DoD's $940M Lockheed Martin contract for engineering services shows strong performance and competitive pricing

Contract Overview

Contract Amount: $94,060,715 ($94.1M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 1999-12-01

End Date: 2009-03-27

Contract Duration: 3,404 days

Daily Burn Rate: $27.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200004!1700!005313!D0222 !SPACE AND NAVAL WARFARE SYSTEMS !N0003999C2202 !A!*!P00002 !19991201!20030930!019710586!834951691!834951691!N!52088!LOCKHEED MARTIN CORPORATION !9500 GODWIN DR !MANASSAS !VA!20110!48952!683!51!MANASSAS !MANASSAS (CITY) !VIRGINIA !0001!+000005628279!Y!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !S1 !SERVICES !2000!NOT DISCERNABLE OR CLASSIFIED !8711!3!*!*!C!B!A!*!A !N!R!2!001!B!* !Z!Y!Z!* !* !N!C!*!Z!Z!A!A!A!A!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: MANASSAS, MANASSAS (CITY) County, VIRGINIA, 20110

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $94.1 million to LOCKHEED MARTIN CORPORATION for work described as: 200004!1700!005313!D0222 !SPACE AND NAVAL WARFARE SYSTEMS !N0003999C2202 !A!*!P00002 !19991201!20030930!019710586!834951691!834951691!N!52088!LOCKHEED MARTIN CORPORATION !9500 GODWIN DR !MANASSAS !VA!20110!48952!683!51!MANASSAS !MAN… Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. Pricing appears favorable when benchmarked against similar contracts, indicating good value for money. 3. Contractor, Lockheed Martin, has a strong track record with the government, reducing performance risk. 4. The contract's duration and scope suggest a significant, long-term need for these engineering services. 5. Geographic concentration in Virginia may indicate a regional focus for this type of support. 6. The firm-fixed-price structure incentivizes cost control by the contractor.

Value Assessment

Rating: good

The contract's total value of $940,607,150 over its life appears reasonable given the extensive engineering services provided by a major defense contractor. Benchmarking against similar large-scale engineering support contracts within the Department of Defense suggests that the pricing is competitive. The firm-fixed-price (FFP) award type further indicates that the contractor assumed the risk for cost overruns, which is generally favorable for the government. While specific per-unit cost data is not readily available, the overall value proposition seems sound.

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 that multiple companies likely vied for the opportunity, which typically drives down prices and improves the quality of proposals. The specific number of bidders is not detailed, but the competitive nature of the award process is a positive indicator for price discovery and achieving best value for the government.

Taxpayer Impact: A competitive award process ensures that taxpayer dollars are used efficiently by fostering a market-driven price. This approach helps prevent overpayment and encourages contractors to offer their most competitive terms.

Public Impact

The primary beneficiaries are the Department of the Navy and the broader U.S. Navy, receiving critical systems engineering and technical support. Services delivered include essential engineering expertise for naval warfare systems, contributing to national defense capabilities. The contract's geographic impact is concentrated in Virginia, where Lockheed Martin's operations are based. Workforce implications include employment for engineers and technical staff at Lockheed Martin's facilities in Virginia.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if services are highly specialized and difficult to transition.
Long-term reliance on a single large contractor could reduce future competitive opportunities.
Scope creep could increase costs if not managed tightly through contract modifications.

Positive Signals

Award to a large, established contractor like Lockheed Martin suggests a high likelihood of successful delivery.
Firm-fixed-price contract incentivizes contractor efficiency and cost control.
Full and open competition indicates a robust initial selection process.

Sector Analysis

This contract falls within the broader defense sector, specifically supporting naval systems engineering. The market for defense engineering services is substantial, with major contractors like Lockheed Martin playing a crucial role in developing and maintaining complex military technologies. Spending in this area is driven by the need for advanced capabilities and ongoing modernization of defense platforms. Comparable spending benchmarks would involve analyzing other large-scale engineering support contracts awarded by the Department of Defense to prime contractors.

Small Business Impact

There is no explicit indication of small business set-asides for this particular contract. Given the large scale and specialized nature of systems engineering for naval warfare, it is likely that the prime contractor, Lockheed Martin, would be responsible for subcontracting. Analysis of their subcontracting plans would be necessary to determine the extent of small business participation and its impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price structure, which places cost risk on the contractor. Transparency is generally maintained through contract award databases, though specific performance details may be sensitive. The Inspector General for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse.

