DoD's $39.5M engineering services contract with Lockheed Martin saw limited competition and a lengthy performance period
Contract Overview
Contract Amount: $39,460,585 ($39.5M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2011-08-31
End Date: 2017-12-31
Contract Duration: 2,314 days
Daily Burn Rate: $17.1K/day
Competition Type: NOT COMPETED
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: ENG SVCS
Place of Performance
Location: GOODYEAR, MARICOPA County, ARIZONA, 85338
State: Arizona Government Spending
Plain-Language Summary
Department of Defense obligated $39.5 million to LOCKHEED MARTIN CORPORATION for work described as: ENG SVCS Key points: 1. The contract's value of $39.5 million over its duration suggests a significant investment in specialized engineering capabilities. 2. Limited competition raises questions about potential price overruns and the optimal use of taxpayer funds. 3. The extended performance period of over 6 years could indicate complex or ongoing project requirements. 4. The Cost Plus Fixed Fee (CPFF) contract type may incentivize cost escalation if not closely monitored. 5. The absence of small business set-asides means opportunities for smaller firms in this contract were not prioritized. 6. The contract was awarded by the Defense Contract Management Agency, indicating a focus on defense-related engineering needs.
Value Assessment
Rating: fair
Benchmarking the value of this $39.5 million contract is challenging without specific deliverables. However, the CPFF structure warrants scrutiny for cost control. Compared to similar large-scale engineering service contracts, the price per year appears within a reasonable range, but the lack of robust competition limits the ability to definitively assess value for money. Further analysis of the specific services rendered and their necessity would provide a clearer picture of cost-effectiveness.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
This contract was not competed on a full and open basis, indicating that the solicitation was likely restricted or that only one responsible source was available. The specific reasons for this limited competition are not detailed in the provided data. A lack of broad competition can lead to higher prices and reduced innovation, as potential bidders are not incentivized to offer their best terms.
Taxpayer Impact: Limited competition means taxpayers may not have received the most competitive pricing available, potentially leading to higher overall costs for the government.
Public Impact
The primary beneficiaries are likely the Department of Defense, receiving critical engineering support for its operations. The services delivered are engineering services, crucial for the design, development, and maintenance of defense systems. The contract's performance is linked to Arizona (AZ), suggesting a geographic focus for the work performed. The workforce implications include employment for engineers and technical staff employed by Lockheed Martin and potentially its subcontractors.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Fixed Fee contract type can lead to cost overruns if not managed tightly.
- Limited competition may result in suboptimal pricing for taxpayers.
- Extended performance period could indicate potential for scope creep or unforeseen project complexities.
- Lack of small business participation limits opportunities for smaller, innovative firms.
Positive Signals
- Award to a major defense contractor like Lockheed Martin suggests access to significant expertise and resources.
- Engineering services are critical for national defense, indicating a necessary function being fulfilled.
- The contract was awarded by a specialized agency (DCMA), implying adherence to defense procurement standards.
Sector Analysis
The engineering services sector is a critical component of the broader aerospace and defense industry. This contract, valued at approximately $39.5 million, falls within the realm of specialized technical support for government programs. The market for defense engineering services is substantial, driven by the continuous need for modernization and maintenance of military equipment and systems. Comparable spending benchmarks in this sector often involve multi-year, high-value contracts for complex projects, making this contract's scale significant but not extraordinary within the defense context.
Small Business Impact
This contract did not include small business set-asides, meaning that opportunities for small businesses were not specifically carved out. Consequently, small businesses were unlikely to be direct awardees. There is no information provided regarding subcontracting plans, so the extent to which small businesses might participate indirectly through subcontracting is unknown. The lack of set-asides suggests that the primary focus was on securing the required engineering services from a large, established contractor.
Oversight & Accountability
Oversight for this contract would typically fall under the purview of the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance with contract terms. Accountability measures would include regular reporting, performance reviews, and audits, particularly given the CPFF contract type. Transparency is generally maintained through contract databases, though specific details of performance and cost breakdowns may be limited due to national security or proprietary concerns.
Related Government Programs
- Defense Engineering Services
- Lockheed Martin Contracts
- Department of Defense Procurement
- Cost Plus Fixed Fee Contracts
- Arizona Defense Spending
Risk Flags
- Limited Competition
- Cost Plus Fixed Fee Contract Type
- Extended Performance Period
Tags
defense, engineering-services, lockheed-martin-corporation, department-of-defense, limited-competition, cost-plus-fixed-fee, delivery-order, arizona, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $39.5 million to LOCKHEED MARTIN CORPORATION. ENG SVCS
Who is the contractor on this award?
The obligated recipient is LOCKHEED MARTIN CORPORATION.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $39.5 million.
What is the period of performance?
Start: 2011-08-31. End: 2017-12-31.
What specific engineering services were provided under this contract?
The provided data indicates the contract was for 'Engineering Services' (NAICS 541330) awarded to Lockheed Martin Corporation by the Department of Defense. While the specific nature of these services is not detailed, engineering services in the defense sector typically encompass a wide range of activities. These can include research and development support, systems engineering, design and integration of complex military platforms (such as aircraft, ships, or ground vehicles), technical analysis, testing and evaluation, and lifecycle support. Given the contract's duration and value, it likely involved substantial, ongoing technical support critical to a specific defense program or system.
How does the Cost Plus Fixed Fee (CPFF) contract type impact value for money?
The Cost Plus Fixed Fee (CPFF) contract type is designed to cover the actual costs incurred by the contractor plus a predetermined fixed fee. While it allows for flexibility and can be used when project scope is uncertain, it carries inherent risks for value for money. The government bears the risk of cost overruns, as all allowable costs are reimbursed. The fixed fee provides the contractor with a profit incentive, but it does not directly incentivize cost reduction. Effective oversight, detailed cost tracking, and robust negotiation are crucial to mitigate the risk of inflated costs and ensure that the government receives fair value under a CPFF arrangement.
What are the implications of 'limited competition' for this contract?
The 'limited competition' designation suggests that the contract was not awarded through a full and open solicitation process. This could be due to several factors, such as the availability of only one responsible source, specific statutory restrictions, or a justification for other than full and open competition. For taxpayers, limited competition often translates to higher prices, as the lack of multiple bidders reduces the incentive for contractors to offer their most competitive rates. It can also limit the government's access to a wider range of innovative solutions or specialized expertise that might be available from other qualified firms.
What is the significance of the contract's extended duration (2314 days)?
The contract duration of 2314 days, approximately 6.3 years, is significant and suggests a long-term requirement for the engineering services provided. Such extended periods are common for complex defense programs that involve extensive research, development, integration, testing, and sustainment phases. This duration implies a stable, ongoing need for Lockheed Martin's expertise within the Department of Defense. However, it also necessitates continuous monitoring to manage potential scope creep, ensure ongoing relevance of services, and adapt to evolving technological or strategic requirements over the contract's lifecycle.
How does the geographic location (AZ) influence the contract's impact?
The contract's designation of 'AZ' (Arizona) as the state of performance indicates that the engineering services were likely rendered or managed from a location within Arizona. This has implications for regional economic impact, potentially through job creation, facility utilization, and local procurement by Lockheed Martin or its subcontractors within the state. While the primary beneficiary is the Department of Defense, the contract contributes to the defense industry ecosystem in Arizona and supports the specialized workforce residing there.
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: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Lockheed Martin Corp
Address: 1300 S LITCHFIELD RD STE 9, GOODYEAR, AZ, 85338
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: $119,034,467
Exercised Options: $117,801,832
Current Obligation: $39,460,585
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: FA852709D0026
IDV Type: IDC
Timeline
Start Date: 2011-08-31
Current End Date: 2017-12-31
Potential End Date: 2017-12-31 00:00:00
Last Modified: 2022-11-04
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