Department of Defense awards $22.8M contract to Lockheed Martin for R&D services, highlighting potential value concerns

Contract Overview

Contract Amount: $22,794,915 ($22.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2003-12-05

End Date: 2005-11-30

Contract Duration: 726 days

Daily Burn Rate: $31.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200403!000013!5700!GU82 !ASC/YPK !F4262001D0058 !A!N! !N!SC26 ! !20031205!20051130!008016958!008016958!834951691!N!LOCKHEED MARTIN CORPORATION !LOCKHEED BLVD !FORT WORTH !TX!76101!27000!439!48!FORT WORTH !TARRANT !TEXAS !+000002090469!Y!N!000000000000!AD92!RDTE/OTHER DEFENSE-APPLIED RESEARCH !S1 !SERVICES !000 !* !541710!E! !5!B!S! ! ! !99990909!B! ! !N!Z!C!U!U!1!001!N!1B!Z!Y!Z! ! !N!C!N! ! ! !Z!Z!A!A!00 !A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $22.8 million to LOCKHEED MARTIN CORPORATION for work described as: 200403!000013!5700!GU82 !ASC/YPK !F4262001D0058 !A!N! !N!SC26 ! !20031205!20051130!008016958!008016958!834951691!N!LOCKHEED MARTIN CORPORATION !LOCKHEED BLVD !FORT WORTH !TX!76101!27000!439!48!FORT WORTH !TARR… Key points: 1. Contract awarded on a sole-source basis, limiting price competition and potentially increasing costs. 2. The contract's cost-plus-fixed-fee structure may incentivize cost overruns. 3. Performance period of 726 days suggests a medium-term project with ongoing oversight needs. 4. The specific R&D focus requires deep technical expertise, potentially justifying limited competition. 5. Geographic location in Texas may offer local economic benefits but doesn't indicate broad national impact.

Value Assessment

Rating: questionable

The contract's value is difficult to benchmark due to its sole-source nature and specific R&D focus. The cost-plus-fixed-fee pricing structure, while common for research and development, carries inherent risks of cost escalation. Without comparable sole-source R&D contracts or more detailed cost breakdowns, assessing true value-for-money is challenging. The awarded amount of $22.8 million for a 726-day period warrants scrutiny to ensure efficient use of taxpayer funds.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning competition was not sought. This approach is typically justified when only one responsible source can provide the required services, often due to unique capabilities, intellectual property, or urgent needs. The lack of competition means there was no opportunity for multiple bidders to offer proposals, potentially leading to higher prices than if a competitive process had been employed.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage market competition to secure the best possible prices, potentially resulting in higher costs for taxpayers.

Public Impact

The primary beneficiary is the Department of Defense, which receives specialized research and development services. The contract supports advanced defense technologies and applied research, contributing to national security. Services are likely performed in Fort Worth, Texas, potentially creating or sustaining high-skilled jobs in the region. The contract's focus on R&D implies a benefit to the defense industrial base through innovation and technological advancement.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost-plus-fixed-fee structure can incentivize higher costs.
Lack of detailed public justification for sole-source award.
Limited transparency on specific R&D deliverables and outcomes.

Positive Signals

Awarded to a major defense contractor with established capabilities.
Contract supports critical defense research and development needs.
Fixed fee component provides some cost predictability.
Long-term performance period allows for sustained R&D effort.

Sector Analysis

This contract falls within the Engineering Services sector, specifically R&D for defense applications. The broader defense R&D market is characterized by significant government investment, long development cycles, and a reliance on specialized contractors. Comparable spending benchmarks are difficult to establish without knowing the precise nature of the R&D, but large-scale defense R&D contracts often run into tens or hundreds of millions of dollars.

Small Business Impact

This contract does not appear to involve small business set-asides. As a sole-source award to a large prime contractor, it is unlikely to include significant subcontracting opportunities for small businesses unless explicitly mandated by the prime. The absence of set-asides means direct benefits to the small business ecosystem from this specific award are minimal.

Oversight & Accountability

Oversight for this contract would typically reside within the Department of Defense, likely the Air Force contracting and program management offices. Accountability measures would include contract performance reviews, milestone tracking, and financial audits. Transparency is limited due to the sole-source nature and the classified or sensitive aspects often associated with defense R&D, though standard reporting requirements would still apply.

Related Government Programs

Defense Research and Development
Engineering Services
Advanced Technology Development
Cost Plus Fixed Fee Contracts
Sole Source Procurements

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competition
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.8 million to LOCKHEED MARTIN CORPORATION. 200403!000013!5700!GU82 !ASC/YPK !F4262001D0058 !A!N! !N!SC26 ! !20031205!20051130!008016958!008016958!834951691!N!LOCKHEED MARTIN CORPORATION !LOCKHEED BLVD !FORT WORTH !TX!76101!27000!439!48!FORT WORTH !TARRANT !TEXAS !+000002090469!Y!N!000000000000!AD92!RDTE/OTHER DEFENSE-APPLIED RESEARCH !S1 !SERVICES !000 !* !541710!E! !5!B!S! ! ! !999

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 Air Force).

What is the total obligated amount?

The obligated amount is $22.8 million.

What is the period of performance?

Start: 2003-12-05. End: 2005-11-30.

What specific research and development activities are covered under this contract?

The provided data indicates the contract is for 'RDTE/OTHER DEFENSE-APPLIED RESEARCH' and falls under the North American Industry Classification System (NAICS) code 541330 (Engineering Services). While the specific nature of the R&D is not detailed in the extract, it pertains to applied research within the defense sector. This could encompass a wide range of activities, from developing new materials and propulsion systems to advancing cybersecurity capabilities or improving sensor technologies. The 'RDTE' designation specifically points towards Research, Development, Test, and Evaluation efforts critical for maintaining technological superiority in defense.

How does the $22.8 million award compare to typical spending on similar defense R&D contracts?

Comparing this $22.8 million award requires context on the specific R&D domain and the scope of work. Defense R&D spending varies enormously, from smaller, targeted research grants to multi-billion dollar programs for major weapon systems. For applied research and development in specialized areas, $22.8 million over approximately two years (726 days) is a substantial but not extraordinary amount. However, given it was a sole-source award, the key question is whether this amount represents competitive market value or a premium paid due to the lack of competition. Without knowing the specific deliverables and comparing it to other sole-source or competitively awarded contracts for similar R&D, a definitive value assessment is difficult.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for R&D?

The primary risk with a Cost Plus Fixed Fee (CPFF) contract, especially for R&D, is the potential for cost overruns. In a CPFF structure, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. If the R&D project encounters unforeseen technical challenges or scope creep, the total costs can escalate significantly beyond initial estimates. While the 'fixed fee' provides a predictable profit margin for the contractor, it doesn't cap the total contract cost. This structure can incentivize contractors to incur higher costs if they believe it will lead to successful project completion, potentially reducing the government's incentive to control expenses compared to fixed-price contracts.

What is the significance of Lockheed Martin Corporation being the sole awardee?

Lockheed Martin Corporation is one of the largest defense contractors globally, possessing extensive experience and specialized capabilities in aerospace, defense, and security technologies. Awarding this contract solely to them suggests that the Department of Defense deemed them the only entity capable of fulfilling the specific, likely complex, R&D requirements. This could be due to proprietary technology, unique expertise, existing infrastructure, or security clearances necessary for the work. However, the sole-source nature bypasses the competitive process, meaning taxpayers do not benefit from potential cost savings that might arise from multiple companies bidding on the contract.

What historical spending patterns exist for this type of R&D service within the Department of Defense?

The Department of Defense consistently allocates significant portions of its budget to Research, Development, Test, and Evaluation (RDT&E). Historical spending patterns show a continuous investment in applied research across various defense domains, including aerospace, electronics, materials science, and information technology. Contracts for engineering and R&D services, particularly those awarded to major defense contractors like Lockheed Martin, often represent substantial sums. While specific historical data for this exact R&D niche isn't provided, the overall trend indicates a strong and sustained demand for advanced technological development within the DoD, often involving sole-source or limited-competition awards for highly specialized or classified projects.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 1 LOCKHEED BLVD, FORT WORTH, TX, 76108

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

Financial Breakdown

Contract Ceiling: $22,794,915

Exercised Options: $22,794,915

Current Obligation: $22,794,915

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F4262001D0058

IDV Type: IDC

Timeline