DoD's $37.8M sole-source training contract for Lockheed Martin raises value-for-money questions

Contract Overview

Contract Amount: $37,815,930 ($37.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2013-05-03

End Date: 2016-09-30

Contract Duration: 1,246 days

Daily Burn Rate: $30.4K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::CT::IGF SOUTH KOREA AND NORWAY FMS SOLE SOURCE TRAINING SERVICES

Place of Performance

Location: DAHLGREN, KING GEORGE County, VIRGINIA, 22448

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $37.8 million to LOCKHEED MARTIN CORPORATION for work described as: IGF::CT::IGF SOUTH KOREA AND NORWAY FMS SOLE SOURCE TRAINING SERVICES Key points: 1. The contract's sole-source nature limits competitive pressure, potentially impacting price efficiency. 2. Educational Support Services (NAICS 611710) is a broad category, making direct cost comparisons challenging. 3. The Cost Plus Fixed Fee (CPFF) contract type can incentivize cost overruns. 4. A duration of 1246 days suggests a significant, long-term training requirement. 5. The absence of a specific Product Service Code (PSC) hinders detailed analysis of services rendered. 6. The contract was awarded to a single, established prime contractor, Lockheed Martin.

Value Assessment

Rating: questionable

Benchmarking the value of this $37.8 million training contract is difficult due to the lack of publicly available comparable sole-source training contracts for similar defense systems. The CPFF structure, while common for complex R&D or services where costs are uncertain, carries inherent risks of cost escalation. Without competitive bidding, it's challenging to ascertain if the fixed fee adequately reflects a fair market price for the services provided. The absence of a specific PSC code further complicates a precise value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was explicitly listed as 'NOT AVAILABLE FOR COMPETITION,' indicating a sole-source award. This means the Department of the Navy did not solicit bids from multiple vendors. Such awards are typically justified when only one vendor possesses the necessary specialized knowledge, technology, or capability to fulfill the requirement. The lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Sole-source contracts bypass the cost-saving mechanisms inherent in a competitive marketplace.

Public Impact

The primary beneficiaries are likely military personnel requiring specialized training on defense systems. The services delivered are educational support, crucial for maintaining operational readiness. The geographic impact is not specified but likely relates to military bases or training facilities. Workforce implications include the need for skilled instructors and support staff, potentially from Lockheed Martin or its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
CPFF contract type can lead to cost overruns.
Lack of specific PSC code obscures service details.
Long contract duration (1246 days) increases exposure to cost changes.
No indication of small business participation or set-aside.

Positive Signals

Awarded to a major defense contractor with established expertise.
Addresses a specific training need for defense systems.
Contract duration suggests a sustained requirement for readiness.

Sector Analysis

The Educational Support Services sector (NAICS 611710) encompasses a wide range of training and educational services. Within the defense industry, such contracts are critical for ensuring personnel are proficient with complex military equipment and systems. Comparable spending benchmarks are difficult to establish without more specific service details, but large sole-source training contracts are not uncommon for highly specialized defense platforms where only the original equipment manufacturer possesses the requisite knowledge.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a sole-source award to a large prime contractor, Lockheed Martin, there is no explicit information regarding subcontracting opportunities for small businesses. Without a competitive solicitation, the government did not mandate small business participation goals. This limits the potential for small businesses to gain experience or revenue from this specific contract.

Oversight & Accountability

Oversight mechanisms for this contract would typically fall under the Department of the Navy's contracting and program management offices. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse. Transparency is limited by the sole-source nature and the lack of detailed public reporting on performance metrics or cost breakdowns. Accountability rests with the contracting officer and program managers to ensure the contractor meets the terms of the Cost Plus Fixed Fee agreement.

Related Government Programs

Department of Defense Training Programs
Lockheed Martin FMS Contracts
Foreign Military Sales Training
Naval Education and Training Command Services

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competition
Potential for cost overruns
Limited transparency on specific services

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.8 million to LOCKHEED MARTIN CORPORATION. IGF::CT::IGF SOUTH KOREA AND NORWAY FMS SOLE SOURCE TRAINING SERVICES

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 $37.8 million.

What is the period of performance?

Start: 2013-05-03. End: 2016-09-30.

What specific training services were provided under this contract, and for which defense systems?

The provided data indicates the contract falls under NAICS code 611710 (Educational Support Services) and was awarded to Lockheed Martin Corporation. However, the specific defense systems or platforms for which training was provided are not detailed in the abbreviated data. The contract's description mentions 'TRAINING SERVICES' and its sole-source nature suggests a highly specialized requirement. Without access to the full contract details or performance reports, it is impossible to ascertain the exact nature of the training, such as pilot training, maintenance training, or operational procedures for a particular aircraft, vessel, or weapon system. The absence of a specific Product Service Code (PSC) further limits the ability to identify the precise nature of the services.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other training contracts of similar scope and duration?

The Cost Plus Fixed Fee (CPFF) structure is often used for services where the scope of work is well-defined but the costs are uncertain, or for research and development. For a contract valued at $37.8 million over 1246 days (approximately 3.4 years), a CPFF structure implies the government agrees to pay the contractor's actual costs plus a predetermined fixed fee. While this can incentivize efficiency to keep costs down (as the fee is fixed), it also carries the risk of cost overruns if the estimated costs are inaccurate. Benchmarking this against other training contracts is challenging without knowing the specific training content, complexity, and the level of competition. Sole-source contracts, like this one, often use different pricing structures than competitively bid ones, making direct comparisons difficult. Typically, competitive bids would drive down the fee and potentially the overall cost.

What is the justification for this contract being sole-source, and were alternative solutions considered?

The data explicitly states the contract was 'NOT AVAILABLE FOR COMPETITION,' signifying a sole-source award. The typical justifications for sole-source contracts include unique capabilities, specialized knowledge, or the urgency of the requirement where only one source can reasonably fulfill it. For a major defense contractor like Lockheed Martin, this often relates to proprietary technology, unique training methodologies developed for their specific platforms, or essential follow-on training for systems they exclusively produce. Without the full justification documentation (e.g., a Justification and Approval document), it's impossible to detail the specific reasons. However, the government is generally required to explore alternatives; the fact it was sole-sourced implies that no viable alternatives were found or deemed suitable during the pre-award phase.

What are the potential risks associated with a sole-source, CPFF contract for training services?

A sole-source, Cost Plus Fixed Fee (CPFF) contract for training services presents several risks. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated costs and reduced incentive for the contractor to be highly efficient. Taxpayers may not receive the best possible value. Secondly, the CPFF structure, while covering actual costs, can incentivize the contractor to incur higher costs to increase the base upon which the fixed fee is calculated, or simply to ensure all costs are covered. This can lead to budget overruns if cost estimates are not rigorously managed. Thirdly, without competition, there's less external validation of the training's effectiveness or the appropriateness of the pricing. Finally, the long duration (1246 days) increases the risk of cost escalation due to inflation or changes in requirements over time, which may not be fully captured by the fixed fee.

How does this contract's spending compare to overall federal spending on educational support services or defense training?

The $37.8 million awarded to Lockheed Martin for training services represents a specific expenditure within the broader category of Educational Support Services (NAICS 611710) and defense training. Federal spending on defense training is substantial, often running into billions of dollars annually across all branches of the military. This particular contract, while significant in absolute terms, is likely a small fraction of the total defense training budget. Comparing it directly to overall federal spending on NAICS 611710 is difficult without knowing the total annual spend for that category across all agencies. However, for a sole-source contract focused on specialized training for a specific defense contractor's systems, its value is best understood in the context of similar specialized training requirements rather than the entire educational support services market.

Industry Classification

NAICS: Educational Services › Educational Support Services › Educational Support Services

Product/Service Code: EDUCATION AND TRAINING › EDUCATION AND TRAINING SERVICES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0017811R2010

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 199 BORTON LANDING RD, MOORESTOWN, NJ, 08057

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

Financial Breakdown

Contract Ceiling: $40,081,467

Exercised Options: $40,081,467

Current Obligation: $37,815,930

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline