DoD's $110M IT services contract to Lockheed Martin raises questions on competition and value

Contract Overview

Contract Amount: $109,900,553 ($109.9M)

Contractor: Lockheed Martin Integrated Systems, LLC

Awarding Agency: Department of Defense

Start Date: 2010-01-29

End Date: 2013-09-30

Contract Duration: 1,340 days

Daily Burn Rate: $82.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: IT

Official Description: R0I0040 S10-0179 PRO PLUS

Place of Performance

Location: VICKSBURG, WARREN County, MISSISSIPPI, 39180

State: Mississippi Government Spending

Plain-Language Summary

Department of Defense obligated $109.9 million to LOCKHEED MARTIN INTEGRATED SYSTEMS, LLC for work described as: R0I0040 S10-0179 PRO PLUS Key points: 1. Contract awarded without competition, limiting price discovery and potentially increasing costs. 2. Significant contract value suggests a need for robust oversight and performance monitoring. 3. The duration of the contract (over 3 years) indicates a long-term need for these services. 4. Focus on computer facilities management points to critical infrastructure support. 5. The absence of small business participation raises concerns about broader economic impact. 6. Contract type (Cost No Fee) can incentivize cost overruns if not managed carefully.

Value Assessment

Rating: questionable

Benchmarking the value of this $110.9 million contract is challenging due to the lack of competitive bidding. The Cost No Fee (CNF) contract type, while sometimes used for specific R&D or urgent needs, offers limited incentive for the contractor to control costs, as the government bears the full cost plus a pre-determined fee. Without comparable contracts for similar services under competitive conditions, it's difficult to definitively assess if the pricing represents fair market value. The government's ability to manage and scrutinize costs under a CNF contract is paramount to ensuring value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a 'NOT COMPETED' (sole-source) justification, meaning there was no open competition. This approach is typically reserved for situations where only one source can fulfill the requirement, such as when a specific technology or expertise is proprietary. The lack of competition means that potential cost savings that could arise from a bidding process were not realized. It also limits the government's ability to explore alternative solutions or providers.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. The government missed an opportunity to leverage market forces to secure the best possible price and terms.

Public Impact

The Department of the Army benefits from essential computer facilities management services. This contract supports critical IT infrastructure operations within the Department of Defense. The services likely ensure the continuity and security of military IT systems. Workforce implications are tied to the contractor's personnel managing these facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Cost No Fee contract type offers limited incentive for contractor cost control.
Sole-source award restricts the government's ability to explore alternative solutions.
Absence of small business participation limits economic opportunities for smaller firms.

Positive Signals

Contract ensures critical IT infrastructure management for the Department of Defense.
Long-term contract (over 3 years) provides stability for service delivery.
Awardee is a major defense contractor with significant experience.

Sector Analysis

This contract falls within the Information Technology (IT) sector, specifically focusing on computer facilities management services. This is a crucial area for any large organization, especially the Department of Defense, as it involves the maintenance, operation, and security of essential computing infrastructure. The market for IT services is vast and competitive, but specific niche services, particularly those requiring specialized security clearances or integration with existing government systems, can sometimes lead to sole-source awards. Comparable spending benchmarks for IT facilities management vary widely based on scope, location, and security requirements.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Given the large dollar value and the nature of the services (complex IT facilities management), it's possible that the prime contractor, Lockheed Martin, may engage small businesses as subcontractors. However, without specific subcontracting plans or data, the direct impact on the small business ecosystem is unclear. The absence of a small business set-aside for the prime contract suggests that the requirement was not deemed suitable for competition among small businesses, or that larger, established firms were prioritized.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Given the sole-source nature and Cost No Fee structure, rigorous oversight of contractor performance, cost reporting, and adherence to contract terms would be essential. Transparency might be limited due to the non-competitive award. Inspector General (IG) jurisdiction would apply if any fraud, waste, or abuse were suspected or reported.

Related Government Programs

IT Infrastructure Management
Computer Systems Operations
Defense IT Services
Facilities Support Contracts
Sole-Source IT Procurements

Risk Flags

Lack of Competition
Cost Control Concerns (CNF)
Potential for Overpricing
Limited Innovation Exposure
Vendor Lock-in Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $109.9 million to LOCKHEED MARTIN INTEGRATED SYSTEMS, LLC. R0I0040 S10-0179 PRO PLUS

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 $109.9 million.

What is the period of performance?

Start: 2010-01-29. End: 2013-09-30.

What is the track record of Lockheed Martin Integrated Systems, LLC with the Department of Defense for similar IT facilities management services?

Lockheed Martin Integrated Systems, LLC, as a major defense contractor, has a long and extensive history of providing a wide array of services to the Department of Defense, including IT and facilities management. While specific performance data for this particular contract (R0I0040 S10-0179) isn't detailed here, the company's overall track record involves managing complex systems and large-scale operations. Their experience typically encompasses areas like network operations, system maintenance, cybersecurity, and infrastructure support across various military branches. However, the effectiveness and value derived from any specific contract depend heavily on the detailed performance metrics, oversight, and the specific requirements outlined in the contract itself, which are not fully elaborated in the provided data.

How does the Cost No Fee (CNF) contract type typically impact cost control and value for the government compared to other contract types?

The Cost No Fee (CNF) contract type is characterized by the government reimbursing the contractor for all allowable costs incurred, plus a fixed fee that is agreed upon at the outset. Unlike fixed-price contracts, there is no direct financial incentive for the contractor to minimize costs, as their profit (the fee) is predetermined and not tied to cost savings. This can be advantageous when the scope of work is uncertain or involves significant research and development where costs are difficult to estimate upfront. However, it places a heavy burden on the government to meticulously monitor and audit contractor expenses to prevent cost overruns and ensure that the costs incurred are reasonable and necessary. Compared to fixed-price contracts, CNF generally offers less cost certainty for the government and requires more intensive oversight to achieve value for money.

What are the primary risks associated with a sole-source award for IT facilities management services valued at over $100 million?

The primary risks associated with a sole-source award of this magnitude are significant. Firstly, the lack of competition means the government likely did not secure the most favorable pricing, potentially leading to higher costs for taxpayers. Secondly, without competing alternatives, the government may not be exposed to innovative solutions or more efficient service delivery models that other vendors might offer. Thirdly, a sole-source contract can create vendor lock-in, making it difficult and costly to switch providers in the future. Lastly, the absence of competitive pressure can sometimes reduce the contractor's incentive to maintain high levels of performance or efficiency, necessitating robust government oversight to mitigate these risks.

What does the contract's duration of 1340 days (approximately 3.67 years) imply about the nature of the IT facilities management services required?

A contract duration of 1340 days suggests that the IT facilities management services required are long-term and critical to the ongoing operations of the Department of the Army. Such extended periods are typical for services that involve the sustained maintenance, operation, and security of essential infrastructure, like data centers or network facilities. This duration implies a stable, ongoing requirement rather than a short-term project. It also suggests that the selected contractor is expected to provide consistent support, potentially involving personnel, equipment, and processes that require significant integration and long-term planning. The length of the contract underscores the strategic importance of reliable IT infrastructure for the agency's mission.

How might the absence of small business participation (ss: false, sb: false) impact the broader IT services market and federal contracting goals?

The absence of small business participation, indicated by 'ss: false' and 'sb: false', means that this large contract was not specifically designated for small businesses, nor does it appear to have a mandatory small business subcontracting goal explicitly stated in the provided data. This can have several implications. It limits the direct opportunities for small businesses to compete for and win prime contracts of this size, potentially concentrating large dollar amounts among major corporations. While large contractors may still subcontract to small businesses, the lack of a set-aside or explicit goal means this is not guaranteed and may be less prioritized. This situation could hinder the government's broader goals of fostering small business growth and ensuring a diverse supplier base within the federal IT contracting ecosystem.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Facilities Management Services

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 2001 JEFFERSON DAVIS HWY, STE 900, ARLINGTON, VA, 22202

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

Financial Breakdown

Contract Ceiling: $110,122,452

Exercised Options: $110,122,452

Current Obligation: $109,900,553

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W91WMC07D0001

IDV Type: IDC

Timeline