DoD's $45.9M Lockheed Martin contract for missile systems shows fair value with 2 bidders

Contract Overview

Contract Amount: $45,890,869 ($45.9M)

Contractor: Lockheed Martin Services, LLC

Awarding Agency: Department of Defense

Start Date: 1999-09-28

End Date: 2009-03-30

Contract Duration: 3,471 days

Daily Burn Rate: $13.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 199912!2100!3015!AH01 !USA AVIATION AND MISSILE COMMAND!DAAH0199C0186 !A!*!* !19990928!20000430!805258373!805258373!834951691!N!77609!LOCKHEED MARTIN SERVICES, INC.!2339 ROUTE 70 W !CHERRY HILL !NJ!08002!12310!007!34!CHERRY HILL !CAMDEN !NEW JERSEY!0001!+000004001005!Y!N!000000000000!L014!TECH REP SVCS/GUIDED MISSILES !A2 !MISSILE AND SPACE SYSTEMS !1CNC!QM-107 GD MSL TGT SYS !8999!3!*!*!*!B!A!*!A !N!J!2!002!B!* !C!N!A!* !* !N!C!*!A!D!A!A!A!*!* !*!N!A!D!N!*!*!*!*!*!

Place of Performance

Location: GAITHERSBURG, MONTGOMERY County, MARYLAND, 20879

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $45.9 million to LOCKHEED MARTIN SERVICES, LLC for work described as: 199912!2100!3015!AH01 !USA AVIATION AND MISSILE COMMAND!DAAH0199C0186 !A!*!* !19990928!20000430!805258373!805258373!834951691!N!77609!LOCKHEED MARTIN SERVICES, INC.!2339 ROUTE 70 W !CHERRY HILL !NJ!08002!12310!007!34!CHERRY HILL !CAMDEN… Key points: 1. Contract awarded to Lockheed Martin Services, Inc. for technical representative services and guided missiles. 2. The contract duration of 3471 days (over 9 years) suggests a long-term need for these specialized services. 3. Awarded under full and open competition, indicating a competitive bidding process. 4. The contract's firm-fixed-price nature provides cost certainty for the government. 5. The presence of two bidders suggests a reasonable level of competition for this specialized defense service. 6. The contract's value of approximately $45.9 million over its extended period indicates a significant investment in missile technology support.

Value Assessment

Rating: good

The contract value of $45.9 million over nearly a decade for technical representative services and guided missiles appears reasonable given the specialized nature of the work and the contractor's role in supporting complex defense systems. Benchmarking against similar long-term support contracts for advanced weaponry is challenging due to unique specifications, but the firm-fixed-price structure suggests predictable costs. The presence of two bidders in a competitive process further supports the assessment of fair value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. The data indicates there were two bidders, which suggests a moderate level of competition for this specialized defense service. While more bidders could potentially drive prices lower, two bidders in a niche market like guided missile support is not uncommon and still allows for price discovery.

Taxpayer Impact: The full and open competition with two bidders likely resulted in a fair market price for the government, avoiding excessive costs that might arise from a sole-source award.

Public Impact

The primary beneficiaries are the U.S. Army Aviation and Missile Command, receiving critical technical support for guided missile systems. Services delivered include technical representation and support for guided missile systems, ensuring operational readiness and effectiveness. The geographic impact is primarily within the United States, supporting defense operations and potentially related industrial bases. Workforce implications include the employment of skilled technical personnel by Lockheed Martin Services, Inc. to fulfill the contract requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (over 9 years) could lead to potential cost overruns if not managed effectively.
Reliance on a single contractor for extended technical support might create vendor lock-in.
The specialized nature of missile systems means limited alternative providers, potentially reducing future competition.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Awarded under full and open competition, indicating a structured procurement process.
Contractor's established presence in missile systems suggests expertise and reliability.

Sector Analysis

This contract falls within the Defense sector, specifically supporting the manufacturing and sustainment of guided missile and space systems. The market for such specialized technical support is dominated by a few large defense contractors with the requisite expertise and security clearances. Spending in this area is driven by national security requirements and technological advancements in missile defense and offense capabilities. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of technical representative services for specific weapon systems.

Small Business Impact

The contract data does not indicate any specific small business set-aside provisions. Given the specialized nature of technical representative services for guided missile systems, it is unlikely that small businesses would be primary awardees without significant subcontracting opportunities. Further analysis would be needed to determine if Lockheed Martin Services, Inc. engaged in subcontracting with small businesses.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), ensuring compliance with contract terms and performance standards. Accountability measures are embedded in the firm-fixed-price structure, incentivizing the contractor to meet specifications within budget. Transparency is facilitated through contract award databases, though detailed performance metrics may not always be publicly disclosed.

Related Government Programs

Guided Missile and Space Vehicle Manufacturing
Technical Representative Services
Defense Contract Services
Missile Systems Support
Aviation and Missile Command Procurement

Risk Flags

Long-term contract duration
Specialized technical services
Limited competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $45.9 million to LOCKHEED MARTIN SERVICES, LLC. 199912!2100!3015!AH01 !USA AVIATION AND MISSILE COMMAND!DAAH0199C0186 !A!*!* !19990928!20000430!805258373!805258373!834951691!N!77609!LOCKHEED MARTIN SERVICES, INC.!2339 ROUTE 70 W !CHERRY HILL !NJ!08002!12310!007!34!CHERRY HILL !CAMDEN !NEW JERSEY!0001!+000004001005!Y!N!000000000000!L014!TECH REP SVCS/GUIDED MISSILES !A2 !MISSILE AND SPACE SYSTEMS !1CNC!QM-107 GD MSL TGT SYS !8999!3!*!*!*!B!A!*!A !N!J!2!0

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $45.9 million.

What is the period of performance?

Start: 1999-09-28. End: 2009-03-30.

What is Lockheed Martin Services, Inc.'s track record with similar technical representative contracts for missile systems?

Lockheed Martin Services, Inc., as a subsidiary or division of the larger Lockheed Martin Corporation, has a long and extensive history of supporting complex defense systems, including missile and space programs. Their track record typically involves providing a wide range of services, from research and development to manufacturing, integration, sustainment, and technical support. For technical representative roles, they are known for deploying highly skilled personnel to government sites or program offices to provide on-site expertise, troubleshooting, training, and lifecycle support. This specific contract's duration of over nine years suggests a successful and ongoing relationship, indicating a level of performance that met the government's requirements for continuity and specialized knowledge in the critical area of guided missile technology.

How does the value of this contract compare to other similar long-term technical support contracts for missile systems?

Comparing the $45.9 million value of this contract to other similar long-term technical support contracts for missile systems is challenging due to the highly specialized and often classified nature of such services. However, for a contract spanning over nine years (3471 days) and involving critical technical representation for guided missile systems, this value appears within a reasonable range. Defense contracts of this duration and complexity often run into tens or hundreds of millions of dollars. Factors influencing the cost include the number of personnel required, their skill levels, the specific missile systems supported, the scope of technical services (e.g., diagnostics, maintenance planning, training, logistics support), and the contractor's overhead. The firm-fixed-price nature also implies that the government secured a defined cost for a defined scope of work over an extended period.

What are the primary risks associated with a contract of this duration and type?

The primary risks associated with a contract of this duration (over 9 years) and type (technical representative services for guided missiles) include: 1. **Scope Creep:** The potential for the scope of work to expand beyond the original agreement, leading to cost increases if not managed tightly. 2. **Technological Obsolescence:** Missile technology evolves rapidly; the services required might change significantly over the contract's life, potentially making the original scope less relevant or requiring costly adaptations. 3. **Contractor Performance Degradation:** Over a long period, contractor performance could decline due to personnel turnover, changes in management, or reduced focus, impacting the quality of technical support. 4. **Cost Overruns (despite FFP):** While firm-fixed-price (FFP) aims to control costs, unforeseen technical challenges or changes in government requirements could necessitate contract modifications, potentially increasing the overall price. 5. **Dependency and Lock-in:** The government may become highly dependent on the incumbent contractor's specialized knowledge, making it difficult to switch providers in the future without significant disruption or cost.

How effective is the firm-fixed-price (FFP) contract type in managing costs for long-term technical support?

The firm-fixed-price (FFP) contract type is generally considered effective in managing costs for long-term technical support, especially when the scope of work is well-defined. It shifts the primary cost risk to the contractor, incentivizing them to perform efficiently and control their expenses to maximize profit. For the government, FFP provides significant cost certainty, as the price is fixed regardless of the contractor's actual costs. This is particularly beneficial for predictable services like technical representation. However, for highly complex or evolving technical requirements, an FFP contract might lead contractors to build in larger contingencies to cover potential risks, potentially resulting in a higher initial price compared to other contract types. Careful definition of the SOW is crucial to mitigate risks of scope creep and ensure the FFP structure remains advantageous throughout the contract's life.

What does the competition level (2 bidders) imply about the market for guided missile technical services?

The competition level of two bidders for this guided missile technical services contract suggests a niche and specialized market. This indicates that the number of companies possessing the necessary technical expertise, security clearances, and infrastructure to compete for such high-stakes defense contracts is limited. While two bidders provide a basis for price comparison and negotiation, it is not as robust as a market with numerous competitors. This situation often arises in sectors requiring highly specialized knowledge, advanced technology, or significant capital investment, where only a few firms can realistically meet the stringent requirements. For taxpayers, this implies that while competition exists, the government may have less leverage to drive down prices compared to more commoditized markets, underscoring the importance of thorough negotiation and performance oversight.

What is the historical spending pattern for technical representative services related to guided missiles within the Department of Defense?

Historical spending patterns for technical representative services related to guided missiles within the Department of Defense (DoD) generally show consistent and significant investment. These services are critical for ensuring the operational readiness, maintenance, and effective utilization of complex weapon systems. Spending in this category is driven by the continuous need to support existing platforms, integrate new technologies, and provide lifecycle sustainment. While specific figures fluctuate based on program priorities, technological advancements, and geopolitical factors, the DoD consistently allocates substantial budgets to contractor support for its missile programs. Contracts like the one awarded to Lockheed Martin Services, Inc. are indicative of this ongoing expenditure, reflecting the long-term commitment required to maintain superiority in missile technology and operational capability.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: TECHNICAL REPRESENTATIVE SVCS. › TECHNICAL REPRESENTATIVE SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 2339 ROUTE 70 W, CHERRY HILL, NJ, 01

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline