DoD awards $17.7M engineering services contract to Lockheed Martin, raising value-for-money questions

Contract Overview

Contract Amount: $17,756,648 ($17.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2019-07-01

End Date: 2026-06-30

Contract Duration: 2,556 days

Daily Burn Rate: $6.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SAUDI MNG TO 0005

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $17.8 million to LOCKHEED MARTIN CORPORATION for work described as: SAUDI MNG TO 0005 Key points: 1. Contract awarded on a firm-fixed-price basis, indicating defined scope and cost. 2. Significant duration of 2556 days suggests a long-term need for engineering services. 3. Sole-source award raises concerns about potential overpricing and lack of competitive pressure. 4. Engineering services sector is critical for defense readiness and technological advancement. 5. Contractor's extensive experience in defense contracting may justify the award, but requires scrutiny. 6. Geographic location in Florida may indicate specific operational or training requirements.

Value Assessment

Rating: questionable

The $17.7 million contract value for engineering services over approximately seven years warrants careful benchmarking. Without competitive bids, it is difficult to ascertain if the pricing reflects fair market value. Comparing this to similar sole-source engineering contracts awarded by the Department of the Army or other defense agencies could reveal potential discrepancies. The firm-fixed-price structure provides cost certainty but does not inherently guarantee value for money in a non-competitive scenario.

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 vendors. This approach is typically used when only one vendor possesses the unique capabilities or proprietary technology required for the service. The lack of competition limits price discovery and may result in higher costs for the government compared to a fully competed contract. It also bypasses the opportunity to leverage a wider range of innovative solutions from the market.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. The government missed an opportunity to secure potentially lower prices and better terms through a competitive process.

Public Impact

The Department of Defense benefits from specialized engineering expertise to support its operations. Services delivered likely include design, development, testing, and integration of complex systems. The contract's impact is concentrated in Florida, potentially supporting regional defense infrastructure or personnel. The contract supports a highly skilled engineering workforce within Lockheed Martin and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to inflated costs.
Long contract duration (over 7 years) increases exposure to potential cost overruns or scope creep.
Lack of transparency in the sole-source justification process can obscure true value for money.
Reliance on a single contractor may create vendor lock-in and reduce future flexibility.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Lockheed Martin is a well-established defense contractor with extensive experience.
The contract addresses a specific, potentially critical, engineering need for the Department of the Army.

Sector Analysis

The engineering services sector is a vital component of the defense industrial base, providing essential support for the design, development, and sustainment of military platforms and systems. This contract falls within the broader professional, scientific, and technical services market, which is characterized by high technical expertise and specialized knowledge. Comparable spending in this sector often involves significant investments in R&D, systems integration, and lifecycle support for complex defense programs.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses mandated by this award. The primary contractor, Lockheed Martin, is a large defense corporation, and any subcontracting would likely be at their discretion, potentially involving other large or specialized firms rather than a broad outreach to the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price structure, which obligates the contractor to deliver specified services within the agreed-upon price. Transparency may be limited due to the sole-source nature of the award, but contract performance reviews and audits by relevant DoD oversight bodies, such as the Defense Contract Audit Agency (DCAA) or the Inspector General, would be standard.

Related Government Programs

Department of Defense Engineering Services
Lockheed Martin Defense Contracts
Army Aviation and Missile Command Support
Florida Defense Industry Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.8 million to LOCKHEED MARTIN CORPORATION. SAUDI MNG TO 0005

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 $17.8 million.

What is the period of performance?

Start: 2019-07-01. End: 2026-06-30.

What specific engineering services are being provided under this contract?

The provided data indicates the contract is for 'Engineering Services' (nd: 'Engineering Services') under the North American Industry Classification System (NAICS) code 541330. While the specific nature of these services is not detailed, this NAICS code typically encompasses establishments providing architectural, engineering, and related design services. For a defense contract of this magnitude and duration, it likely involves complex systems engineering, design, integration, testing, and technical support for military platforms, weapons systems, or related infrastructure. This could range from conceptual design and prototyping to sustainment engineering and upgrades throughout the lifecycle of defense assets.

How does the $17.7 million contract value compare to similar engineering services contracts awarded by the DoD?

Benchmarking the $17.7 million value requires comparing it against similar engineering services contracts, particularly those awarded on a sole-source basis by the Department of Defense or Department of the Army. Without access to a comprehensive database of comparable contracts, a precise comparison is difficult. However, for a contract spanning over seven years (2556 days), $17.7 million suggests an average annual value of approximately $2.5 million. This figure needs to be assessed in the context of the complexity and criticality of the engineering services required. If the services involve highly specialized expertise or support for major defense programs, this value might be reasonable. Conversely, if the services are more routine, the value could be considered high, especially given the lack of competition.

What are the primary risks associated with a sole-source award of this magnitude?

The primary risks associated with a sole-source award of this magnitude ($17.7 million) include potential overpricing due to the absence of competitive pressure, reduced incentive for the contractor to innovate or optimize costs, and a lack of transparency in the justification for awarding to a single vendor. There's also the risk of vendor lock-in, making it difficult to switch providers or negotiate better terms in the future. Furthermore, if the sole-source justification is weak or based on outdated information, the government may not be obtaining the best value or the most suitable solution available in the market. The long duration of the contract exacerbates these risks over time.

What is Lockheed Martin's track record with similar DoD engineering contracts?

Lockheed Martin Corporation is one of the largest defense contractors globally and has an extensive track record of performing complex engineering services contracts for the Department of Defense across various branches and programs. They are known for their work on major defense platforms, including aircraft, missiles, and space systems. Their history typically involves large-scale, high-value contracts requiring advanced engineering capabilities. While their experience is extensive, the specific performance, cost-effectiveness, and quality of past contracts would need to be reviewed to fully assess their suitability and value proposition for this particular award. Past performance reviews and contract close-out data would provide more granular insights.

How does the firm-fixed-price (FFP) contract type influence risk and value for this award?

The Firm-Fixed-Price (FFP) contract type aims to transfer most of the risk from the government to the contractor. Under an FFP agreement, the contractor agrees to a set price for a defined scope of work, regardless of the actual costs incurred. This provides the government with cost certainty and predictability, which is a significant advantage. For this $17.7 million contract, the FFP structure means Lockheed Martin is responsible for managing its costs to remain profitable. However, in a sole-source scenario, the initial FFP might be set at a higher baseline price than if it were competitively bid, potentially diminishing the value-for-money aspect despite the cost certainty.

What is the historical spending pattern for engineering services (NAICS 541330) by the Department of the Army?

Historical spending by the Department of the Army on engineering services (NAICS 541330) is substantial, reflecting the continuous need for design, development, and technical support for its vast array of military equipment, infrastructure, and systems. The Army consistently procures these services for projects ranging from weapon system upgrades and vehicle design to base construction planning and environmental engineering. Annual spending can fluctuate based on major program milestones, modernization efforts, and infrastructure investments. While specific aggregate figures for the Army's spending on NAICS 541330 are not provided here, it is understood to be a multi-billion dollar category annually across the Department of Defense, with significant portions allocated to major defense contractors like Lockheed Martin for specialized support.

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: $17,756,648

Exercised Options: $17,756,648

Current Obligation: $17,756,648

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $75,854

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