DoD awards $128.7M engineering services contract to Lockheed Martin for MLRS systems

Contract Overview

Contract Amount: $128,671,861 ($128.7M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2007-09-28

End Date: 2012-11-21

Contract Duration: 1,881 days

Daily Burn Rate: $68.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING SERVICES FOR VARIOUS MLRS PROGRAM SYSTEMS

Place of Performance

Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $128.7 million to LOCKHEED MARTIN CORPORATION for work described as: ENGINEERING SERVICES FOR VARIOUS MLRS PROGRAM SYSTEMS Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, indicating potential for cost overruns. 2. Sole-source award limits competitive pressure, potentially impacting price efficiency. 3. Long contract duration of 1881 days suggests a significant, ongoing need for services. 4. Services provided are critical for maintaining and improving complex military systems. 5. Contractor has a strong track record with the Department of Defense. 6. Geographic location of performance is Texas.

Value Assessment

Rating: fair

The contract's value of $128.7 million over approximately five years for engineering services is substantial. Without specific benchmarks for MLRS system engineering, a direct value-for-money assessment is challenging. However, the cost-plus-fixed-fee structure, while common for complex R&D, carries inherent risks of cost escalation compared to fixed-price contracts. The absence of competition further complicates a definitive value assessment, as it removes a key mechanism for price discovery and potential savings.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Lockheed Martin Corporation, was solicited. This approach is typically used when a unique capability or proprietary technology is required, or when there is insufficient time to conduct a full and open competition. The lack of multiple bidders means there was no competitive pressure to drive down prices or encourage innovative solutions from a wider market.

Taxpayer Impact: For taxpayers, a sole-source award means the absence of competitive bidding may have resulted in a higher price than could have been achieved through a competitive process. This limits the government's ability to secure the best possible value for public funds.

Public Impact

The primary beneficiaries are the U.S. Army, receiving essential engineering support for the Multiple Launch Rocket System (MLRS) program. Services delivered include engineering support crucial for the sustainment and potential upgrades of MLRS platforms. Geographic impact is concentrated in Texas, where the contractor is located and likely where services are performed. Workforce implications include employment for engineers and technical staff at Lockheed Martin in Texas.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee structure can lead to higher costs than anticipated.
Sole-source award limits price competition and potential for cost savings.
Long contract duration may not reflect evolving technological needs or market efficiencies.
Lack of transparency in sole-source justification could mask inefficiencies.

Positive Signals

Contractor is a major defense supplier with extensive experience.
Engineering services are critical for maintaining a key military asset.
Fixed fee component provides some cost certainty for the contractor's effort.
Contract is for a specific, well-defined program (MLRS).

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting defense systems. The aerospace and defense industry is characterized by long-term, high-value contracts, often with specialized requirements. Spending in this area is driven by national security needs and the lifecycle management of complex weapon systems. Comparable spending benchmarks are difficult to establish without detailed knowledge of MLRS system complexity and specific engineering tasks, but large-scale engineering support for major defense platforms typically runs into tens or hundreds of millions of dollars.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Lockheed Martin Corporation is a large prime contractor. There is no explicit information provided regarding subcontracting plans for small businesses. Without such details, the direct impact on the small business ecosystem is unclear, though large prime contractors often utilize small businesses for specialized support services.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. As a cost-plus-fixed-fee contract, rigorous financial oversight is necessary to monitor costs and ensure the fixed fee is earned appropriately. Transparency is limited due to the sole-source nature. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Missile Systems
Defense Logistics
Aerospace Engineering
Military Hardware Support
Weapon System Sustainment

Risk Flags

Sole-source award lacks competitive pricing.
Cost-plus-fixed-fee structure carries risk of cost overruns.
Long contract duration may not be optimal for evolving needs.
Limited public information on specific performance metrics.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $128.7 million to LOCKHEED MARTIN CORPORATION. ENGINEERING SERVICES FOR VARIOUS MLRS PROGRAM SYSTEMS

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 $128.7 million.

What is the period of performance?

Start: 2007-09-28. End: 2012-11-21.

What is Lockheed Martin Corporation's track record with the Department of Defense, particularly on similar engineering services contracts?

Lockheed Martin Corporation is a major defense contractor with a long and extensive history of working with the Department of Defense across numerous programs and platforms. They are a primary provider of aerospace and defense products and services. Their track record includes the development, production, and sustainment of complex systems, including missile systems like the MLRS. While specific performance metrics for past MLRS engineering contracts are not detailed here, their status as a leading defense prime indicates a substantial capacity and experience base. However, like any large contractor, they have faced scrutiny on various contracts regarding cost, schedule, and performance, necessitating ongoing oversight by the DoD.

How does the $128.7 million value compare to other engineering services contracts for similar military systems?

Benchmarking the $128.7 million value requires comparison with contracts for engineering services on comparable complex military systems, such as other rocket artillery, armored vehicles, or aircraft sustainment programs. Given the MLRS is a significant and complex weapon system, this contract value appears within a reasonable range for multi-year engineering support. However, without access to a database of comparable sole-source, cost-plus-fixed-fee engineering contracts for similar platforms, a precise comparison is difficult. Factors like the scope of work (e.g., sustainment, upgrades, new development), contract duration, and specific technical challenges heavily influence contract values in this sector.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract for engineering services?

The primary risks associated with this contract structure are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher prices than could be achieved in a competitive bidding process. This reduces the government's leverage in price negotiations. Secondly, the cost-plus-fixed-fee (CPFF) structure means the contractor is reimbursed for allowable costs plus a negotiated fixed fee. While the fixed fee provides some incentive for the contractor to control costs (as it doesn't increase with higher costs), there's still a risk of cost overruns if initial estimates are inaccurate or unforeseen technical challenges arise. The government bears the risk of cost increases above the estimated amount, while the contractor's profit is capped by the fixed fee.

How effective is the Department of the Army likely to be in overseeing this contract given its sole-source and CPFF nature?

The effectiveness of the Department of the Army's oversight depends heavily on the resources and diligence applied. For a sole-source CPFF contract, robust oversight is critical. This includes detailed monitoring of contractor expenditures to ensure costs are allowable and reasonable, verification that the fixed fee is earned based on performance milestones, and proactive management of contract scope to prevent creep. The Army typically employs contracting officers, program managers, and technical representatives to perform this oversight. However, the inherent limitations of sole-source procurement and the cost-reimbursement nature mean that oversight must be particularly stringent to mitigate risks of inefficiency and ensure value for taxpayer money.

What are the historical spending patterns for MLRS program engineering services, and how does this contract fit?

Historical spending patterns for MLRS program engineering services would likely show consistent investment over the system's lifecycle, reflecting its importance in the Army's arsenal. Early spending would focus on development and initial fielding, followed by sustainment, upgrades, and modernization efforts. This $128.7 million contract, awarded in 2007 and ending in 2012, represents a significant block of funding for engineering services during a period of active military operations and system sustainment. It fits into the broader pattern of ongoing investment required to maintain the operational readiness and technological relevance of major weapon systems like the MLRS.

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: W31P4Q07R0066

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, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $394,465,510

Exercised Options: $394,465,210

Current Obligation: $128,671,861

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline