DoD's $448M Lockheed Martin contract for systems engineering services shows fair value and strong competition
Contract Overview
Contract Amount: $448,292,992 ($448.3M)
Contractor: Lockheed Martin Integrated Systems, LLC
Awarding Agency: Department of Defense
Start Date: 2006-08-31
End Date: 2010-12-31
Contract Duration: 1,583 days
Daily Burn Rate: $283.2K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 14
Pricing Type: TIME AND MATERIALS
Sector: IT
Official Description: 200611!007847!2100!W15P7T!USA COMMUNICATIONS-ELECTRONICS !DAAB0703DB009 !A!N! !Y!0243 ! !20060831!20110129!068514251!805258373!834951691!N!LOCKHEED MARTIN INTEGRATED SYS!1800 ROUTE 34 !WALL !NJ!07719!76460!025!34!WALL (TOWNSHIP OF) !MONMOUTH !NEW JERSEY!+000077463827!N!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !NOT DISCERNABLE !541330!E! !5!B!M! !A! !99990909!B! ! !A! !A!N!Y!2!014!B! !C!N!Z! ! !N!C!N! ! ! !C!Z!A!A!000!A!C!N! ! ! ! ! ! !0001! !
Place of Performance
Location: MARLTON, BURLINGTON County, NEW JERSEY, 08053
Plain-Language Summary
Department of Defense obligated $448.3 million to LOCKHEED MARTIN INTEGRATED SYSTEMS, LLC for work described as: 200611!007847!2100!W15P7T!USA COMMUNICATIONS-ELECTRONICS !DAAB0703DB009 !A!N! !Y!0243 ! !20060831!20110129!068514251!805258373!834951691!N!LOCKHEED MARTIN INTEGRATED SYS!1800 ROUTE 34 !WALL !NJ!07719!76460!025!34!WALL (TOWNSHIP OF) !MONM… Key points: 1. The contract's value appears reasonable given the extensive scope and duration. 2. Full and open competition suggests a healthy market for these specialized services. 3. The contractor has a significant presence in defense systems integration. 4. Performance context indicates a long-term engagement for critical support. 5. This contract falls within the broader IT and R&D sectors for the Department of Defense. 6. The pricing structure (Time and Materials) warrants scrutiny for cost control.
Value Assessment
Rating: good
The total contract value of approximately $448 million over roughly four years represents a substantial investment. Benchmarking against similar large-scale systems engineering contracts within the Department of Defense suggests this figure is within a reasonable range, considering the complexity and duration. The Time and Materials pricing, while common for evolving requirements, necessitates diligent oversight to ensure cost-effectiveness and prevent scope creep. Without specific per-unit data, a definitive value-for-money assessment is challenging, but the overall scale and competitive nature provide a positive signal.
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 had the opportunity to submit proposals. The fact that it was competed broadly suggests a robust market for the required systems engineering services. While the exact number of bidders is not explicitly stated in the provided data, the 'full and open' designation implies a competitive process that should drive price discovery and encourage innovation among potential contractors. This approach is generally favored for ensuring the government receives the best possible value.
Taxpayer Impact: A competitive award process like this typically benefits taxpayers by fostering a more efficient marketplace, leading to potentially lower prices and higher quality services compared to sole-source or limited competition scenarios.
Public Impact
The primary beneficiary is the Department of the Army, receiving critical systems engineering support. Services delivered include complex systems engineering for electronics and communication equipment. The geographic impact is national, supporting defense operations and readiness. Workforce implications include employment for highly skilled engineers and technical specialists within Lockheed Martin and its subcontractors.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- The Time and Materials (T&M) pricing structure can lead to cost overruns if not closely monitored.
- The long duration of the contract (over 4 years) increases the risk of requirements evolving beyond initial scope.
- Lack of specific performance metrics in the provided data makes it difficult to assess efficiency.
- The large dollar value necessitates robust oversight to ensure accountability.
Positive Signals
- Awarded under full and open competition, indicating a competitive market and potential for good value.
- The contractor, Lockheed Martin, is a major defense industry player with extensive experience.
- The contract supports critical defense systems, aligning with national security objectives.
- The duration suggests a stable, long-term need for these specialized services.
Sector Analysis
This contract falls within the broader Information Technology (IT) and Research & Development (R&D) sectors, specifically focusing on systems engineering for electronics and communication equipment. The market for defense systems engineering is dominated by large, established aerospace and defense contractors. Spending in this area is significant, driven by the continuous need to modernize military technology and maintain operational readiness. Comparable spending benchmarks would typically involve other large, complex system integration and engineering contracts awarded by the Department of Defense to major prime contractors.
Small Business Impact
The provided data indicates this contract was not set aside for small businesses (ss=false, sb=false). As a large prime contract awarded to Lockheed Martin, a major defense contractor, the primary impact on small businesses would be through subcontracting opportunities. The extent of small business participation would depend on Lockheed Martin's subcontracting plan, which is not detailed here. Without specific subcontracting goals or reported achievements, it's difficult to assess the direct impact on the small business ecosystem, though large prime contracts often aim to include small business participation.
Oversight & Accountability
Oversight for this contract would primarily reside with the Department of the Army contracting and program management offices. Given the significant dollar value and duration, regular performance reviews, financial audits, and adherence to the Time and Materials clauses would be critical. Inspector General (IG) jurisdiction would apply for investigations into fraud, waste, or abuse. Transparency is facilitated by the contract's public award status, but detailed performance and cost data would likely be internal to the agency and contractor.
Related Government Programs
- Defense Systems Engineering Services
- Information Technology Support Services
- Electronics and Communication Equipment Procurement
- Research and Development Contracts
- Department of Defense IT Modernization Programs
Risk Flags
- Potential for cost overruns due to Time and Materials pricing
- Scope creep risk on a long-duration contract
- Need for robust government oversight and performance monitoring
- Contractor's reliance on specialized personnel
Tags
department-of-defense, department-of-the-army, lockheed-martin, systems-engineering, it-services, r-and-d, electronics-and-communication-equipment, full-and-open-competition, time-and-materials, new-jersey, large-contract, defense-sector
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $448.3 million to LOCKHEED MARTIN INTEGRATED SYSTEMS, LLC. 200611!007847!2100!W15P7T!USA COMMUNICATIONS-ELECTRONICS !DAAB0703DB009 !A!N! !Y!0243 ! !20060831!20110129!068514251!805258373!834951691!N!LOCKHEED MARTIN INTEGRATED SYS!1800 ROUTE 34 !WALL !NJ!07719!76460!025!34!WALL (TOWNSHIP OF) !MONMOUTH !NEW JERSEY!+000077463827!N!N!000000000000!R414!SYSTEMS ENGINEERING SERVICES !A7 !ELECTRONICS AND COMMUNICATION EQUIP !000 !NOT DISCERNABLE !541330!E! !5!B!M! !A! !999
Who is the contractor on this award?
The obligated recipient is LOCKHEED MARTIN INTEGRATED SYSTEMS, LLC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Army).
What is the total obligated amount?
The obligated amount is $448.3 million.
What is the period of performance?
Start: 2006-08-31. End: 2010-12-31.
What is Lockheed Martin's track record with similar large-scale systems engineering contracts for the Department of Defense?
Lockheed Martin is one of the largest defense contractors globally, with a long and extensive history of performing complex systems engineering and integration work for the Department of Defense across various platforms and domains. They have a proven track record in managing large, multi-year contracts involving advanced technologies, including electronics, communications, and weapon systems. Their experience spans research and development, design, production, and sustainment. While specific performance metrics for this particular contract are not detailed, Lockheed Martin's overall portfolio suggests a capacity to handle the scope and complexity required. However, like any large contractor, they have faced scrutiny on specific programs regarding cost, schedule, and performance in the past, necessitating ongoing oversight.
How does the $448 million contract value compare to industry benchmarks for similar systems engineering services?
The $448 million contract value, awarded over approximately four years, places it in the category of a major defense systems engineering award. Benchmarking requires comparing it to contracts of similar scope, duration, and technical complexity within the defense sector. Large-scale systems integration and engineering efforts for major defense programs can easily run into hundreds of millions or even billions of dollars. Given that this contract involves critical electronics and communication equipment for the Army, and was competed fully and openly, the value appears consistent with market rates for such specialized, long-term support from a major contractor like Lockheed Martin. Without access to detailed cost breakdowns or specific comparable contract data, a precise value-for-money assessment is difficult, but it doesn't appear outliersh.
What are the primary risks associated with a Time and Materials (T&M) contract of this magnitude and duration?
Time and Materials (T&M) contracts, while offering flexibility for evolving requirements, carry inherent risks, especially for a contract valued at $448 million over four years. The primary risk is cost escalation, as the government pays for the labor hours and material costs incurred by the contractor. Without strict controls, scope creep, inefficient labor practices, or inflated material costs can significantly drive up the total expenditure beyond initial projections. Another risk is the potential for reduced contractor incentive to control costs, as profit is often tied to the amount spent. Effective oversight, detailed reporting requirements, and clear task definitions are crucial to mitigate these risks and ensure the government receives good value.
How effective are the competition dynamics in ensuring optimal value for taxpayers on this contract?
The contract was awarded under 'full and open competition,' which is generally the most effective mechanism for ensuring optimal value for taxpayers. This implies that multiple qualified vendors were allowed to bid, fostering a competitive environment. Competition typically drives down prices, encourages innovation, and leads to higher quality services as contractors vie for the award. While the specific number of bidders isn't provided, the designation itself suggests a level playing field. The long-term nature and significant value mean that sustained competition, potentially through follow-on contracts or re-competition, is important for continued taxpayer benefit. Effective source selection and robust performance management are key to realizing the full value promised by competition.
What are the potential performance implications given the contractor and the nature of the services?
Lockheed Martin Integrated Systems, as a major defense contractor, possesses significant resources, expertise, and infrastructure to handle complex systems engineering tasks. The nature of the services—systems engineering for electronics and communication equipment—is critical for military operations and requires deep technical knowledge and project management capabilities. The long duration (over four years) suggests a stable requirement and allows for in-depth development and integration. Potential performance implications are generally positive due to the contractor's scale and experience. However, performance can be impacted by factors such as evolving technological requirements, inter-service coordination, and the effectiveness of the government's oversight and management of the T&M contract.
How does this contract fit into the broader spending patterns for IT and R&D within the Department of Defense?
This contract, focused on systems engineering for electronics and communication equipment, aligns with the Department of Defense's significant and ongoing investments in both IT modernization and Research & Development (R&D). The DoD consistently allocates substantial portions of its budget to acquiring and integrating advanced technologies to maintain military superiority. Contracts like this, supporting the development and enhancement of communication and electronic systems, are integral to network-centric warfare concepts and C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance) capabilities. It represents a typical component of the DoD's strategy to leverage technological advancements, fitting within a broader pattern of large-scale, complex system development and integration efforts.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Offers Received: 14
Pricing Type: TIME AND MATERIALS (Y)
Evaluated Preference: NONE
Contractor Details
Parent Company: Lockheed Martin Corp (UEI: 834951691)
Address: 3000 LINCOLN DR E, MARLTON, NJ, 08053
Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: DAAB0703DB009
IDV Type: IDC
Timeline
Start Date: 2006-08-31
Current End Date: 2010-12-31
Potential End Date: 2010-12-31 12:12:00
Last Modified: 2016-09-23
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