DoD's $298.8M Lockheed Martin contract for technical services shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $298,757,039 ($298.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2010-03-18

End Date: 2019-02-28

Contract Duration: 3,269 days

Daily Burn Rate: $91.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIXED PRICE INCENTIVE

Sector: Other

Official Description: ECASS

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32825

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $298.8 million to LOCKHEED MARTIN CORPORATION for work described as: ECASS Key points: 1. Value for money appears reasonable given the contract's duration and scope. 2. Competition was limited, potentially impacting price discovery and overall value. 3. Risk indicators are moderate, with a fixed-price incentive structure aiming to control costs. 4. Performance context suggests a long-term engagement for specialized technical services. 5. This contract fits within the broader professional, scientific, and technical services sector for defense. 6. The contractor, Lockheed Martin, is a major player with extensive government experience.

Value Assessment

Rating: good

The contract's total value of approximately $298.8 million over nearly nine years suggests a significant investment. While direct comparisons are difficult without more granular data on the specific services rendered, the fixed-price incentive (FPI) structure indicates an effort to balance cost control with performance. Benchmarking against similar large-scale, long-duration technical services contracts within the Department of Defense would be necessary for a definitive value assessment, but the price appears within a plausible range for the scope and duration.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, which is a positive indicator for robust price discovery. However, the data indicates only 3 bids were received. While full and open competition was utilized, the relatively low number of bidders might suggest a specialized service area or high barriers to entry for potential competitors. This level of competition is adequate but could potentially be improved with broader outreach or by addressing specific market dynamics.

Taxpayer Impact: Full and open competition is generally beneficial for taxpayers as it encourages multiple vendors to offer their best pricing. A low number of bidders, even in a fully competed scenario, can sometimes lead to less aggressive pricing than might be achieved with a larger pool of interested parties.

Public Impact

The primary beneficiary is the Department of the Navy, receiving specialized technical services essential for its operations. Services delivered likely encompass a range of professional, scientific, and technical support critical to defense readiness. The contract's geographic impact is centered in Florida, where the contractor's operations are located. Workforce implications include employment opportunities for skilled technical professionals within Lockheed Martin's Florida facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders (3) in a full and open competition could indicate potential market concentration or high entry barriers.
Long contract duration (over 9 years) increases the risk of cost overruns if not managed meticulously.
Fixed-price incentive contracts can still lead to cost increases if performance targets are not met efficiently or if scope creep occurs.

Positive Signals

Awarded under full and open competition, maximizing the potential for competitive pricing.
Contractor (Lockheed Martin) is a well-established entity with a proven track record in defense contracting.
Fixed-price incentive structure aligns contractor and government interests towards achieving specific performance outcomes while managing costs.

Sector Analysis

This contract falls within the broad 'All Other Professional, Scientific, and Technical Services' category (NAICS 541990), a significant segment of the federal contracting market. This sector is characterized by specialized expertise and often supports complex government missions. The total federal spending in this sector is substantial, with defense agencies being major consumers of these services. Benchmarks for similar contracts would typically involve analyzing the cost per service hour or per deliverable against industry standards and other government contracts for comparable technical support.

Small Business Impact

The data indicates that small business participation (sb: false) was not a specific set-aside requirement for this contract. There is no explicit information on subcontracting plans for small businesses. Without specific set-aside goals or reporting on subcontracting, the direct impact on the small business ecosystem is unclear, though large prime contractors like Lockheed Martin often engage small businesses in their supply chains.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy contracting officers and program managers. Accountability measures are embedded within the contract's performance clauses and reporting requirements. Transparency is facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.

Related Government Programs

Department of Defense - Research and Development
Professional, Scientific, and Technical Services
Defense Logistics and Support Services
Naval Operations and Support

Risk Flags

Limited Competition
Long Contract Duration
Potential for Cost Overruns
Specialized Service Area

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $298.8 million to LOCKHEED MARTIN CORPORATION. ECASS

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 $298.8 million.

What is the period of performance?

Start: 2010-03-18. End: 2019-02-28.

What specific technical services were provided under this contract?

The contract falls under NAICS code 541990, 'All Other Professional, Scientific, and Technical Services.' While the specific details are not provided in the summary data, this category typically encompasses a wide array of specialized support. For the Department of the Navy, this could include services such as systems engineering, technical consulting, research and development support, testing and evaluation, logistics analysis, or specialized scientific research. The long duration and significant value suggest complex, ongoing support rather than a one-off service.

How does the $298.8 million total obligation compare to similar contracts for technical services within the DoD?

Directly comparing the $298.8 million obligation requires detailed analysis of similar contracts based on service type, duration, and complexity. However, for a contract spanning nearly nine years (March 2010 - February 2019), this figure represents an average annual obligation of approximately $33 million. This is a substantial amount, indicative of a major program or a suite of critical services. Larger defense contracts often reach hundreds of millions or even billions, so in that context, it's a significant but not exceptionally large contract. Benchmarking would involve looking at contracts for systems integration, advanced technical support, or specialized engineering services awarded around the same period.

What are the primary risks associated with a Fixed Price Incentive (FPI) contract of this magnitude and duration?

The primary risks with an FPI contract of this scale and duration include potential cost overruns if the target cost is underestimated or if performance targets are difficult to achieve, leading to higher incentive fees. Scope creep is another significant risk; if the requirements evolve beyond the initial scope without proper contract modification and pricing adjustments, costs can escalate. Contractor performance risk is also present; if Lockheed Martin fails to meet performance targets, the government may incur higher costs through incentive fees or face delays in critical services. Conversely, the government also bears the risk that the contractor may cut corners on quality to meet cost targets, impacting the effectiveness of the services.

What was the historical spending trend for this specific contract or similar services provided by Lockheed Martin to the Navy?

The provided data covers the period from March 18, 2010, to February 28, 2019, with a total obligation of $298,757,038.54. This represents the complete lifecycle spending for this particular definitive contract. To understand historical trends, one would need to examine prior contracts awarded to Lockheed Martin for similar services by the Department of the Navy or other DoD components, as well as subsequent contracts. Analyzing year-over-year spending on this contract would reveal if the spending was consistent or varied based on program milestones or funding allocations.

Given the 'All Other Professional, Scientific, and Technical Services' category, how specialized are the services, and does this specialization justify the limited competition?

The NAICS code 541990 is indeed broad, but within the context of defense contracting, 'All Other' often signifies highly specialized or niche services that don't fit neatly into more defined categories like engineering services (541330) or computer systems design (541512). These services might require unique expertise, proprietary knowledge, or specific clearances. If the services were highly specialized, it could naturally limit the pool of qualified bidders, even under full and open competition. The fact that only three bidders participated suggests that either the market for these specific services is inherently small, or there are significant barriers (technical, financial, or security-related) preventing broader participation. This specialization could justify the limited competition to some extent, provided the government ensured fair pricing through negotiation and oversight.

What is the significance of the contract type being a 'Definitive Contract' with a 'Fixed Price Incentive' (FPI) pricing structure?

A 'Definitive Contract' is a standard contract type used for procurement of goods or services. It signifies a firm commitment by the government to purchase and by the contractor to provide. The 'Fixed Price Incentive' (FPI) pricing structure is a hybrid. It establishes a target cost, a target profit, and a price ceiling. The final contract price is determined by the contractor's actual costs, with incentives for the contractor to stay below the target cost and penalties for exceeding it, up to the ceiling. This structure aims to provide the contractor with maximum incentive for cost efficiency while still providing the government with a degree of cost certainty, capped by the price ceiling. It's often used when there's uncertainty in the cost estimates but a strong desire to control final price.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Other Professional, Scientific, and Technical Services › All Other Professional, Scientific, and Technical Services

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N6833509R0001

Offers Received: 3

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 12506 LAKE UNDERHILL RD, ORLANDO, FL, 32825

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

Financial Breakdown

Contract Ceiling: $301,913,368

Exercised Options: $300,512,744

Current Obligation: $298,757,039

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline