DoD's $70M Lockheed Martin contract for custom computer programming services awarded under full and open competition

Contract Overview

Contract Amount: $70,119,554 ($70.1M)

Contractor: Lockheed Martin Services, LLC

Awarding Agency: Department of Defense

Start Date: 2011-05-01

End Date: 2015-02-15

Contract Duration: 1,386 days

Daily Burn Rate: $50.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: PSDT-SP

Place of Performance

Location: GAITHERSBURG, MONTGOMERY County, MARYLAND, 20879

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $70.1 million to LOCKHEED MARTIN SERVICES, LLC for work described as: PSDT-SP Key points: 1. Contract awarded to a single, large defense contractor, indicating a focus on established capabilities. 2. The contract's duration of 1386 days suggests a long-term need for the services provided. 3. Fixed-price contract type aims to control costs and transfer risk to the contractor. 4. The award was made by the Department of the Air Force, a major component of the DoD. 5. Services fall under NAICS code 541511, 'Custom Computer Programming Services', a common area for federal IT spending. 6. The contract was not set aside for small businesses, suggesting the scope or nature of services required larger firms.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics or comparable contract data. The firm-fixed-price structure suggests an attempt to control costs. However, the total award amount of over $70 million over approximately 3.8 years warrants scrutiny to ensure it represents a fair price for the custom programming services delivered. Without more granular data on the specific services rendered and their market value, a definitive assessment of value-for-money is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 5 bids suggests a reasonable level of competition for this requirement. While not a sole-source award, the fact that it went to a single large contractor like Lockheed Martin may suggest that the technical requirements or scale of the project favored established players in the defense IT sector.

Taxpayer Impact: Full and open competition generally benefits taxpayers by encouraging competitive pricing and potentially leading to lower overall costs compared to sole-source or limited competition awards.

Public Impact

The Department of the Air Force benefits from specialized custom computer programming services to support its operations. This contract likely supports critical IT infrastructure and software development needs within the Air Force. The geographic impact is primarily within Maryland, where the contract is managed or services are delivered. Workforce implications include employment opportunities for skilled programmers and IT professionals, likely concentrated with the contractor and potentially subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if the fixed-price contract does not adequately account for all development complexities.
Risk of vendor lock-in if the custom software becomes deeply integrated into Air Force systems.
Dependence on a single large contractor may limit flexibility in adapting to future technological changes.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award under full and open competition suggests a competitive bidding process.
Long contract duration allows for sustained development and support of critical systems.

Sector Analysis

The federal IT services market, particularly for custom computer programming, is substantial. This contract fits within the broader category of defense IT spending, which represents a significant portion of the federal budget. Companies like Lockheed Martin are major players in this sector, often competing for large, complex contracts that require specialized expertise and security clearances. Benchmarks for similar custom programming services can vary widely based on complexity, labor rates, and project scope.

Small Business Impact

This contract was not set aside for small businesses, and the awardee is a large corporation. This suggests that the scope of work or the required expertise was deemed beyond the capacity of small businesses, or that the competition naturally favored larger entities. There is no explicit information on subcontracting plans for small businesses, which could be a missed opportunity to engage the small business ecosystem.

Oversight & Accountability

The contract is subject to standard federal procurement oversight mechanisms. As a firm-fixed-price contract, performance and deliverables would be monitored by the contracting officer and technical representatives. Transparency is generally maintained through contract award databases like FPDS. Inspector General oversight would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense IT Services
Custom Software Development Contracts
Air Force IT Modernization Programs
Federal Civilian IT Services

Risk Flags

Contract Duration
Large Prime Contractor
Fixed-Price Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $70.1 million to LOCKHEED MARTIN SERVICES, LLC. PSDT-SP

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN SERVICES, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $70.1 million.

What is the period of performance?

Start: 2011-05-01. End: 2015-02-15.

What specific custom computer programming services were delivered under this contract?

The provided data indicates the contract falls under NAICS code 541511, 'Custom Computer Programming Services,' and was awarded to Lockheed Martin Services, LLC by the Department of the Air Force. However, the specific nature of the programming services—such as software development, system integration, database programming, or application maintenance—is not detailed in the summary data. These services likely supported specific operational or administrative functions within the Air Force, potentially involving the creation of new software, modification of existing systems, or development of specialized tools to meet unique requirements. Further analysis would require access to the contract's statement of work (SOW) or performance reports.

How does the $70.1 million award compare to similar custom programming contracts within the DoD?

Comparing the $70.1 million award requires context regarding the contract's duration (1386 days, approx. 3.8 years) and the specific services rendered. For custom programming, contract values can range from thousands to hundreds of millions of dollars depending on complexity, scope, and duration. A $70 million contract over nearly four years for specialized programming services is substantial but not uncommon within the Department of Defense, which frequently procures large-scale IT solutions. To provide a precise benchmark, one would need to compare it against contracts with similar NAICS codes, durations, and specific technical requirements awarded by the DoD or other federal agencies during a comparable timeframe.

What are the key risks associated with this firm-fixed-price contract for custom programming?

While firm-fixed-price (FFP) contracts are designed to provide cost certainty, they carry specific risks, especially for custom programming. A primary risk is that the initial price may not accurately reflect the true cost and effort required for complex, evolving software development. If the contractor underestimates the complexity or encounters unforeseen technical challenges, they may incur losses, potentially impacting their motivation or ability to deliver fully. Conversely, if the government's requirements change significantly after the contract is awarded, scope adjustments and change orders can lead to cost increases, negating some of the FFP benefits. There's also a risk that the contractor might cut corners on quality or documentation to protect their profit margin if development proves more difficult than anticipated.

What was the historical spending pattern for custom computer programming services by the Department of the Air Force prior to this award?

Historical spending patterns for custom computer programming services by the Department of the Air Force prior to this award (May 2011) would likely show a consistent and significant investment in IT modernization and support. The Air Force, like other branches of the DoD, relies heavily on sophisticated software for command and control, logistics, intelligence, personnel management, and training. Spending in this area typically fluctuates based on strategic priorities, technological advancements, and specific program requirements. Analyzing past spending would involve examining FPDS data for similar NAICS codes (like 541511) awarded by the Air Force in the years preceding 2011 to identify trends in contract values, types of services procured, and major contractors.

How does the selection of Lockheed Martin Services, LLC impact the potential for innovation or alternative solutions?

Selecting a large, established contractor like Lockheed Martin Services, LLC for a significant custom programming contract can have mixed impacts on innovation. On one hand, large companies possess extensive resources, established processes, and deep domain knowledge, which can be crucial for executing complex, long-term projects reliably. They may also have the capacity to invest in R&D relevant to the contract's scope. However, reliance on a single, large incumbent can sometimes stifle innovation. Smaller, more agile companies might offer novel approaches or cutting-edge technologies that are less likely to be considered or integrated within the established framework of a large contractor. The full and open competition process helps mitigate this by allowing various entities to bid, but the ultimate awardee's structure and approach will shape the innovation landscape.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Custom Computer Programming Services

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › ADP AND TELECOMMUNICATIONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 5

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 700 N FREDERICK AVE, GAITHERSBURG, MD, 20879

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $71,295,500

Exercised Options: $71,295,500

Current Obligation: $70,119,554

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA873408D0003

IDV Type: IDC

Timeline