Lockheed Martin awarded $255M contract for Army program management, raising questions on competition and value

Contract Overview

Contract Amount: $254,750,595 ($254.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2015-05-28

End Date: 2022-03-31

Contract Duration: 2,499 days

Daily Burn Rate: $101.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: UCA FOR BASE GWA 0001-0001 PROGRAM MANAGEMENT IGF::CT::IGF

Place of Performance

Location: GRAND PRAIRIE, TARRANT County, TEXAS, 75051

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $254.8 million to LOCKHEED MARTIN CORPORATION for work described as: UCA FOR BASE GWA 0001-0001 PROGRAM MANAGEMENT IGF::CT::IGF Key points: 1. Contract awarded via sole-source justification, limiting competitive pressure on pricing. 2. Significant duration of the contract (over 6 years) suggests a long-term need for these services. 3. Cost-plus-fixed-fee structure may incentivize cost increases, requiring robust oversight. 4. The contract's value places it among larger engagements for program management services. 5. Lack of competition raises concerns about achieving optimal value for taxpayer dollars. 6. Performance context is limited due to the sole-source nature and lack of public performance data.

Value Assessment

Rating: questionable

Benchmarking the value of this $255 million contract is challenging due to its sole-source nature and the specific program management services provided. Without competitive bids, it's difficult to assess if the pricing is optimal or if alternative solutions could have been procured at a lower cost. The cost-plus-fixed-fee structure, while common for complex projects, carries inherent risks of cost overruns that necessitate diligent oversight to ensure value for money. Comparing it to similar sole-source contracts for specialized program management within the Department of Defense might offer some context, but a true value-for-money assessment is hampered by the lack of competitive data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed among multiple potential vendors. This approach is typically reserved for situations where only one vendor possesses the necessary capabilities or when urgency precludes a full and open competition. The lack of competition means that market forces were not leveraged to drive down prices or encourage innovation, potentially leading to higher costs for the government compared to a competed contract. The government must have demonstrated that full and open competition was not feasible or not in the public interest.

Taxpayer Impact: The absence of competition means taxpayers may not have received the best possible price for these essential program management services. Without competing offers, there is less assurance that the selected contractor's pricing reflects market rates or that cost-saving efficiencies were pursued.

Public Impact

The primary beneficiary is the Department of the Army, which receives critical program management support for its operations. Services delivered include program management, likely encompassing planning, execution, monitoring, and control of specific defense programs. The geographic impact is centered within Texas, where the contractor is located, but the ultimate impact is on national defense programs. Workforce implications include the direct employment of personnel by Lockheed Martin to fulfill the contract requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially inflates costs.
Cost-plus-fixed-fee structure can incentivize higher spending without direct performance linkage.
Long contract duration (over 6 years) increases exposure to potential cost escalations.
Lack of transparency in the sole-source justification process.
Limited public data on specific performance metrics and outcomes.

Positive Signals

Lockheed Martin is a major defense contractor with extensive experience in program management.
The contract addresses a specific, likely critical, need within the Department of the Army.
The fixed-fee component provides some level of cost certainty for the government.
The contract duration suggests a stable, long-term requirement being met.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting program management for defense initiatives. The broader engineering services market is substantial, with significant government spending allocated to defense-related engineering and technical support. This contract represents a notable portion of spending within this niche, particularly for program management functions. Comparable spending benchmarks would typically involve analyzing other large, sole-source engineering services contracts awarded to major defense contractors for similar program management roles.

Small Business Impact

This contract does not appear to involve a small business set-aside, as indicated by the prime contractor being Lockheed Martin Corporation. There is no explicit information provided regarding subcontracting plans or goals for small businesses. Without specific subcontracting requirements or reporting, the direct impact on the small business ecosystem is unclear, though large prime contracts often have indirect subcontracting opportunities.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Given the sole-source nature and cost-plus-fixed-fee structure, robust oversight is crucial to monitor costs, ensure compliance with contract terms, and verify performance. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract. Transparency is limited by the sole-source award, but contract modifications and performance reports, if publicly available, would offer insights.

Related Government Programs

Department of Defense Program Management Support
Army Logistics and Readiness Programs
Defense Engineering Services Contracts
Major Defense Acquisition Programs

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Long contract duration
Lack of transparency in justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $254.8 million to LOCKHEED MARTIN CORPORATION. UCA FOR BASE GWA 0001-0001 PROGRAM MANAGEMENT IGF::CT::IGF

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 $254.8 million.

What is the period of performance?

Start: 2015-05-28. End: 2022-03-31.

What specific program(s) does this contract support, and what is the justification for the sole-source award?

The provided data indicates this contract, "UCA FOR BASE GWA 0001-0001 PROGRAM MANAGEMENT IGF::CT::IGF," is for program management services supporting the Department of the Army. The justification for the sole-source award is not detailed in the provided data. Typically, sole-source awards are justified under specific circumstances outlined in the Federal Acquisition Regulation (FAR), such as when only one responsible source can provide the required supplies or services, or when a public exigency requires immediate contract award. Without further documentation, the precise reason for not competing this significant contract remains unclear, which is a key area for further investigation.

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

The Cost-Plus-Fixed-Fee (CPFF) structure is common for complex projects where the scope is not fully defined or is subject to change, such as advanced research and development or large-scale program management. In a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This differs from fixed-price contracts, where the price is set regardless of costs incurred, and cost-reimbursement contracts without a fixed fee. The primary risk of CPFF for the government is that the contractor has less incentive to control costs, as their profit is fixed. This necessitates stringent oversight to ensure costs are reasonable and allocable. Compared to fixed-price contracts, CPFF offers more flexibility but potentially at a higher overall cost if not managed carefully.

What is Lockheed Martin Corporation's track record with similar large-scale program management contracts within the Department of Defense?

Lockheed Martin Corporation is one of the largest defense contractors globally and has a long history of managing complex, large-scale programs for the Department of Defense across various domains, including aviation, missile defense, and space systems. Their track record includes managing major acquisition programs, weapon system development, and sustainment efforts. While specific details of their performance on this particular contract are not provided, their extensive experience suggests a high level of capability in program management. However, like any large contractor, they have also faced scrutiny and challenges on various programs regarding cost, schedule, and performance, underscoring the importance of ongoing government oversight.

What are the potential implications of a $255 million sole-source contract on market competition and innovation in the defense program management sector?

A $255 million sole-source contract awarded to a single incumbent like Lockheed Martin can have significant implications for market competition and innovation. By not opening the contract for competitive bidding, the government foregoes the opportunity to discover potentially more cost-effective solutions or innovative approaches from other qualified firms. This can create a barrier to entry for smaller or emerging companies seeking to gain a foothold in the defense program management sector. Furthermore, a lack of competitive pressure may reduce the incentive for the incumbent contractor to continuously innovate or aggressively pursue cost efficiencies, potentially leading to higher long-term costs for the government and slower adoption of new technologies or methodologies.

How does the duration of this contract (2499 days, approximately 6.8 years) influence the assessment of its value and risk?

The extended duration of this contract, nearly seven years, significantly impacts its value and risk assessment. On the one hand, a long-term contract suggests a stable, ongoing requirement for critical program management services, providing continuity for the Department of the Army and allowing the contractor to develop deep expertise. This stability can be valuable. However, the extended period also amplifies the risks associated with a sole-source, cost-plus-fixed-fee award. Over nearly seven years, there is a greater opportunity for costs to escalate beyond initial projections, for the program's needs to evolve in ways not fully anticipated, or for performance issues to arise. Robust oversight mechanisms are therefore even more critical to manage these long-term risks and ensure sustained value.

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

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

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: $636,153,196

Exercised Options: $399,999,346

Current Obligation: $254,750,595

Actual Outlays: $245,154

Subaward Activity

Number of Subawards: 251

Total Subaward Amount: $359,389,205

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline