DoD's $46M R&D contract to Lockheed Martin shows potential for cost overruns and limited competition
Contract Overview
Contract Amount: $46,146,697 ($46.1M)
Contractor: Lockheed Martin Integrated Systems, LLC
Awarding Agency: Department of Defense
Start Date: 2007-08-31
End Date: 2010-08-30
Contract Duration: 1,095 days
Daily Burn Rate: $42.1K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 3
Pricing Type: TIME AND MATERIALS
Sector: R&D
Official Description: CR 1742
Place of Performance
Location: WALL TOWNSHIP, MONMOUTH County, NEW JERSEY, 07719, UNITED STATES OF AMERICA
Plain-Language Summary
Department of Defense obligated $46.1 million to LOCKHEED MARTIN INTEGRATED SYSTEMS, LLC for work described as: CR 1742 Key points: 1. Contract awarded under a full and open competition, but only three bidders participated. 2. The contract's Time and Materials (T&M) pricing structure carries inherent risk for cost overruns. 3. The contractor, Lockheed Martin, has a significant presence in the defense sector. 4. Research and Development in Physical, Engineering, and Life Sciences is a critical but often unpredictable area. 5. The contract duration of 1095 days suggests a substantial project scope. 6. The award was made by the Department of the Army, indicating a focus on military applications.
Value Assessment
Rating: questionable
Benchmarking the value of this R&D contract is challenging due to the specialized nature of the work and the lack of detailed performance metrics. The Time and Materials (T&M) pricing model, while common for R&D, can lead to costs exceeding initial estimates if not closely managed. Without specific deliverables or milestones tied to fixed prices, assessing the true value-for-money is difficult. The contract's total award amount of $46.1 million over three years suggests a significant investment, but the ultimate return on this investment is contingent on the success of the research.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under a full and open competition, meaning all responsible sources were permitted to submit offers. However, the participation of only three bidders suggests that the market for this specific R&D requirement may be limited, or that the barriers to entry for potential competitors are high. A low number of bidders in a full and open competition can sometimes indicate a lack of robust market interest or specialized capabilities required, potentially impacting price discovery.
Taxpayer Impact: While a full and open competition is generally favorable for taxpayers, the limited number of bidders in this instance might have constrained the competitive pressure, potentially leading to a less optimal price than if more firms had vied for the contract.
Public Impact
The primary beneficiary is the Department of Defense, specifically the Department of the Army, which will receive the outcomes of the research and development. The contract supports advancements in physical, engineering, and life sciences, potentially leading to new technologies or improved military capabilities. The geographic impact is primarily within New Jersey, where the contractor is located, suggesting potential for local economic benefits and job creation in the R&D sector. Workforce implications include the employment of scientists, engineers, and technical staff at Lockheed Martin and potentially its subcontractors.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Time and Materials (T&M) contract type increases the risk of cost overruns if not meticulously monitored.
- Limited competition (3 bidders) may indicate a specialized market or high entry barriers, potentially reducing competitive pressure on pricing.
- The nature of R&D is inherently uncertain, meaning the project's success and final cost are not guaranteed.
- Lack of specific performance metrics or milestones in the provided data makes it difficult to assess the contractor's performance incentives.
- The contract's duration (3 years) requires sustained oversight to ensure continued alignment with evolving DoD needs.
Positive Signals
- Awarded through a full and open competition, ensuring a broad initial opportunity for interested parties.
- The contractor, Lockheed Martin, is a well-established entity with extensive experience in defense contracting and R&D.
- The contract supports critical research and development in physical, engineering, and life sciences, aligning with national security objectives.
- The contract is managed by the Department of the Army, a major component of the DoD with established procurement and oversight processes.
Sector Analysis
This contract falls within the Research and Development (R&D) sector, specifically focusing on physical, engineering, and life sciences (NAICS code 541710). This sector is characterized by innovation, long development cycles, and significant investment. The market size for defense-related R&D is substantial, driven by the need for technological superiority. Comparable spending benchmarks in this area are highly variable, depending on the specific scientific domain and project scope. Lockheed Martin is a major player in this sector, consistently securing large contracts for advanced technology development.
Small Business Impact
The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Given the nature of the work and the prime contractor, it is unlikely that significant subcontracting opportunities for small businesses would be mandated or readily available, unless specific components or specialized services were outsourced. The focus appears to be on a large, established prime contractor for a complex R&D effort.
Oversight & Accountability
Oversight for this contract would typically be managed by the contracting officer and the contracting officer's representative (COR) within the Department of the Army. Accountability measures would be tied to the contract's terms, including delivery schedules, technical performance, and adherence to the T&M ceiling. Transparency is generally maintained through contract awards databases, though detailed R&D progress reports are often considered sensitive. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.
Related Government Programs
- Department of Defense Research and Development Programs
- Army Science and Technology Investments
- Advanced Technology Development Contracts
- Lockheed Martin Defense Contracts
- Time and Materials Contract Vehicles
Risk Flags
- Potential for cost overruns due to T&M contract type.
- Limited competition may reduce price discovery and potentially impact value.
- R&D inherently carries uncertainty regarding outcomes and final costs.
- Lack of detailed performance metrics in summary data hinders full value assessment.
Tags
defense, department-of-defense, department-of-the-army, research-and-development, time-and-materials, full-and-open-competition, lockheed-martin, new-jersey, large-contract, fy2007, fy2008, fy2009
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $46.1 million to LOCKHEED MARTIN INTEGRATED SYSTEMS, LLC. CR 1742
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 $46.1 million.
What is the period of performance?
Start: 2007-08-31. End: 2010-08-30.
What is the track record of Lockheed Martin in managing Time and Materials (T&M) R&D contracts with the Department of Defense?
Lockheed Martin has a long and extensive history of contracting with the Department of Defense across various service and product categories, including significant R&D efforts. While specific data on their T&M R&D contract performance is not publicly detailed in this summary, their status as a major defense contractor suggests they possess established systems for managing such contracts. However, T&M contracts inherently carry risks of cost escalation if not rigorously overseen. Past performance reviews and contract close-out data from the DoD would provide a more granular assessment of their specific success rates, cost control effectiveness, and adherence to contract ceilings on similar T&M R&D awards.
How does the $46.1 million award compare to other R&D contracts in physical, engineering, and life sciences awarded by the DoD in the same period?
The $46.1 million award for this R&D contract is a substantial sum, indicative of a significant project scope. To benchmark it effectively against other DoD R&D contracts in physical, engineering, and life sciences awarded around 2007-2010, one would need access to comprehensive contract databases. Such a comparison would involve analyzing the number of bidders, contract types (e.g., fixed-price vs. T&M), duration, and specific research areas. Generally, R&D contracts can range from a few million to hundreds of millions of dollars, depending on the technological maturity, strategic importance, and complexity. This particular award appears to be in the mid-to-upper range for a single contract of this nature, suggesting a high-priority or complex research undertaking.
What are the primary risks associated with the Time and Materials (T&M) contract type for this R&D effort?
The primary risk with a Time and Materials (T&M) contract for R&D is the potential for cost overruns. Unlike fixed-price contracts, T&M agreements reimburse the contractor for direct labor hours at specified hourly rates and for the actual cost of materials. If the project scope expands, if research proves more complex than anticipated, or if labor hours are not efficiently utilized, costs can escalate beyond initial projections, especially if there isn't a robust ceiling or strict oversight. For R&D, where outcomes are uncertain, T&M can provide flexibility but requires diligent monitoring of labor hours, rates, and material costs to ensure value for money and prevent budget breaches.
Given the limited competition (3 bidders), what is the potential impact on innovation and technological advancement?
Limited competition, even in a full and open solicitation, can have a mixed impact on innovation. On one hand, it might suggest that only a few entities possess the highly specialized knowledge, facilities, or security clearances required for this specific R&D. In such cases, awarding to the most capable firm, even with fewer competitors, might be the most pragmatic approach to achieving the desired technological advancement. On the other hand, a lack of broader competition could stifle the exploration of alternative approaches or disruptive technologies that might have emerged from a more diverse pool of bidders. It could also indicate that the market for this type of R&D is concentrated, potentially leading to less pressure to innovate aggressively.
What are the typical performance metrics or milestones used to evaluate success in DoD R&D contracts of this nature?
Evaluating success in DoD R&D contracts typically involves a combination of technical, schedule, and cost performance metrics. For contracts like this, which are R&D focused, key performance indicators (KPIs) might include the successful demonstration of specific technologies, achievement of defined research objectives, development of prototypes, validation of scientific principles, and timely completion of research phases or milestones. While the contract is T&M, there are usually interim deliverables, progress reports, and technical reviews that allow the government to assess progress and provide feedback. The ultimate success is often measured by whether the R&D leads to a capability that can be transitioned to a program of record or provides a significant technological advantage.
How has federal spending in the 'Research and Development in the Physical, Engineering, and Life Sciences' category (NAICS 541710) evolved since this contract was awarded?
Federal spending in the 'Research and Development in the Physical, Engineering, and Life Sciences' category (NAICS 541710) has generally seen fluctuations but has remained a significant area of investment, particularly within the Department of Defense. Since the 2007-2010 period when this contract was active, overall federal R&D spending has been influenced by budget priorities, national security needs, and economic conditions. The DoD consistently represents a large portion of federal R&D outlays, focusing on areas like advanced materials, artificial intelligence, cybersecurity, and biomedical research. While specific year-over-year trends for NAICS 541710 require detailed analysis of federal budget data, the importance of scientific and technological advancement for defense ensures continued substantial investment in this broad category.
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: 3
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
Financial Breakdown
Contract Ceiling: $75,147,064
Exercised Options: $46,146,697
Current Obligation: $46,146,697
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: DAAB0703DB009
IDV Type: IDC
Timeline
Start Date: 2007-08-31
Current End Date: 2010-08-30
Potential End Date: 2010-08-30 00:00:00
Last Modified: 2015-05-13
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