DoD's $77.3M Lockheed Martin contract for engineering services awarded without competition

Contract Overview

Contract Amount: $77,311,956 ($77.3M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2008-10-03

End Date: 2017-06-30

Contract Duration: 3,192 days

Daily Burn Rate: $24.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MMC7000A PRODUCTION

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $77.3 million to LOCKHEED MARTIN CORPORATION for work described as: MMC7000A PRODUCTION Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Long contract duration of 3192 days suggests a sustained need for these engineering services. 3. The firm-fixed-price contract type shifts some risk to the contractor, but the lack of competition is a concern. 4. Services provided by Lockheed Martin are critical for production support, indicating a significant role in defense operations. 5. The contract's value, while substantial, needs benchmarking against similar sole-source engineering service contracts. 6. Geographic location in Texas may indicate specific operational needs or contractor presence.

Value Assessment

Rating: questionable

The total award of $77.3 million for engineering services over nearly nine years presents a significant expenditure. Without competitive bidding, it is difficult to ascertain if this represents a fair market price. Benchmarking against similar sole-source contracts for specialized engineering support within the Department of Defense would be necessary to assess value for money. The firm-fixed-price structure provides some cost certainty, but the absence of competition raises concerns about potential overpricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of Defense did not solicit bids from multiple potential contractors. This approach is typically used when only one source is capable of meeting the requirement, or in cases of urgent need. The lack of competition means that taxpayers did not benefit from the potential cost savings that could arise from a competitive bidding process.

Taxpayer Impact: Sole-source awards limit the government's ability to negotiate the best possible price, potentially leading to higher costs for taxpayers. It also bypasses opportunities to foster a broader base of capable suppliers.

Public Impact

The Department of the Air Force benefits from sustained engineering support for production, ensuring operational readiness. Lockheed Martin Corporation, as the sole contractor, receives substantial revenue and maintains its role in supporting defense programs. The contract's impact is primarily on the defense industrial base and the specific programs it supports, rather than broad public services. Workforce implications are concentrated within Lockheed Martin's engineering divisions, particularly in Texas where the contract is managed.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition for a large contract raises concerns about price reasonableness and potential for inflated costs.
Long-term sole-source awards can stifle innovation and reduce market responsiveness.
Dependence on a single contractor for critical production support creates program risk if performance issues arise.

Positive Signals

Firm-fixed-price contract type provides cost certainty for the government, assuming the price was negotiated effectively.
Award to a major defense contractor like Lockheed Martin suggests access to specialized expertise and established production capabilities.
The contract supports critical defense production, contributing to national security objectives.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader aerospace and defense industry. The market for specialized defense engineering is often dominated by a few large, established contractors due to the high barriers to entry, including security clearances, specialized knowledge, and existing relationships. Spending in this area is driven by the need for complex design, development, testing, and sustainment of military platforms and systems. Comparable spending benchmarks would typically look at other sole-source or competitively awarded engineering support contracts for major defense programs.

Small Business Impact

There is no indication that this contract included small business set-asides. As a sole-source award to a large prime contractor, it is unlikely to have direct subcontracting opportunities specifically mandated for small businesses, although Lockheed Martin may engage small businesses as part of its broader supply chain. The lack of set-aside means small businesses did not have a direct opportunity to compete for this specific contract.

Oversight & Accountability

Oversight for this contract would primarily reside within the Department of the Air Force's contracting and program management offices. Accountability measures are typically embedded in the contract's performance clauses and reporting requirements. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Production Support Contracts
Aerospace Engineering Services
Lockheed Martin Defense Contracts
Sole-Source Defense Procurements
Air Force Production Support

Risk Flags

Sole-source award
Lack of competition
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $77.3 million to LOCKHEED MARTIN CORPORATION. MMC7000A PRODUCTION

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 $77.3 million.

What is the period of performance?

Start: 2008-10-03. End: 2017-06-30.

What is the track record of Lockheed Martin Corporation in fulfilling similar engineering services contracts for the Department of Defense?

Lockheed Martin Corporation is a major defense contractor with extensive experience in providing engineering services across numerous platforms and programs for the Department of Defense. Historically, they have been awarded a significant volume of contracts, many of which are sole-source due to the specialized nature of their work and existing platform knowledge. Performance on these contracts varies, as with any large contractor, but they are generally considered a capable provider of complex engineering solutions. Analyzing past performance metrics, such as on-time delivery, quality of work, and cost overruns on comparable contracts, would provide a more detailed assessment. However, specific performance data for this particular contract (MMC7000A) is not detailed here, only the award information.

How does the $77.3 million value of this contract compare to similar engineering services contracts awarded by the DoD?

The $77.3 million value for engineering services over approximately nine years is substantial, but its comparability is limited by the sole-source nature of this award. In a competitive environment, similar scope work might yield different price points. Benchmarking would ideally involve comparing this to other sole-source engineering support contracts for major defense production programs, which often command premium pricing due to specialized knowledge and limited alternatives. If this were competitively bid, one would expect to see a range of offers. Without access to a database of comparable sole-source contracts with detailed scope and pricing, a precise value comparison is difficult. However, the duration and the nature of production support suggest it aligns with significant, long-term defense sustainment needs.

What are the primary risks associated with awarding a nearly $77.3 million contract on a sole-source basis?

The primary risks associated with a sole-source award of this magnitude include potential overpricing due to the lack of competitive pressure, reduced incentive for the contractor to innovate or improve efficiency, and a lack of market validation for the chosen solution or price. There's also a risk of vendor lock-in, making it difficult and costly to switch providers in the future. Furthermore, it limits opportunities for other capable firms, potentially hindering the development of a broader industrial base. For taxpayers, the main risk is paying more than necessary for the services rendered. The long duration exacerbates these risks, as market conditions and technological needs can change significantly over nearly nine years.

How effective is a firm-fixed-price contract type in managing costs for long-term, sole-source engineering services?

A firm-fixed-price (FFP) contract type aims to provide cost certainty by fixing the price regardless of the contractor's actual costs. This shifts the risk of cost overruns to the contractor, incentivizing them to manage their expenses efficiently. For long-term, sole-source engineering services, FFP can be effective in controlling the government's budget if the initial price is well-negotiated and reflects a reasonable estimate of the work required. However, the effectiveness is significantly diminished when the contract is sole-source, as the government lacks the leverage of competition to ensure the initial price is truly competitive. If the scope of work is also poorly defined or subject to significant change, the FFP structure can lead to costly change orders, negating some of its benefits.

What are the historical spending patterns for engineering services within the Department of the Air Force, and how does this contract fit?

The Department of the Air Force historically spends billions of dollars annually on a wide array of services, including engineering, maintenance, logistics, and IT support. Engineering services are a critical component, often tied to the lifecycle management of complex aircraft, weapons systems, and infrastructure. Spending patterns are influenced by modernization programs, sustainment requirements for aging fleets, and new platform development. This $77.3 million contract for production support fits within the sustainment and operational readiness category, likely supporting the ongoing production or modification of specific Air Force assets. Its sole-source nature suggests it addresses a highly specialized or proprietary need, rather than a commodity service.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

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: $383,847,115

Exercised Options: $266,486,831

Current Obligation: $77,311,956

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F4262001D0058

IDV Type: IDC

Timeline