DoD's $21.6M R&D contract with Lockheed Martin for EUVST Phase B raises questions on value and competition

Contract Overview

Contract Amount: $21,584,383 ($21.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2021-12-15

End Date: 2026-03-31

Contract Duration: 1,567 days

Daily Burn Rate: $13.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: EO14042 EUVST - PHASE B

Place of Performance

Location: PALO ALTO, SANTA CLARA County, CALIFORNIA, 94304

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $21.6 million to LOCKHEED MARTIN CORPORATION for work described as: EO14042 EUVST - PHASE B Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, which can incentivize cost overruns. 2. Sole-source award limits opportunities for competitive pricing and innovation. 3. Long duration of over 4 years suggests a complex, long-term research effort. 4. The contract is for Research and Development, a sector with inherent uncertainties. 5. Focus on physical, engineering, and life sciences research indicates a specialized technical area. 6. The contract's value is significant within the R&D sector for this specific research area.

Value Assessment

Rating: questionable

The contract's value is difficult to assess without detailed cost breakdowns and performance metrics. Awarded on a cost-plus-fixed-fee basis, there is a risk of costs exceeding initial estimates. Benchmarking against similar R&D contracts for advanced systems is challenging due to the specialized nature of the work. The fixed fee component provides some cost control, but the overall value proposition hinges on the successful development of the EUVST system.

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 limits the government's ability to solicit bids from multiple vendors and potentially secure more favorable pricing or innovative solutions. The justification for a sole-source award would typically involve unique capabilities or proprietary technology held by the contractor.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as competition is absent, potentially reducing the government's negotiating power.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Department of the Navy, in its pursuit of advanced technology. The contract aims to deliver research and development services for the EUVST system, likely enhancing military capabilities. The geographic impact is primarily within California, where Lockheed Martin is headquartered and likely where the R&D will take place. Workforce implications include employment for highly skilled engineers, scientists, and technicians involved in advanced research and development.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus-fixed-fee structure may not provide sufficient incentive for cost efficiency.
Long contract duration increases exposure to changing technological landscapes and requirements.
Lack of transparency in sole-source justifications can obscure potential alternatives.
Potential for scope creep in R&D projects without rigorous oversight.

Positive Signals

Award to a large, established defense contractor like Lockheed Martin suggests access to significant technical expertise.
The contract is for research and development, which is crucial for maintaining technological superiority.
Fixed fee component provides a defined profit margin, offering some predictability for the contractor.
The specific nature of the EUVST system may indeed require specialized capabilities only available from this contractor.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. This sector is characterized by high innovation, long development cycles, and significant government investment, particularly in defense applications. Comparable spending benchmarks are difficult to establish due to the unique nature of advanced defense systems like the EUVST, but R&D spending by the DoD is substantial, often involving large, sole-source contracts for critical technologies.

Small Business Impact

This contract does not appear to involve a small business set-aside, as it was awarded to Lockheed Martin Corporation, a large prime contractor. There is no explicit information regarding subcontracting plans for small businesses within the provided data. The focus on advanced R&D may limit opportunities for small businesses unless they are specialized subcontractors to the prime.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy contracting officers and program managers. Accountability measures would be tied to the achievement of R&D milestones outlined in the contract. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Advanced Weapons Systems Development
Naval Research and Development Programs
Aerospace Engineering Services
Defense Technology Innovation
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Sole-source award may limit competitive pricing.
Cost-plus-fixed-fee structure can incentivize cost overruns.
Long contract duration increases risk of obsolescence and requirement changes.
Lack of detailed public information on R&D objectives and performance metrics.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $21.6 million to LOCKHEED MARTIN CORPORATION. EO14042 EUVST - PHASE B

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 $21.6 million.

What is the period of performance?

Start: 2021-12-15. End: 2026-03-31.

What is the specific technological objective of the EUVST system being developed under this contract?

The provided data does not specify the exact technological objective of the EUVST (EUVST) system. However, given the contractor (Lockheed Martin) and the awarding agency (Department of the Navy), it is highly probable that the EUVST relates to advanced naval capabilities, potentially involving unmanned systems, electronic warfare, or sensor technology. The classification 'Research and Development in the Physical, Engineering, and Life Sciences' suggests a focus on fundamental scientific principles applied to engineering challenges. Further details would likely be found in classified program documents or unclassified program descriptions released by the Department of Defense.

What is the justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was awarded as 'NOT COMPETED,' implying a sole-source justification. Common reasons for sole-source awards in defense R&D include the unique capability or proprietary technology held by a single contractor, the need for compatibility with existing systems, or urgent and compelling requirements where competition is not feasible. Without specific documentation from the Department of the Navy, the precise justification remains unknown. However, for a complex system like the EUVST, it's plausible that Lockheed Martin possesses specialized knowledge, intellectual property, or manufacturing capabilities essential for its development, making competition impractical or detrimental to program timelines.

How does the cost-plus-fixed-fee (CPFF) contract structure compare to other R&D contract types in terms of risk and incentive for efficiency?

The Cost-Plus-Fixed-Fee (CPFF) structure is common for R&D contracts where the scope of work is not fully defined at the outset, carrying inherent uncertainty. In a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This structure shifts much of the cost risk to the government, as the contractor is incentivized to incur costs to perform the work, but their profit is fixed regardless of the total cost. While the fixed fee provides some incentive for the contractor to manage costs to maximize their return on investment (as a higher cost doesn't increase their fee), it generally offers less incentive for cost efficiency compared to fixed-price contracts. Other R&D contract types, like Firm-Fixed-Price (FFP) or Cost-Plus-Incentive-Fee (CPIF), might offer different risk/reward profiles and incentives for efficiency.

What is the historical spending pattern for similar R&D contracts within the Department of the Navy or for advanced systems?

Historical spending on similar R&D contracts within the Department of the Navy for advanced systems can be substantial, often running into tens or hundreds of millions of dollars, especially for major platform developments or cutting-edge technologies. Contracts for research and development in areas like aerospace, naval warfare, and electronic systems frequently utilize cost-reimbursement or cost-plus structures due to the inherent uncertainties. Sole-source awards are also not uncommon for highly specialized or classified programs where only one contractor possesses the requisite expertise or technology. Analyzing historical spending requires access to contract databases and specific program information, but it's typical for the Navy to invest heavily in R&D to maintain technological superiority, with individual contracts varying widely in value based on project complexity and duration.

What are the potential performance risks associated with a long-duration R&D contract like this?

Long-duration R&D contracts, such as this 1567-day (approximately 4.3 years) award, carry several performance risks. Firstly, technological obsolescence is a significant concern; the technology landscape can change rapidly over several years, potentially rendering the developed system outdated before or shortly after deployment. Secondly, requirements creep is common in R&D, where the objectives or specifications may evolve as the project progresses, leading to scope changes and potential delays. Thirdly, maintaining contractor focus and motivation over an extended period can be challenging. Finally, the government's ability to effectively oversee and manage a long-term R&D effort requires sustained expertise and resources to ensure milestones are met and the project stays on track and within budget.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)

Product/Service Code: RESEARCH AND DEVELOPMENT › Space R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0017321RWR05

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 3251 HANOVER ST, PALO ALTO, CA, 94304

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $24,022,461

Exercised Options: $24,022,461

Current Obligation: $21,584,383

Subaward Activity

Number of Subawards: 29

Total Subaward Amount: $4,503,534

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline