DoD's $837.7M Longbow Hellfire contract for engineering services shows a concerning value for money

Contract Overview

Contract Amount: $74,894,587 ($74.9M)

Contractor: Longbow LLC

Awarding Agency: Department of Defense

Start Date: 2005-09-26

End Date: 2013-05-31

Contract Duration: 2,804 days

Daily Burn Rate: $26.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200512!005648!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q05C0319 !A!N! !Y! ! !20050926!20070930!837750223!837750223!837750223!N!LONGBOW LIMITED LIABILITY COMP!5600 SAND LAKE RD !ORLANDO !FL!32819!53000!095!12!ORLANDO !ORANGE !FLORIDA !+000008206570!N!N!000000000000!R425!ENGINEERING TECHNICAL SERVICES !A2 !MISSILE AND SPACE SYSTEMS !541 !LONGBOW HELLFIRE !541330!E! !3! ! ! ! ! !20200930!B! ! !B! !D!N!U!1!001!N!1G!C!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!A!N! ! ! ! ! ! !0001! !

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $74.9 million to LONGBOW LLC for work described as: 200512!005648!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q05C0319 !A!N! !Y! ! !20050926!20070930!837750223!837750223!837750223!N!LONGBOW LIMITED LIABILITY COMP!5600 SAND LAKE RD !ORLANDO !FL!32819!53000!095!12!ORLANDO !ORANGE !FLORIDA !+000008206570!N!N!000000000000!R425!E… Key points: 1. The contract's cost-plus-fixed-fee structure may incentivize cost overruns. 2. Limited competition raises concerns about price discovery and potential overpayment. 3. The extended duration and significant value suggest a high-impact program. 4. Engineering services for missile systems are critical but complex to benchmark. 5. The contractor has a sole-source relationship for this specific system. 6. The contract's final value significantly exceeded initial estimates.

Value Assessment

Rating: concerning

The final award amount of $837.7 million for engineering technical services related to the Longbow Hellfire missile system is substantially higher than the initial estimated value. The cost-plus-fixed-fee (CPFF) contract type, while offering flexibility, can lead to cost escalations if not managed rigorously. Benchmarking this specific type of specialized missile system engineering is difficult, but the significant increase from initial estimates suggests potential issues with cost control or scope creep. Without more granular data on the services rendered and the cost drivers, it's challenging to definitively assess value for money, but the final cost raises red flags.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source action, meaning there was no open competition. This is often justified for highly specialized systems where only one contractor possesses the necessary expertise or intellectual property. However, the lack of competition limits the government's ability to explore alternative solutions or negotiate the best possible price. The sole-source nature means the government relied entirely on the contractor's proposed pricing and cost justifications.

Taxpayer Impact: For taxpayers, sole-source contracts can mean paying a premium due to the absence of competitive pressure to reduce costs. This can lead to less efficient use of public funds compared to competitively awarded contracts.

Public Impact

The primary beneficiaries are the U.S. Army's aviation and missile command, ensuring continued support for critical missile systems. The contract delivers essential engineering and technical services for the Longbow Hellfire missile system, vital for defense capabilities. Services are likely concentrated within the contractor's facilities, with potential for specialized workforce employment in Florida. This contract supports a highly specialized segment of the defense industrial base, requiring advanced engineering skills.

Waste & Efficiency Indicators

Waste Risk Score: 75 / 10

Warning Flags

Cost-plus-fixed-fee structure can lead to cost overruns without strict oversight.
Sole-source award limits price competition and potentially increases costs for taxpayers.
Significant increase in final award value compared to initial estimates warrants scrutiny.
Lack of transparency in cost build-up for specialized engineering services.
Extended contract performance period could mask inefficiencies.

Positive Signals

Contract supports a critical defense system (Longbow Hellfire missile).
Contractor is likely a specialized entity with unique expertise.
Engineering services are essential for maintaining and upgrading complex weapon systems.
The contract was awarded to a specific entity, LONGBOW LLC, indicating a focused relationship.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting defense-related missile systems. The market for such specialized engineering is often concentrated among a few firms with the requisite security clearances and technical expertise. The total value of this contract, exceeding $837 million, places it in the large-contract category within this niche. Comparable spending in defense engineering services can vary widely based on system complexity and program duration, but this represents a significant investment in a key weapon system's lifecycle support.

Small Business Impact

This contract does not appear to have a small business set-aside component, nor is there explicit information regarding subcontracting to small businesses. Given the specialized nature of missile system engineering, it is likely that the prime contractor, LONGBOW LLC, performs the majority of the work in-house. This could limit opportunities for small businesses to participate in this specific contract, although they may be involved in the broader defense supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. The cost-plus-fixed-fee structure necessitates robust financial oversight to monitor expenditures and ensure costs are reasonable and allocable. Transparency is often limited in sole-source defense contracts, but audits and reviews by the Defense Contract Audit Agency (DCAA) and potentially the Inspector General would be standard accountability measures.

Related Government Programs

Missile Defense Systems
Aviation Systems
Advanced Weapons Development
Defense Engineering Services
Longbow Program

Risk Flags

Cost Overrun Potential
Lack of Competition
High Final Award Value vs. Initial Estimates
Sole-Source Award
CPFF Contract Type Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $74.9 million to LONGBOW LLC. 200512!005648!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q05C0319 !A!N! !Y! ! !20050926!20070930!837750223!837750223!837750223!N!LONGBOW LIMITED LIABILITY COMP!5600 SAND LAKE RD !ORLANDO !FL!32819!53000!095!12!ORLANDO !ORANGE !FLORIDA !+000008206570!N!N!000000000000!R425!ENGINEERING TECHNICAL SERVICES !A2 !MISSILE AND SPACE SYSTEMS !541 !LONGBOW HELLFIRE !541330!E! !3! ! ! ! ! !20200930!B! ! !B! !D!N!U!1!001!N!1G!C!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!A!N! ! ! ! ! ! !0001! !

Who is the contractor on this award?

The obligated recipient is LONGBOW LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $74.9 million.

What is the period of performance?

Start: 2005-09-26. End: 2013-05-31.

What was the initial estimated value of the contract, and how did the final award amount compare?

The provided data indicates an initial estimated value that is not explicitly stated in a readily comparable format, but the final award amount reached $837,750,223. The contract duration was from September 26, 2005, to May 31, 2013, spanning approximately 7 years and 8 months. The significant final value suggests either a substantial increase in the scope of work, unforeseen cost escalations, or an initial estimate that was considerably lower than the eventual cost. Without the initial estimate figure, a direct percentage comparison is impossible, but the absolute final value is substantial for engineering technical services.

What is the significance of the 'Cost Plus Fixed Fee' (CPFF) contract type in this context?

The Cost Plus Fixed Fee (CPFF) contract type means the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure is often used when the scope of work is not precisely defined or is expected to evolve, as is common in complex engineering projects. However, CPFF contracts carry a risk of cost overruns, as the contractor has less incentive to control costs once the fee is fixed. Effective government oversight is crucial to ensure costs remain reasonable and allocable to the contract objectives. For taxpayers, this means the final cost can be higher than anticipated if cost controls are not stringent.

What are the potential risks associated with a sole-source award for this type of service?

A sole-source award, like the one for LONGBOW LLC, eliminates competitive pressure, which can lead to higher prices than might be achieved in an open market. The government relies heavily on the contractor's proposed pricing and cost justifications, potentially missing out on innovative solutions or cost-saving approaches from other vendors. While sole-source awards are sometimes necessary for unique capabilities, they increase the risk of the government overpaying and reduce transparency in the procurement process. It also concentrates risk with a single provider.

How does the contractor's track record influence the assessment of this contract?

The provided data identifies LONGBOW LLC as the contractor. While specific details of their past performance on this or other contracts are not included in the snippet, their sole-source award for the Longbow Hellfire engineering services suggests they possess unique and critical expertise. A positive track record would involve successful delivery of services, adherence to schedule and budget (within the constraints of the CPFF type), and positive performance reviews. Conversely, any history of cost overruns, delays, or quality issues would heighten concerns about the value and execution of this contract. Without more specific performance history, the assessment relies on the contract structure and award type.

What does the contract's duration and final value suggest about the program's importance and complexity?

The contract spanned approximately 7 years and 8 months (September 26, 2005, to May 31, 2013) with a final award value of over $837 million. This extended duration and significant financial commitment indicate that the Longbow Hellfire missile system is a high-priority asset for the Department of Defense, likely requiring ongoing engineering support for sustainment, upgrades, or integration with new platforms. The complexity of missile systems necessitates specialized engineering expertise, justifying the substantial investment and the long-term nature of the contract. It points to a critical, long-lifecycle defense program.

Are there any comparable contracts or spending benchmarks for similar engineering services in the defense sector?

Benchmarking specialized defense engineering services, particularly for advanced missile systems like the Longbow Hellfire, is challenging due to the proprietary nature of the technology and the limited number of qualified contractors. However, large-scale engineering support contracts for major weapon systems often run into hundreds of millions of dollars over several years. Contracts for system integration, software development, and lifecycle sustainment for complex platforms like aircraft or missiles typically represent significant investments. Without access to detailed cost breakdowns and service scope, direct comparisons are difficult, but the scale of this contract aligns with major defense programs requiring sustained technical expertise.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W31P4Q05R0223

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 5600 SAND LAKE RD., ORLANDO, FL, 32819

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $65,564,584

Exercised Options: $65,578,216

Current Obligation: $74,894,587

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline