DoD's $35.7M Lockheed Martin contract for aircraft operational system development shows fair value and strong competition

Contract Overview

Contract Amount: $35,688,797 ($35.7M)

Contractor: Lockheed Martin Services, Inc.

Awarding Agency: Department of Defense

Start Date: 2003-08-28

End Date: 2009-06-09

Contract Duration: 2,112 days

Daily Burn Rate: $16.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200311!000222!1700!A8452 !NAVAL AIR WARFARE CENTER, WEAPON!N6893699D0030 !A!N! !N!0005 !20030828!20050731!016107190!805258373!834951691!N!LOCKHEED MARTIN SERVICES INC !4151 N PECOS ROAD SUITE 20!LAS VEGAS !NV!89115!13154!029!06!CHINA LAKE NWC !KERN !CALIFORNIA!+000000745300!N!N!000000000000!AC17!RDTE/AIRCRAFT-OPERATIONAL SYSTEM DEVELOPMENT !S1 !SERVICES !2000!NOT DISCERNABLE OR CLASSIFIED !541330!E! !5!B!M! !A!D!20040114!B! ! !A! !A!U!R!1!001!B! !Z!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!B!N! ! ! ! ! ! !0001! !

Place of Performance

Location: GAITHERSBURG, MONTGOMERY County, MARYLAND, 20879

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $35.7 million to LOCKHEED MARTIN SERVICES, INC. for work described as: 200311!000222!1700!A8452 !NAVAL AIR WARFARE CENTER, WEAPON!N6893699D0030 !A!N! !N!0005 !20030828!20050731!016107190!805258373!834951691!N!LOCKHEED MARTIN SERVICES INC !4151 N PECOS ROAD SUITE 20!LAS VEGAS !NV!89115!13154!029!06!CHINA LAKE NWC !KERN … Key points: 1. Contract awarded to Lockheed Martin Services, Inc. for aircraft operational system development. 2. The contract duration was 2,112 days, indicating a long-term need for these services. 3. Awarded under full and open competition, suggesting a robust bidding process. 4. The contract type, Cost Plus Award Fee, allows for flexibility but requires careful oversight. 5. The primary service category is Engineering Services, aligning with the contract's objective. 6. The contract was managed by the Naval Air Warfare Center, Weapon Division.

Value Assessment

Rating: good

The contract value of approximately $35.7 million over its life appears reasonable for a multi-year, complex system development effort. Benchmarking against similar large-scale defense system development contracts would provide a more precise value-for-money assessment. The Cost Plus Award Fee (CPAF) structure, while common in R&D, necessitates diligent performance monitoring to ensure costs remain controlled and award fees are justified by exceptional performance. Without specific performance metrics and award fee payouts, a definitive assessment of cost efficiency is challenging, but the overall value seems within an expected range for this type of work.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited and considered. This competitive environment is generally favorable for price discovery and achieving better value for the government. The presence of multiple bidders suggests that the market for these specialized engineering services is sufficiently robust to support competition, which can drive innovation and cost-effectiveness. The specific number of bidders is not provided, but the designation 'full and open' implies a significant level of market engagement.

Taxpayer Impact: A full and open competition process typically leads to more competitive pricing, which directly benefits taxpayers by ensuring the government is not overpaying for essential defense services.

Public Impact

The primary beneficiaries are the U.S. Navy and potentially other branches of the Department of Defense requiring advanced aircraft operational systems. The services delivered involve the development and enhancement of aircraft operational systems, crucial for national defense capabilities. The contract's geographic impact is centered around the Naval Air Warfare Center, China Lake, California, and potentially extends to Lockheed Martin's facilities. Workforce implications include employment for engineers, technicians, and support staff involved in complex system development and integration.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee contracts can incentivize cost overruns if not managed tightly, as contractor profit is tied to performance and cost.
Long contract durations (2,112 days) can sometimes lead to scope creep or evolving requirements that may not be fully captured in initial pricing.
The specific nature of 'aircraft operational system development' could involve classified or sensitive technologies, potentially limiting transparency.
Reliance on a single large contractor, even if awarded competitively, can reduce long-term market flexibility.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process that likely secured favorable pricing.
The contract is for a critical defense capability (aircraft operational systems), indicating a strategic investment.
The Naval Air Warfare Center's involvement suggests specialized expertise and oversight for this technical domain.
The contract's duration implies a sustained commitment to developing and improving vital defense assets.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on Research, Development, Test, and Evaluation (RDTE) for aircraft operational systems. The market for defense system development is characterized by high barriers to entry, significant government investment, and a focus on technological advancement and national security. Comparable spending benchmarks would typically involve other large-scale aerospace and defense system development contracts, often awarded by agencies like the Department of Defense, NASA, or their prime contractors. The total value of $35.7 million places this contract within the mid-to-large size category for R&D efforts.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss=false, sb=false). Lockheed Martin Services, Inc. is a large business. While there's no direct indication of small business subcontracting goals or performance from the provided data, large defense contracts often include subcontracting plans that aim to engage small businesses. The absence of a small business set-aside means opportunities for small businesses would likely stem from subcontracting requirements rather than direct prime contract awards.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense, specifically managed by the Naval Air Warfare Center, Weapon Division. As a Cost Plus Award Fee contract, rigorous oversight is expected to monitor costs, track performance against milestones, and justify any award fees paid. The Defense Contract Management Agency (DCMA) may also be involved in contract administration and oversight. Transparency is generally limited in defense R&D contracts due to national security considerations, but Inspector General (IG) reports and contract close-out documentation would provide accountability measures.

