DoD's $12.3M R&D contract with Lockheed Martin shows fair value, but limited competition raises concerns

Contract Overview

Contract Amount: $12,323,285 ($12.3M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2006-04-27

End Date: 2009-09-30

Contract Duration: 1,252 days

Daily Burn Rate: $9.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Place of Performance

Location: CHERRY HILL, CAMDEN County, NEW JERSEY, 08002

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $12.3 million to LOCKHEED MARTIN CORPORATION for work described as: Key points: 1. Contract awarded to a single, large defense contractor, indicating a potential lack of broad market engagement. 2. Pricing appears reasonable given the specialized nature of R&D, though direct comparisons are difficult. 3. Performance risk is moderate, typical for complex research and development projects. 4. This contract represents a small fraction of the Department of Defense's overall R&D spending. 5. The contract falls within the 'Research and Development' sector, a critical area for defense innovation.

Value Assessment

Rating: good

The contract's value of approximately $12.3 million for R&D services appears reasonable when considering the specialized nature of the work and the contractor's established capabilities. Benchmarking is challenging due to the unique R&D focus, but the cost-plus-fixed-fee structure suggests that costs were monitored. Compared to other large-scale defense R&D efforts, this contract's value is modest, implying a focused scope.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. However, the data indicates only two bids were received, which is a relatively low number for a significant R&D contract. This limited number of bidders might suggest a highly specialized field where only a few companies possess the required expertise, or it could indicate potential barriers to entry for other qualified firms.

Taxpayer Impact: While full and open competition was utilized, the low number of bids means taxpayers may not have benefited from the most aggressive pricing possible. The government secured a bid from a capable contractor, but the potential for greater cost savings through broader competition was likely limited.

Public Impact

The primary beneficiary is the Department of Defense, which gains access to advanced research and development capabilities. The contract supports the development of new technologies and advancements in physical, engineering, and life sciences relevant to national security. The geographic impact is primarily centered in New Jersey, where the contractor is located, potentially supporting local high-tech employment. Workforce implications include the utilization of highly skilled scientists, engineers, and researchers within Lockheed Martin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders for a full and open competition could indicate market concentration or barriers to entry.
Cost-plus-fixed-fee contracts can sometimes incentivize cost overruns if not closely managed.
The specialized nature of R&D makes direct value-for-money comparisons difficult.

Positive Signals

Awarded to a reputable contractor with a strong track record in defense R&D.
The contract falls under the 'Research and Development' category, crucial for maintaining technological superiority.
Full and open competition was the chosen procurement method, adhering to federal acquisition principles.

Sector Analysis

This contract falls within the Research and Development (R&D) sector, specifically NAICS code 541710. This sector is vital for defense innovation, focusing on scientific discovery and technological advancement. The market is characterized by high barriers to entry, significant investment in intellectual property, and a concentration of large, specialized firms like Lockheed Martin. Comparable spending benchmarks in defense R&D are substantial, with the government investing billions annually to maintain a technological edge.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, and the contractor, Lockheed Martin, is a large corporation. There is no explicit information regarding subcontracting plans for small businesses within this specific award. Therefore, the direct impact on the small business ecosystem from this particular contract is likely minimal, though large prime contractors often have broader subcontracting programs.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Army contracting officers and program managers. The cost-plus-fixed-fee structure necessitates diligent monitoring of expenditures to ensure costs remain within the fixed fee parameters. Transparency is generally maintained through contract reporting requirements, and the Inspector General's office would have jurisdiction to investigate any potential fraud, waste, or abuse.

Related Government Programs

Department of Defense Research and Development Programs
Advanced Technology Development Contracts
Lockheed Martin Defense Contracts
Aerospace and Defense R&D

Risk Flags

Limited competition despite full and open solicitation.
Potential for cost escalation in CPFF contracts.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.3 million to LOCKHEED MARTIN CORPORATION. See the official description on USAspending.

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 Army).

What is the total obligated amount?

The obligated amount is $12.3 million.

What is the period of performance?

Start: 2006-04-27. End: 2009-09-30.

What is Lockheed Martin's track record with similar R&D contracts for the Department of Defense?

Lockheed Martin Corporation has an extensive and well-documented track record of securing and executing numerous research and development contracts with the Department of Defense across various branches and agencies. Their history includes significant contributions to areas such as aerospace, missile defense, advanced materials, and information systems. While specific performance metrics for individual contracts are often proprietary or aggregated, the company's continued success in winning large, complex R&D awards suggests a generally positive performance history and a strong capability to meet DoD's demanding requirements. However, like any large contractor, there may be instances of contract disputes, performance issues, or cost overruns on specific projects, which would be detailed in contract performance reports and agency evaluations.

How does the value of this $12.3 million contract compare to other R&D spending by the Department of the Army?

The $12.3 million value of this specific contract is relatively modest when viewed against the backdrop of the Department of the Army's overall Research and Development (R&D) budget. The Army, like other branches of the DoD, invests billions of dollars annually in R&D to maintain technological superiority. Contracts of this size typically represent focused efforts on specific technological advancements or feasibility studies rather than large-scale program development. For context, the Army's R&D obligations often range from several hundred million to billions of dollars per fiscal year, encompassing a wide array of projects from basic research to applied technology development. Therefore, this $12.3 million award is a component of a much larger R&D investment strategy.

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

Cost Plus Fixed Fee (CPFF) contracts, like the one awarded to Lockheed Martin, present specific risks, particularly in R&D contexts. The primary risk for the government is that the contractor may have less incentive to control costs rigorously, as all allowable costs are reimbursed. While the 'fixed fee' provides a defined profit margin, the contractor is guaranteed to recover their costs. This can lead to potential cost overruns if the project scope expands or unforeseen technical challenges arise, increasing the total contract value beyond initial estimates. For the contractor, the risk lies in accurately estimating the costs to ensure the fixed fee is sufficient profit, especially if unexpected difficulties arise that increase expenses without a corresponding increase in allowable costs or fee adjustment.

Given the 'full and open competition' designation, why were only two bids received?

The designation of 'full and open competition' means the solicitation was made available to all responsible sources, and all responsible sources were permitted to submit a bid. However, receiving only two bids can occur for several reasons, even under full and open competition. The specialized nature of Research and Development (R&D) in areas like defense often means that only a limited number of companies possess the requisite technical expertise, facilities, and security clearances. Additionally, the complexity and potential risks associated with R&D projects might deter some potential bidders. High barriers to entry, such as significant upfront investment or stringent qualification requirements, could also contribute to a smaller pool of interested and capable offerors, leading to fewer than expected bids.

What is the typical performance period for R&D contracts of this magnitude?

The performance period for R&D contracts can vary significantly based on the project's scope, complexity, and objectives. For a contract valued at approximately $12.3 million, with a duration of 1252 days (roughly 3.4 years), this falls within a common range for focused R&D efforts. Shorter contracts might be for feasibility studies or initial research phases, while longer durations are typical for more extensive development and testing. The specified end date of September 30, 2009, indicates this was a project completed in the past. The duration reflects the time needed for research, experimentation, analysis, and potentially prototype development within the physical, engineering, and life sciences domain.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences

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

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 3 EXECUTIVE CAMPUS-6TH FLO, CHERRY HILL, NJ, 01

Business Categories: Category Business, Not Designated a Small Business

Timeline