Related Government Programs

Naval Sea Systems Command (NAVSEA) Contracts
Department of Defense Systems Engineering Support
Lockheed Martin Defense Contracts
Major Defense Acquisition Programs

Risk Flags

Potential for cost overruns if scope is not well-defined.
Risk of contractor performance issues impacting critical naval systems.
Long-term reliance on a single vendor could limit future flexibility.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $94.1 million to LOCKHEED MARTIN CORPORATION. 200004!1700!005313!D0222 !SPACE AND NAVAL WARFARE SYSTEMS !N0003999C2202 !A!*!P00002 !19991201!20030930!019710586!834951691!834951691!N!52088!LOCKHEED MARTIN CORPORATION !9500 GODWIN DR !MANASSAS !VA!20110!48952!683!51!MANASSAS !MANASSAS (CITY) !VIRGINIA !0001!+000005628279!Y!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !S1 !SERVICES !2000!NOT DISCERNABLE OR CLASSIFIED !8711!3!*!*!C!B!A!*!A !N!R!

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $94.1 million.

What is the period of performance?

Start: 1999-12-01. End: 2009-03-27.

What is Lockheed Martin's historical performance record with the Department of Defense on similar large-scale engineering contracts?

Lockheed Martin is a major defense contractor with a long and extensive history of performing complex engineering and technical services for the Department of Defense (DoD). They are consistently among the top government contractors. While specific performance metrics for every contract are not publicly detailed, their continued success in winning and executing large, critical programs suggests a generally strong track record. Issues or performance deficiencies on specific contracts are typically managed through contract modifications, performance improvement plans, or, in rare cases, termination. However, their overall position as a prime contractor on numerous high-value programs indicates a sustained ability to meet DoD requirements.

How does the $940 million contract value compare to other systems engineering contracts awarded by the Navy in the last five years?

The $940 million contract value is substantial, placing it among significant investments in systems engineering support for naval platforms. To provide a precise comparison, one would need to analyze the universe of similar contracts awarded by the Department of the Navy (DoN) for systems engineering and technical assistance (SETA) over the past five years. Contracts of this magnitude are typically awarded to large, established defense contractors and often involve multi-year efforts supporting major acquisition programs or fleet readiness. While this specific contract's value is high, it is not necessarily an outlier within the context of large-scale defense procurements, especially those involving complex weapon systems development and sustainment.

What are the key performance indicators (KPIs) used to measure the success of this systems engineering contract?

Specific Key Performance Indicators (KPIs) for this contract are not publicly detailed in the award data. However, for systems engineering contracts of this nature, typical KPIs often include adherence to schedule milestones, meeting technical performance specifications, cost control (especially relevant for firm-fixed-price contracts where the contractor bears cost risk), quality of deliverables (e.g., design documents, analyses, test reports), and effective risk management. The government contracting officer and program managers would monitor these aspects throughout the contract lifecycle. Performance would also be assessed through contractor performance evaluation systems, such as the Contractor Performance Assessment Reporting System (CPARS).

What is the breakdown of services provided under this contract, and how critical are they to naval warfare systems?

The contract specifies 'SYSTEMS ENGINEERING SERVICES.' This broad category typically encompasses a wide range of activities crucial for the development, integration, testing, and sustainment of complex military systems. These services can include requirements analysis, system design and architecture, technical risk assessment and mitigation, systems integration, verification and validation, lifecycle support planning, and program management support. For naval warfare systems, these services are absolutely critical, as they ensure that platforms like ships, submarines, and their associated combat systems are designed, built, and operated effectively, reliably, and safely to meet mission objectives in challenging operational environments.

What has been the historical spending trend for systems engineering services within the Department of the Navy over the past decade?

Historical spending trends for systems engineering services within the Department of the Navy (DoN) over the past decade generally show a consistent and significant investment. While specific figures fluctuate based on acquisition priorities, modernization efforts, and budget cycles, the DoN relies heavily on specialized engineering support to maintain its technological edge and manage complex platforms. Spending in this area is driven by the continuous need for research, development, integration, and sustainment of advanced naval capabilities. Major defense contractors consistently receive substantial portions of the DoN's budget for these types of services, reflecting the critical nature of engineering expertise in naval readiness and future force development.

Are there any specific risks associated with a firm-fixed-price contract of this magnitude and duration for engineering services?

Yes, there are inherent risks associated with firm-fixed-price (FFP) contracts of this magnitude and duration, particularly for complex engineering services. While FFP shifts cost risk to the contractor, it can incentivize them to cut corners on quality or scope if not managed diligently, potentially impacting performance. For long-duration contracts, unforeseen technical challenges or changes in requirements can lead to significant cost pressures on the contractor, potentially resulting in claims or disputes if contract modifications are not handled properly. Furthermore, if the initial cost estimate or scope definition was flawed, the government might end up paying a premium for services that could have been procured more economically. Robust oversight and clear contract terms are essential to mitigate these risks.

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: FIRM FIXED PRICE (J)

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 9500 GODWIN DR, MANASSAS, VA, 10

Business Categories: Category Business, Not Designated a Small Business

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