Related Government Programs

Aircraft System Development Programs
Naval Aviation Research and Development
Aerospace Engineering Services Contracts
Department of Defense R&D Spending
Lockheed Martin Defense Contracts

Risk Flags

Contract Type: Cost Plus Award Fee requires careful monitoring of costs and performance.
Long Duration: Multi-year contracts can be susceptible to changing requirements or technological obsolescence.
Potential for Classified Work: Nature of defense system development may limit public transparency.
Large Contractor Reliance: Dependence on a single prime contractor for critical systems.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.7 million to LOCKHEED MARTIN SERVICES, INC.. 200311!000222!1700!A8452 !NAVAL AIR WARFARE CENTER, WEAPON!N6893699D0030 !A!N! !N!0005 !20030828!20050731!016107190!805258373!834951691!N!LOCKHEED MARTIN SERVICES INC !4151 N PECOS ROAD SUITE 20!LAS VEGAS !NV!89115!13154!029!06!CHINA LAKE NWC !KERN !CALIFORNIA!+000000745300!N!N!000000000000!AC17!RDTE/AIRCRAFT-OPERATIONAL SYSTEM DEVELOPMENT !S1 !SERVICES !2000!NOT DISCERNABLE OR CLASSIFIED !541330!E! !5!B!M! !A!D!20040114!B

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN SERVICES, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $35.7 million.

What is the period of performance?

Start: 2003-08-28. End: 2009-06-09.

What was the specific nature of the 'aircraft operational system development' and how did it contribute to naval capabilities?

The contract, N6893699D0030, awarded to Lockheed Martin Services, Inc., focused on 'AIRCRAFT-OPERATIONAL SYSTEM DEVELOPMENT' under the PSC code AC17. While the exact system is not detailed due to potential classification, this typically involves the research, design, integration, testing, and enhancement of software and hardware systems that enable aircraft to perform their missions. This could range from avionics upgrades, mission planning software, electronic warfare systems, or command and control integration. The contribution to naval capabilities would be enhanced performance, safety, and mission effectiveness of naval aircraft, ensuring they can operate reliably and successfully in complex operational environments. The $35.7 million value suggests a significant undertaking over its multi-year duration.

How does the Cost Plus Award Fee (CPAF) structure compare to other contract types for similar R&D efforts, and what are its implications for cost control?

Cost Plus Award Fee (CPAF) contracts are common for research and development efforts where the final scope and cost are difficult to define precisely at the outset. Unlike fixed-price contracts, CPAF reimburses the contractor for allowable costs and includes a base fee plus an award fee. The award fee is earned based on the government's assessment of the contractor's performance against pre-defined criteria, often related to technical achievement, schedule adherence, and cost management. This structure incentivizes high performance and innovation. However, it requires robust government oversight to ensure costs are reasonable and that award fees are genuinely earned. Compared to Cost Plus Incentive Fee (CPIF), CPAF places more discretion in the government's hands for determining the award fee, potentially offering more control but also requiring more subjective evaluation. Compared to Cost Plus Fixed Fee (CPFF), CPAF adds a performance incentive beyond just cost reimbursement.

What was the historical spending trend for this specific contract or similar services provided by Lockheed Martin to the Naval Air Warfare Center?

The provided data covers a single contract (N6893699D0030) awarded on 2003-08-28 with an end date of 2009-06-09, totaling $35,688,797.40. This represents a specific period of spending for aircraft operational system development. To understand historical trends, one would need to examine prior contracts awarded to Lockheed Martin (or its predecessors/subsidiaries) for similar services by the Naval Air Warfare Center (NAWC) or other naval aviation commands, as well as subsequent contracts. Analyzing the total obligated amounts, contract durations, and types of services across multiple contracts over time would reveal patterns in spending, technological focus, and contractor relationships. Without access to a broader contract history database, it's impossible to establish a definitive trend solely from this single data point.

Were there any significant performance issues or contract modifications noted during the execution of this contract?

The provided data snippet does not contain specific details regarding performance issues or contract modifications beyond the initial award and its scheduled end date. The contract was awarded on August 28, 2003, and had an estimated completion date of July 31, 2005, with a final delivery/completion date extending to June 9, 2009. The duration of 2,112 days (approximately 5.8 years) suggests it was a long-term project. Significant modifications, such as scope changes, funding increases/decreases, or schedule adjustments, would typically be reflected in contract modification data (often denoted by 'mod' numbers or similar fields in a full contract database). The absence of explicit flags for issues in this summary data does not preclude their existence but indicates they are not highlighted in this particular record.

What is the significance of the NAICS code 541330 (Engineering Services) in the context of this contract and the defense industry?

The North American Industry Classification System (NAICS) code 541330, 'Engineering Services,' is highly relevant to this contract. It signifies that the primary service procured involves the application of engineering principles to design, develop, and consult on various technical projects. For the defense industry, this code encompasses a vast array of activities, including aerospace engineering, systems engineering, mechanical engineering, electrical engineering, and more, all crucial for developing and maintaining military platforms and systems. Contracts under this NAICS code often involve complex problem-solving, research and development, and the creation of sophisticated technologies. The Naval Air Warfare Center's use of this code for aircraft operational system development underscores the highly technical and specialized nature of the work performed by Lockheed Martin Services, Inc.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 4151 N PECOS ROAD SUITE 20, LAS VEGAS, NV, 90

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6893699D0030

IDV Type: IDC

Timeline