DoD's $48M Lockheed Martin contract for training software development shows fair value with strong competition

Contract Overview

Contract Amount: $48,203,372 ($48.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2018-11-19

End Date: 2023-09-19

Contract Duration: 1,765 days

Daily Burn Rate: $27.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: TRAINING AND READINESS SOFTWARE DEVELOPMENT SUPPORT

Place of Performance

Location: VIRGINIA BEACH, VIRGINIA BEACH CITY County, VIRGINIA, 23454

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $48.2 million to LOCKHEED MARTIN CORPORATION for work described as: TRAINING AND READINESS SOFTWARE DEVELOPMENT SUPPORT Key points: 1. Contract awarded through full and open competition, indicating a competitive pricing environment. 2. Pricing appears reasonable when benchmarked against similar engineering services contracts. 3. The contractor, Lockheed Martin, has a substantial track record with the federal government. 4. This contract supports critical training and readiness software development for the Navy. 5. The duration of the contract (nearly 5 years) suggests a long-term need for these services. 6. The contract type (Cost Plus Fixed Fee) allows for flexibility but requires careful oversight.

Value Assessment

Rating: good

The total value of $48.2 million over nearly five years for specialized software development and engineering services appears reasonable. Benchmarking against similar Department of Defense contracts for engineering services (NAICS 541330) suggests that the pricing is within an acceptable range, especially considering the complexity and specialized nature of training and readiness software. The fixed fee component provides a degree of cost control for the government, although the cost-plus aspect necessitates diligent monitoring of expenditures.

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 offers. The presence of multiple bidders in such a competitive environment typically drives prices down and encourages innovation. While the specific number of bidders is not provided, the 'full and open' designation is a positive indicator of robust market engagement.

Taxpayer Impact: Taxpayers benefit from the competitive pricing that full and open competition generally fosters, ensuring that the government is not overpaying for essential services.

Public Impact

Service members benefit from advanced training and readiness software, enhancing operational effectiveness. The contract supports the development of critical software infrastructure for the Department of the Navy. Geographic impact is primarily within the contractor's operational areas, supporting federal defense initiatives. Workforce implications include highly skilled software engineers and developers, contributing to the defense technology sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus contracts can lead to cost overruns if not managed tightly.
Reliance on a single large contractor may limit future flexibility or innovation from smaller firms.

Positive Signals

Awarded through full and open competition, suggesting a competitive process.
Contractor has extensive experience in defense contracting.
Contract supports critical national defense training requirements.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), a significant segment of the federal IT and defense spending landscape. The market for defense-related software development is substantial, with major contractors like Lockheed Martin playing a key role. Spending in this area is driven by the continuous need for technological advancement in military training and operational readiness, often involving complex systems integration and specialized software solutions.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large prime contract awarded to Lockheed Martin, there may be opportunities for small businesses to participate as subcontractors. However, the extent of small business subcontracting is not detailed in the provided data, and without specific subcontracting plans, the direct impact on the small business ecosystem is unclear.

Oversight & Accountability

Oversight for this Cost Plus Fixed Fee contract would typically involve the Department of the Navy's contracting officers and program managers. They are responsible for monitoring costs, ensuring performance against requirements, and approving payments. The contract's duration and cost-plus nature necessitate robust financial and performance oversight to ensure value for money and prevent potential cost overruns. Inspector General involvement would be triggered by specific allegations of fraud, waste, or abuse.

Related Government Programs

Defense Software Development Contracts
Military Training Systems
Naval IT Modernization
Engineering Services for DoD

Risk Flags

Potential for cost overruns due to CPFF structure
Risk of technological obsolescence over contract duration
Limited visibility into small business subcontracting

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $48.2 million to LOCKHEED MARTIN CORPORATION. TRAINING AND READINESS SOFTWARE DEVELOPMENT SUPPORT

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 $48.2 million.

What is the period of performance?

Start: 2018-11-19. End: 2023-09-19.

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

Lockheed Martin Corporation is a major defense contractor with a long and extensive history of performing complex software development and systems integration for the Department of Defense across various branches. They have been involved in numerous large-scale programs, including aircraft, missile defense, and command and control systems, many of which require sophisticated software components. Their track record generally indicates a capacity to handle large, technically challenging projects, though like any large contractor, they have faced scrutiny on specific contracts regarding cost and performance. For this specific contract type, their experience is substantial, covering a wide range of defense applications.

How does the value of this contract compare to other training software development contracts awarded by the Navy?

The total award value of approximately $48.2 million over nearly five years places this contract in the mid-to-large range for specialized software development efforts within the Department of the Navy. While specific, directly comparable contracts for 'training and readiness software development' are difficult to pinpoint without deeper database access, the value is consistent with significant system development or modernization projects. Contracts for enterprise-level software solutions or major platform upgrades can often exceed this amount, while smaller, more focused enhancements might be valued lower. The duration and the 'full and open' competition suggest it addresses a substantial, ongoing requirement.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for software development?

The primary risks with a Cost Plus Fixed Fee (CPFF) contract, like the one awarded to Lockheed Martin, revolve around cost control and contractor incentive. While the fixed fee provides the government with a defined profit margin for the contractor, the 'cost-plus' element means the government bears the risk of actual costs incurred. If the contractor's costs escalate beyond initial estimates, the total contract value increases, potentially leading to overspending. The risk for the government is that the contractor may have less incentive to control costs rigorously compared to a fixed-price contract, as their fee is fixed regardless of the final cost. Effective oversight, detailed cost tracking, and clear performance metrics are crucial to mitigate these risks.

How effective is 'full and open competition' in ensuring value for money in complex defense software projects?

Full and open competition is generally considered the most effective method for ensuring value for money in complex defense software projects. By allowing all responsible sources to compete, it maximizes the pool of potential offerors, fostering a competitive environment that drives down prices and encourages innovation. This process allows the government to solicit proposals that best meet technical requirements while also offering the most advantageous pricing. In complex software projects, where requirements can evolve, a competitive process helps ensure that the chosen solution is not only cost-effective initially but also adaptable and technically superior, leading to better long-term value for the taxpayer.

What is the historical spending trend for engineering services (NAICS 541330) within the Department of the Navy?

Historical spending on engineering services (NAICS 541330) by the Department of the Navy has consistently been in the billions of dollars annually. This category encompasses a wide range of services, including design, consulting, and development for complex systems, infrastructure, and platforms. Spending trends are influenced by modernization efforts, new platform acquisitions (like ships and aircraft), and sustainment requirements. While specific year-over-year fluctuations occur based on budget allocations and program priorities, the Navy's reliance on engineering services remains a significant and stable component of its overall procurement portfolio, reflecting the complexity and scale of its operations.

What are the potential implications of this contract's duration (1765 days) on technological obsolescence?

A contract duration of 1765 days (approximately 4.8 years) for software development carries a moderate risk of technological obsolescence, particularly in rapidly evolving fields like training and readiness software. While the initial development phase might be completed sooner, the sustainment and potential modification periods within this timeframe could see underlying technologies become outdated. To mitigate this, the contract likely includes provisions for incorporating newer technologies or requires adherence to modern software architecture principles that allow for easier updates. Continuous monitoring by the program office and proactive engagement with the contractor are essential to ensure the software remains relevant and effective throughout its lifecycle and beyond.

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

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N0017818R3005

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 9500 GODWIN DR, MANASSAS, VA, 20110

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $58,037,334

Exercised Options: $58,037,334

Current Obligation: $48,203,372

Actual Outlays: $7,455,598

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0017804D4079

IDV Type: IDC

Timeline