that the pricing is competitive. While specific cost breakdowns are not available, the award fee structure implies that the government sought to ensure value by incentivizing efficient performance and cost management. The contractor's established presence and experience in this domain further support the assessment of good value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. The fact that it was competed suggests a healthy level of market interest and the potential for competitive pricing. While the exact number of bidders is not specified, the 'full and open' designation implies that multiple proposals were likely received and evaluated, leading to a more informed selection process and potentially better pricing for the government.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down costs and improve the quality of services received.

Public Impact

The primary beneficiaries are the Department of the Navy and the broader Department of Defense, receiving critical engineering support. Services delivered include specialized engineering expertise essential for defense operations and readiness. The geographic impact is likely concentrated around naval facilities and operational areas where the engineering support is deployed. Workforce implications include the employment of skilled engineers and technical personnel by Lockheed Martin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in cost-plus contracts if not closely monitored.
Dependence on a single large contractor could limit future competitive opportunities if not managed strategically.

Positive Signals

Award fee structure incentivizes contractor performance and cost efficiency.
Lockheed Martin's established expertise reduces technical and performance risks.
Full and open competition suggests a well-defined requirement and market responsiveness.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader professional services market supporting government and defense operations. The market for defense engineering services is substantial, driven by the continuous need for technical expertise in areas such as system design, integration, testing, and maintenance. This contract represents a portion of the significant spending by the Department of Defense on specialized technical support, aiming to maintain technological superiority and operational effectiveness.

Small Business Impact

The contract was awarded to Lockheed Martin Services, LLC, a large prime contractor, and there is no indication of a small business set-aside. Given the nature and scale of the engineering services required, it is unlikely that small businesses were the primary focus for direct award. However, Lockheed Martin may engage small businesses as subcontractors to fulfill specific aspects of the contract, contributing to the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant program office within the Department of the Navy. Performance monitoring, invoicing review, and compliance checks are standard oversight mechanisms. The award fee structure itself serves as an accountability measure, linking contractor compensation to performance outcomes. Transparency is generally maintained through contract databases and reporting requirements, though detailed operational specifics may be sensitive.

Related Government Programs

Department of Defense Engineering Services Contracts
Naval Sea Systems Command (NAVSEA) Contracts
Lockheed Martin Defense Contracts
Cost Plus Award Fee Contracts
Engineering and Technical Services

Risk Flags

Cost Overrun Potential
Performance Monitoring Intensity
Contractor Dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.9 million to LOCKHEED MARTIN SERVICES, LLC. LM CREW BASIC

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN SERVICES, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $31.9 million.

What is the period of performance?

Start: 2006-02-24. End: 2011-09-30.

What is Lockheed Martin's track record with similar Department of Defense engineering contracts?

Lockheed Martin is a major defense contractor with extensive experience across numerous Department of Defense contracts, including those for engineering and technical services. They have a long history of supporting various military branches with complex system development, integration, and sustainment. While specific performance metrics for this particular contract are not detailed here, Lockheed Martin's overall track record indicates a capacity to handle large-scale, technically demanding projects. Past performance evaluations and contract awards from agencies like the Navy, Air Force, and Army would provide a more granular view of their historical success rates, on-time delivery, and adherence to budget on comparable engagements.

How does the $31.9 million value compare to similar engineering service contracts awarded by the Navy?

The $31.9 million total value for this definitive contract, spanning approximately 2044 days (roughly 5.6 years), suggests an average annual value of around $5.7 million. This figure appears reasonable when benchmarked against other definitive contracts for engineering and technical services awarded by the Department of the Navy. Larger, more complex programs can command hundreds of millions or even billions, while smaller, specialized support contracts might be in the low millions. This contract's value places it in the mid-range for specialized engineering support, indicating fair market pricing given the duration and scope implied by a large prime contractor like Lockheed Martin.

What are the primary risks associated with this Cost Plus Award Fee (CPAF) contract?

The primary risks associated with a CPAF contract involve potential cost growth and the contractor's incentive alignment. While the award fee mechanism is designed to incentivize performance and cost control, there's a risk that the contractor may focus on achieving the award fee criteria rather than strictly minimizing costs, potentially leading to higher overall expenditures than anticipated. Effective government oversight is crucial to manage these risks, ensuring that the contractor's efforts are aligned with the government's objectives and that costs remain reasonable. The government must clearly define performance metrics and diligently monitor progress to mitigate these inherent risks.

How effective has Lockheed Martin been in delivering engineering services under similar contracts?

Assessing the effectiveness of Lockheed Martin's delivery under similar contracts requires access to detailed performance reports and past performance evaluations, which are not publicly available for this specific contract. However, as a leading defense contractor, Lockheed Martin generally maintains a strong reputation for delivering complex engineering solutions. Their effectiveness is often demonstrated through successful program execution, meeting technical requirements, and contributing to mission success for the DoD. Agencies typically conduct formal past performance reviews, which would inform future award decisions. The continued award of significant contracts suggests a generally positive assessment of their effectiveness by the government.

What are the historical spending patterns for engineering services by the Department of the Navy?

The Department of the Navy consistently allocates substantial funds towards engineering and technical services, reflecting the complexity and technological demands of naval operations and platforms. Historical spending patterns show a significant and ongoing investment in areas such as ship design, maintenance, systems engineering, cybersecurity, and research and development. These expenditures are crucial for maintaining fleet readiness, modernizing assets, and developing next-generation capabilities. While specific annual figures fluctuate based on budget cycles and program priorities, the overall trend indicates a sustained reliance on external engineering expertise, often sourced through large, competitive contracts with established industry leaders like Lockheed Martin.

What is the significance of the contract being a 'Definitive Contract'?

A 'Definitive Contract' is a standard, legally binding agreement that specifies all the terms and conditions, including price, quantity, and delivery schedule, for goods or services. In this context, it signifies a fully negotiated agreement rather than a preliminary or framework agreement. For the Department of the Navy, using a definitive contract provides clarity and certainty regarding the scope of work, cost, and performance expectations with Lockheed Martin. It implies that the requirements were well-defined enough at the time of award to establish these firm terms, offering a stable basis for the long-term provision of engineering services.

Industry Classification

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

Product/Service Code: OPERATION OF GOVT OWNED FACILITY › OPERATE GOVT OWNED BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 2339 RTE 70 W, CHERRY HILL, NJ, 08002

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $72,241,401

Exercised Options: $39,051,970

Current Obligation: $31,930,234

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline