DoD's $19.5M contract with Lockheed Martin for miscellaneous intermediation services awarded without competition

Contract Overview

Contract Amount: $19,531,382 ($19.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2004-02-12

End Date: 2019-05-16

Contract Duration: 5,572 days

Daily Burn Rate: $3.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Place of Performance

Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $19.5 million to LOCKHEED MARTIN CORPORATION for work described as: Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, potentially leading to higher costs if not managed effectively. 2. Lack of competition suggests potential for higher prices and reduced innovation. 3. Long contract duration of over 15 years indicates a sustained need for these services. 4. Awarded to a single, large defense contractor, raising questions about market accessibility for smaller firms. 5. The contract's value, while significant, needs to be benchmarked against similar intermediation services. 6. Performance context is limited without specific details on deliverables and outcomes.

Value Assessment

Rating: questionable

Benchmarking the value of this $19.5 million contract is challenging without specific details on the intermediation services provided. The cost-plus-fixed-fee structure inherently carries a risk of cost overruns if not meticulously managed. Comparing it to similar contracts is difficult due to the 'Miscellaneous Intermediation' NAICS code, which is broad. However, the lack of competition and the long duration suggest that the government may not have secured the most competitive pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This typically occurs when a specific contractor is deemed uniquely qualified or when circumstances prevent a competitive process. The absence of multiple bidders means that price discovery through market forces was bypassed, potentially leading to less favorable terms for the government.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competition to drive down costs, potentially resulting in higher expenditures for taxpayers.

Public Impact

The Department of Defense benefits from the provision of miscellaneous intermediation services, crucial for its operational efficiency. The services delivered are essential for supporting various logistical and administrative functions within the Army. The geographic impact is primarily within Texas, where the contractor is located, but the services likely support broader DoD operations. Workforce implications are tied to the employment generated by Lockheed Martin to fulfill this contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs.
Cost-plus-fixed-fee structure can incentivize higher spending.
Long contract duration without re-competition limits future cost savings.
Broad NAICS code makes specific performance assessment difficult.

Positive Signals

Awarded to a major defense contractor with a known track record.
Contract duration suggests a stable and ongoing need for the services.
Fixed fee component provides some cost certainty compared to pure cost-reimbursement.

Sector Analysis

The defense sector is characterized by long-term, high-value contracts, often awarded to a few large prime contractors. Miscellaneous intermediation services, while not as prominent as major weapon systems, are critical for the efficient functioning of military operations. The market for such services can be specialized, but the lack of competition here is notable. Comparable spending benchmarks are difficult to establish due to the broad nature of the NAICS code and the sole-source award.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The award to a large prime contractor like Lockheed Martin suggests that subcontracting opportunities for small businesses may exist, but this is not guaranteed or explicitly mandated by the contract details provided. The absence of a set-aside means small businesses did not have a direct opportunity to compete for the prime contract.

Oversight & Accountability

Oversight mechanisms for this contract would typically involve contract officers, program managers, and potentially Inspector General investigations within the Department of Defense. Transparency is limited by the sole-source nature and the lack of publicly available performance reports. Accountability would be measured against the fixed fee and the cost controls implemented by the contracting agency.

Related Government Programs

Department of Defense Procurement
Defense Logistics Agency Contracts
Federal Intermediation Services
Cost-Plus Contracts
Sole-Source Defense Contracts

Risk Flags

Sole-source award lacks competitive pricing pressure.
Long contract duration may not reflect current market value.
Cost-plus-fixed-fee structure carries inherent cost overrun risk.
Broad NAICS code limits specific performance and value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.5 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 $19.5 million.

What is the period of performance?

Start: 2004-02-12. End: 2019-05-16.

What specific intermediation services does this contract cover, and how do they support the Department of the Army's mission?

The NAICS code 523910, 'Miscellaneous Intermediation,' is very broad and encompasses a wide range of financial and business services. Without more specific contract details, it's difficult to pinpoint the exact services provided by Lockheed Martin. These could range from financial transaction processing, supply chain financing, or other intermediary roles that facilitate the Army's operations. The 'Miscellaneous Intermediation' designation suggests services that don't fit neatly into other, more specific categories, implying a potentially unique or specialized support function critical to the Army's logistical or administrative needs. The long duration and sole-source award suggest these services are considered essential and perhaps difficult to procure competitively.

How does the cost-plus-fixed-fee (CPFF) pricing structure compare to other contract types for similar services, and what are the associated risks?

The Cost-Plus-Fixed-Fee (CPFF) structure is common in defense contracting, especially for services where the scope may evolve or is not fully defined at the outset. It involves the contractor being reimbursed for all allowable costs plus a predetermined fixed fee representing profit. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers less cost certainty for the government, as the total cost can exceed initial estimates if actual costs are higher than anticipated. However, it can be advantageous when the scope is uncertain, encouraging the contractor to perform the work without the risk of significant financial loss. The primary risk for the government is cost overrun, which necessitates robust oversight and cost control measures to ensure value for money.

What factors led to this contract being awarded on a sole-source basis instead of through full and open competition?

Sole-source awards are typically justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source can provide the required supplies or services, or when urgency, national security, or a lack of adequate competition necessitates it. For this $19.5 million contract with Lockheed Martin, the justification for a sole-source award is not provided in the data. However, common reasons include the contractor possessing unique technical capabilities, proprietary data, or existing infrastructure that makes them the only viable option. Alternatively, a lack of market research or a failure to properly define the requirement for competitive bidding could also lead to a sole-source determination. The long duration (over 15 years) might also suggest that the initial justification for sole-sourcing was based on factors that were perceived to be long-term.

What is Lockheed Martin's track record with the Department of Defense, particularly on similar intermediation or cost-plus contracts?

Lockheed Martin is one of the largest defense contractors globally, with an extensive history of performing a wide array of contracts for the Department of Defense (DoD). Their track record includes complex weapon systems, IT services, logistics, and support functions. While specific data on their performance for 'Miscellaneous Intermediation' services under CPFF contracts isn't detailed here, Lockheed Martin generally has a substantial portfolio of DoD contracts. Performance on such contracts can vary, but as a major prime contractor, they are accustomed to the rigorous oversight and reporting requirements of the DoD. Past performance reviews and contract award histories, often available through government databases like FPDS, would provide a more granular view of their success rates, cost control, and adherence to schedules on similar engagements.

How does the $19.5 million total award value compare to historical spending on similar miscellaneous intermediation services by the Department of the Army or DoD?

Comparing the $19.5 million total award value for this specific contract requires context that is not fully provided. The NAICS code 523910 is broad, making direct comparisons difficult without knowing the precise services rendered. However, for a contract spanning over 15 years (from 2004 to 2019), the average annual value is approximately $1.3 million. This figure needs to be benchmarked against the typical spending for similar intermediation services within the DoD. Large defense contracts can range from millions to billions of dollars. Without data on the number of bidders, the pricing structure of comparable contracts, or the specific deliverables, it's hard to definitively state if $19.5 million represents high, low, or average spending for this type of service over such a long period. The sole-source nature further complicates value assessment.

What are the potential risks associated with the long duration (over 15 years) of this contract, especially given its sole-source nature?

The long duration of this contract, spanning over 15 years, presents several risks, particularly when coupled with its sole-source award. Firstly, it reduces opportunities for the government to benefit from market evolution and potential cost reductions through competitive re-procurement. Technology and service needs can change significantly over 15 years, and a fixed, sole-source contract may not adapt efficiently. Secondly, it can lead to complacency on the part of the contractor, as the pressure to innovate or offer better value diminishes without competitive threats. Thirdly, it locks the government into a potentially suboptimal pricing structure or service level for an extended period. Without regular competitive reviews, there's a risk that the government continues to pay above-market rates or receives services that are no longer state-of-the-art.

Industry Classification

NAICS: Finance and Insurance › Other Financial Investment Activities › Miscellaneous Intermediation

Product/Service Code: WEAPONS

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: 1701 W MARSHALL DR, GRAND PRAIRIE, TX, 75051

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

Financial Breakdown

Contract Ceiling: $35,438

Exercised Options: $35,438

Current Obligation: $19,531,382

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline