DoD's $16M Lockheed Martin contract for engineering services in Florida raises value and competition questions

Contract Overview

Contract Amount: $15,987,190 ($16.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2019-06-01

End Date: 2027-01-31

Contract Duration: 2,801 days

Daily Burn Rate: $5.7K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SAUDI RSLFAC TASK ORDER

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $16.0 million to LOCKHEED MARTIN CORPORATION for work described as: SAUDI RSLFAC TASK ORDER Key points: 1. Contract awarded via a sole-source justification, limiting price discovery and potentially increasing costs. 2. The fixed-price contract structure offers some cost certainty but may not reflect true market value. 3. Long duration of nearly 8 years suggests a sustained need for these engineering services. 4. The absence of small business participation raises concerns about broader economic impact. 5. Engineering services are critical for defense readiness, but the specific value proposition needs scrutiny. 6. The contract's value, while significant, needs benchmarking against similar sole-source awards.

Value Assessment

Rating: questionable

The contract's value of approximately $16 million over nearly eight years for engineering services warrants careful review. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar government contracts. The firm fixed-price nature provides some predictability, but the lack of competition means the government may not be achieving the best possible value. Further analysis would require comparing the scope of work and deliverables to publicly available data on comparable engineering service contracts, particularly those awarded on a sole-source basis.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a 'NOT COMPETED' justification, indicating a sole-source procurement. This means that only one contractor, Lockheed Martin Corporation, was solicited for this requirement. The lack of competition limits the government's ability to explore alternative solutions or pricing structures, and it prevents other qualified firms from bidding. While sole-source awards are sometimes necessary due to unique capabilities or urgent needs, they generally lead to higher prices and reduced innovation compared to full and open competition.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings and innovation that typically arise from a competitive bidding environment. This can result in higher overall spending for the same level of service.

Public Impact

The primary beneficiary is Lockheed Martin Corporation, which receives a significant contract for engineering services. The services delivered are engineering support, crucial for maintaining and advancing defense capabilities. The contract has a geographic impact primarily in Florida, where the services are likely performed or managed. While not explicitly stated, such contracts can imply a need for specialized engineering workforce, potentially impacting employment in that sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing and reduced value for taxpayer dollars.
Sole-source award limits opportunities for small businesses to participate in this significant contract.
The long contract duration could indicate a lack of flexibility to adapt to changing technological needs or market conditions.
The specific engineering services and their necessity require further validation to ensure alignment with strategic goals.

Positive Signals

Firm fixed-price contract provides cost certainty for the government, assuming the scope is well-defined.
Lockheed Martin is a well-established defense contractor with a track record, suggesting a degree of reliability.
The contract supports critical defense engineering functions, contributing to national security objectives.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader defense industrial base. The market for defense engineering services is substantial, driven by the continuous need for research, development, modernization, and sustainment of military platforms and systems. Companies like Lockheed Martin are major players in this space, often holding numerous contracts across various defense agencies. Benchmarking this contract's value would involve comparing its per-year cost and scope to other large-scale engineering support contracts awarded to prime defense contractors, especially those that are sole-sourced.

Small Business Impact

This contract does not appear to have a small business set-aside (ss=false) and there is no indication of subcontracting plans for small businesses (sb=false). The absence of small business participation in a contract of this magnitude is a missed opportunity to leverage the innovation and agility of the small business sector. It also means that the economic benefits of this contract are less likely to be distributed within the broader small business ecosystem, potentially concentrating revenue among larger corporations.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army and the Department of Defense's contracting and program management offices. Accountability measures are typically embedded within the contract's terms and conditions, including performance metrics and reporting requirements. Transparency is limited due to the sole-source nature of the award, as the justification and negotiation details are not publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Department of Defense Engineering Services
Lockheed Martin Defense Contracts
Sole-Source Defense Procurements
Army Engineering Support Contracts
Florida Defense Spending

Risk Flags

Sole-source award
Lack of competition
Long contract duration
No small business participation indicated

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.0 million to LOCKHEED MARTIN CORPORATION. SAUDI RSLFAC TASK ORDER

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 $16.0 million.

What is the period of performance?

Start: 2019-06-01. End: 2027-01-31.

What is the specific scope of engineering services required under this contract, and how does it align with the Army's current and future needs?

The provided data does not detail the specific scope of engineering services. However, given the contractor (Lockheed Martin) and the agency (Department of the Army), these services likely encompass a broad range of activities such as systems engineering, design, analysis, testing, and technical support for various defense platforms or programs. The long duration (nearly 8 years) suggests a sustained requirement, possibly related to lifecycle support, modernization efforts, or new system development. To fully assess alignment, one would need to examine the Statement of Work (SOW) and compare it against the Army's strategic modernization priorities and existing engineering capabilities. Without the SOW, it's difficult to determine if the services are essential, redundant, or could potentially be fulfilled through more competitive or innovative means.

How does the approximate annual cost of this contract compare to industry benchmarks for similar sole-source engineering services?

The total contract value is approximately $16 million over a period of 2801 days (roughly 7.67 years), equating to an average annual cost of roughly $2.09 million. Benchmarking this figure against industry standards for sole-source engineering services is challenging without specific details on the nature of the services, the required expertise, and the complexity of the tasks. Sole-source contracts inherently lack the price discovery mechanism of competition, often leading to higher costs. To perform a meaningful comparison, one would need to identify comparable sole-source contracts for similar engineering disciplines (e.g., aerospace, systems integration) awarded by the DoD or other agencies, analyze their scope, duration, and pricing, and then adjust for differences in scale and complexity. Publicly available data on sole-source awards often shows a premium compared to competitively bid contracts.

What are the risks associated with awarding a nearly 8-year sole-source contract for engineering services, particularly regarding technological obsolescence and contractor performance?

Awarding a long-term sole-source contract like this carries several risks. Firstly, technological obsolescence is a significant concern; over nearly eight years, the technologies or systems the engineering services support may evolve rapidly, rendering the contracted services less relevant or requiring costly modifications. Secondly, without competition, there's a reduced incentive for the contractor (Lockheed Martin) to maintain peak performance or efficiency, potentially leading to complacency. Contractor performance risk is also elevated because the government has fewer options to switch providers if issues arise. Furthermore, the lack of competitive pressure can mask inefficiencies or scope creep, leading to cost overruns or suboptimal outcomes. Robust oversight and clear performance metrics are crucial to mitigate these risks.

What is Lockheed Martin Corporation's track record with similar sole-source engineering contracts awarded by the Department of Defense?

Lockheed Martin Corporation is a major defense contractor with extensive experience in engineering services across numerous platforms and programs for the Department of Defense (DoD). They frequently hold large, long-term contracts, many of which may involve sole-source or limited competition justifications due to the specialized nature of their work and proprietary technologies. Their track record generally includes successful delivery on complex defense systems. However, like any large contractor, they have also faced scrutiny regarding contract costs, performance, and sole-source awards. Analyzing their specific history with similar sole-source engineering contracts would involve reviewing past performance evaluations (e.g., CPARS), contract modifications, and any reported issues or disputes related to cost, schedule, or technical performance on comparable agreements.

How does this contract's value and duration compare to historical spending patterns for engineering services within the Department of the Army?

The Department of the Army spends billions annually on various services, including engineering. A $16 million contract over nearly 8 years, averaging around $2.1 million per year, represents a modest portion of the Army's overall service procurement budget. However, its significance lies in its sole-source nature and long duration. Historically, the Army has utilized both competitive and sole-source procurements for engineering services. Sole-source awards are typically justified for unique capabilities, urgent needs, or when only one source can fulfill the requirement. Comparing this specific contract's value and duration to historical patterns would involve analyzing trends in Army spending on engineering services, the proportion allocated to sole-source contracts, and the typical lengths of such agreements. This contract appears to align with the Army's practice of engaging large, established contractors like Lockheed Martin for critical, long-term support, but the lack of competition warrants attention within the broader spending context.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 5600 W SAND LAKE RD # MP-265, ORLANDO, FL, 32819

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: $15,987,190

Exercised Options: $15,987,190

Current Obligation: $15,987,190

Subaward Activity

Number of Subawards: 26

Total Subaward Amount: $1,585,223

Contract Characteristics

Commercial Item: PRODUCTS OR SERVICES PURSUANT TO FAR 12.102(F)

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W52P1J19D0006

IDV Type: IDC

Timeline