DoD's $21.2M R&D contract for Satchmo Phase I awarded to Lockheed Martin Corporation

Contract Overview

Contract Amount: $21,242,911 ($21.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2022-12-06

End Date: 2026-10-01

Contract Duration: 1,395 days

Daily Burn Rate: $15.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: PHASE I - SATCHMO

Place of Performance

Location: NORTH CHARLESTON, CHARLESTON County, SOUTH CAROLINA, 29419

State: South Carolina Government Spending

Plain-Language Summary

Department of Defense obligated $21.2 million to LOCKHEED MARTIN CORPORATION for work described as: PHASE I - SATCHMO Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Significant investment in research and development within the physical, engineering, and life sciences sector. 3. Long contract duration of 1395 days suggests a complex, multi-year project. 4. Cost-plus-fixed-fee structure may incentivize cost overruns. 5. Contractor is a major defense industry player with extensive experience. 6. Focus on R&D indicates potential for future technological advancements. 7. Awarded by the Department of the Navy, part of the broader Department of Defense. 8. Project located in South Carolina, potentially impacting the local economy.

Value Assessment

Rating: questionable

The contract's value of $21.2 million for a Phase I R&D effort is substantial. Without comparable sole-source R&D contracts for similar technologies, it is difficult to benchmark the value for money. The cost-plus-fixed-fee (CPFF) pricing structure, while common for R&D where costs are uncertain, carries inherent risks of cost escalation. The absence of competitive bidding means there was no market pressure to drive down costs, raising questions about whether the government secured the best possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Lockheed Martin Corporation, was solicited. This approach is typically justified when only one responsible source is available or when there is a compelling urgency. The lack of competition means that the government did not benefit from a range of proposals and price points that would typically emerge from a full and open competition. This significantly limits the government's ability to ensure it is receiving the most cost-effective solution.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without competing bids, there is less assurance that the negotiated price reflects the lowest possible cost for the research and development services required.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Department of the Navy, which will receive the results of the research and development. The contract aims to advance research in physical, engineering, and life sciences, potentially leading to new technologies or capabilities. The geographic impact is centered in South Carolina, where the contractor is located, potentially creating or sustaining high-skilled jobs in the region. The workforce implications include the employment of scientists, engineers, and support staff by Lockheed Martin to execute the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Cost-plus-fixed-fee contract type can incentivize higher spending if not closely managed.
Long contract duration increases the risk of scope creep and cost overruns over time.
Lack of transparency inherent in sole-source procurements makes independent value assessment challenging.

Positive Signals

Award to a major defense contractor like Lockheed Martin suggests access to significant expertise and resources.
Focus on R&D aligns with strategic goals for technological advancement within the DoD.
Contract is for a specific research phase (Phase I), implying a structured approach to development.
The contract is for research and development, which is crucial for maintaining a technological edge.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically focusing on physical, engineering, and life sciences (NAICS 541715). This is a critical area for defense innovation, aiming to develop next-generation technologies. The market for defense R&D is dominated by large aerospace and defense contractors. Spending in this category is often characterized by long-term investments and high technical risk, with contracts frequently awarded on a sole-source or limited-competition basis due to specialized capabilities required.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the contractor, Lockheed Martin Corporation, is a large aerospace and defense company, making it unlikely that significant subcontracting opportunities will be directed towards small businesses under this specific award, unless explicitly mandated or identified as a strategic need. The absence of small business participation could limit the broader economic impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract will primarily be conducted by the Department of the Navy's contracting and program management offices. As a cost-plus-fixed-fee contract, rigorous financial oversight and auditing will be crucial to monitor expenditures and ensure compliance with the fixed fee. Transparency may be limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Department of Defense Research and Development Programs
Navy Science and Technology Initiatives
Advanced Technology Development Contracts
Lockheed Martin Corporation Contracts
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Long contract duration
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $21.2 million to LOCKHEED MARTIN CORPORATION. PHASE I - SATCHMO

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 $21.2 million.

What is the period of performance?

Start: 2022-12-06. End: 2026-10-01.

What is Lockheed Martin Corporation's track record with similar sole-source R&D contracts awarded by the Department of the Navy?

Lockheed Martin Corporation, as a major defense contractor, has a long history of receiving numerous contracts from the Department of the Navy, many of which are sole-source due to the specialized nature of the work and the company's unique capabilities. Analyzing their past performance on similar sole-source R&D efforts would involve reviewing contract histories for cost performance, adherence to schedule, and the successful delivery of research outcomes. While specific data on all sole-source R&D contracts is not publicly detailed, their overall performance ratings and past contract awards suggest a capacity to execute complex research projects. However, the absence of competition in sole-source awards means that direct comparisons of value-for-money against alternative providers are inherently limited.

How does the $21.2 million cost compare to other Phase I R&D contracts in the physical, engineering, and life sciences sector?

Benchmarking the $21.2 million cost for this Phase I R&D contract against similar efforts is challenging without access to detailed, comparable contract data. Phase I R&D contracts can vary significantly in scope, duration, and complexity, influencing their total cost. Contracts in the physical, engineering, and life sciences sector, particularly those for defense applications, often involve substantial investment due to the cutting-edge nature of the research. While $21.2 million is a significant sum, its reasonableness is difficult to assess without knowing the specific technical objectives, the required personnel expertise, and the projected timeline. The sole-source nature of this award further complicates direct cost comparisons, as competitive bidding typically drives down prices.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee R&D contract of this magnitude?

The primary risks associated with this contract are multifaceted. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to a higher price than could be achieved through open competition. Taxpayers may not be receiving the best value for their investment. Secondly, the cost-plus-fixed-fee (CPFF) structure, while common for R&D where costs are uncertain, can incentivize the contractor to incur higher costs to increase the absolute profit margin, as the fee is a fixed percentage of the total allowable costs. This necessitates robust government oversight to manage costs effectively. Thirdly, the long duration (1395 days) increases the risk of scope creep, technological obsolescence, or unforeseen challenges that could further inflate costs or delay deliverables. Finally, the lack of transparency inherent in sole-source awards makes it harder for external parties to scrutinize the contract's value and effectiveness.

What are the potential long-term implications for the Department of the Navy if this R&D effort is successful?

If this R&D effort is successful, the Department of the Navy could gain significant technological advantages. The outcomes could lead to the development of new capabilities, improved operational effectiveness, or enhanced national security. For example, advancements in physical, engineering, or life sciences could translate into superior equipment, more efficient processes, or novel solutions to existing challenges. Success could also position the Navy at the forefront of innovation in its specific area of research, potentially deterring adversaries and strengthening its strategic posture. Furthermore, successful R&D can pave the way for future development phases and subsequent procurement of advanced systems, ensuring a continued technological edge.

How does the historical spending on NAICS code 541715 by the Department of the Navy compare to this specific contract award?

The Department of the Navy, as part of the larger Department of Defense, consistently invests heavily in Research and Development under NAICS code 541715 (Research and Development in the Physical, Engineering, and Life Sciences). Historical spending data reveals a substantial and ongoing commitment to this sector, driven by the need for technological superiority. While this specific $21.2 million contract represents a notable investment for a single Phase I effort, it must be viewed within the context of the Navy's broader R&D budget, which often runs into billions of dollars annually across various research areas. Analyzing the Navy's historical spending patterns for NAICS 541715 would show a consistent allocation of funds towards innovation, with individual contracts varying widely in size and scope based on project requirements and strategic priorities.

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 › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N6523623R8010

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 3 EXECUTIVE CAMPUS FL 6, CHERRY HILL, NJ, 08002

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

Financial Breakdown

Contract Ceiling: $29,758,826

Exercised Options: $29,758,826

Current Obligation: $21,242,911

Actual Outlays: $1,078,871

Subaward Activity

Number of Subawards: 10

Total Subaward Amount: $9,734,148

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline