DoD's $74.5M Lockheed Martin contract for management consulting services lacked competition, raising value concerns
Contract Overview
Contract Amount: $74,500,279 ($74.5M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2013-01-31
End Date: 2021-12-17
Contract Duration: 3,242 days
Daily Burn Rate: $23.0K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Other
Official Description: IGF::OT::IGF GPS II R 5 YEAR
Place of Performance
Location: LITTLETON, DOUGLAS County, COLORADO, 80125
State: Colorado Government Spending
Plain-Language Summary
Department of Defense obligated $74.5 million to LOCKHEED MARTIN CORPORATION for work described as: IGF::OT::IGF GPS II R 5 YEAR Key points: 1. The contract was awarded on a sole-source basis, limiting opportunities for competitive bidding and potentially impacting price. 2. The administrative management and general management consulting services provided are broad, making direct performance comparisons challenging. 3. A significant contract duration of 3,242 days suggests a long-term need for these services. 4. The contract's cost-plus-fixed-fee structure may incentivize cost increases, requiring robust oversight. 5. The absence of small business participation is noted, with no set-aside provisions. 6. The contract's value is substantial, representing a significant investment in consulting services by the Air Force.
Value Assessment
Rating: questionable
Benchmarking the value of this contract is difficult due to its sole-source nature and the broad scope of 'Administrative Management and General Management Consulting Services'. Without competitive bids, it's hard to ascertain if the fixed fee represents a fair market price. The cost-plus structure, while common for complex services, carries inherent risks of cost escalation. Further analysis would require detailed breakdowns of the services rendered and comparison to similar sole-source contracts for management consulting within the Department of Defense.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning it was not competed. This approach bypasses the standard procurement process where multiple vendors submit bids, which typically drives down costs and fosters innovation. The lack of competition means there was no direct comparison of pricing or service offerings from other qualified contractors, potentially leading to a higher price than if it had been competed.
Taxpayer Impact: Taxpayers may have paid a premium for these services due to the absence of competitive pressure. Without a bidding process, the government had less leverage to negotiate the best possible price.
Public Impact
The primary beneficiary is the Department of the Air Force, receiving administrative and management consulting support. Services likely include strategic planning, organizational efficiency improvements, and general management advisory functions. The geographic impact is primarily within the Department of Defense's operational areas, though specific locations are not detailed. Workforce implications could involve supporting military and civilian personnel in management roles and potentially influencing organizational structures.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price discovery and competitive advantage.
- Cost-plus-fixed-fee structure can lead to cost overruns if not closely monitored.
- Broad service category makes performance assessment and value-for-money difficult.
- Lack of small business participation limits opportunities for smaller firms in the contracting ecosystem.
Positive Signals
- Long contract duration suggests a sustained need and potential for stable service delivery.
- Award to a large, established contractor like Lockheed Martin may indicate perceived capability and reliability for complex tasks.
- The contract falls under administrative management, a critical function for large organizations like the DoD.
Sector Analysis
The market for administrative management and general management consulting services is vast and highly competitive, serving both government and commercial sectors. This contract, however, represents a significant sole-source award within the defense industry's support services segment. Comparable spending benchmarks are difficult to establish precisely due to the unique nature of sole-source awards and the broad service category. However, the defense sector frequently engages consulting firms for strategic, operational, and management support, often through competitive processes.
Small Business Impact
This contract does not appear to have included any small business set-aside provisions, nor is there an indication of significant subcontracting to small businesses. The award was made directly to Lockheed Martin Corporation, a large prime contractor. This means that opportunities for small businesses to participate in delivering these specific management consulting services were likely limited or non-existent, potentially impacting the small business ecosystem's ability to gain experience and revenue within this particular contract vehicle.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Given the cost-plus-fixed-fee structure, rigorous financial oversight and performance monitoring are crucial to ensure costs remain reasonable and deliverables are met. Transparency is limited by the sole-source nature, but contract modifications, performance reports, and payment data would typically be subject to internal review and potentially Inspector General audits if specific concerns arise.
Related Government Programs
- Defense Management Consulting Services
- Administrative Support Contracts
- Management and Strategy Consulting
- Federal Consulting Services
- Department of Defense IT and Management Support
Risk Flags
- Lack of Competition
- Cost-Plus Contract Risk
- Broad Service Scope
- No Small Business Participation
Tags
defense, department-of-defense, air-force, administrative-management-consulting, general-management-consulting, sole-source, definitive-contract, cost-plus-fixed-fee, lockheed-martin-corporation, large-contract, management-support, colorado
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $74.5 million to LOCKHEED MARTIN CORPORATION. IGF::OT::IGF GPS II R 5 YEAR
Who is the contractor on this award?
The obligated recipient is LOCKHEED MARTIN CORPORATION.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Air Force).
What is the total obligated amount?
The obligated amount is $74.5 million.
What is the period of performance?
Start: 2013-01-31. End: 2021-12-17.
What specific management and administrative tasks were performed under this contract?
The provided data indicates the contract was for 'Administrative Management and General Management Consulting Services' (NAICS 541611) awarded to Lockheed Martin Corporation. However, the specific tasks performed are not detailed in the summary data. Typically, such services can encompass a wide range of activities including organizational analysis, strategic planning, process improvement, program management support, policy development, and general administrative advisory functions. Without access to the contract's statement of work (SOW) or performance reports, a precise breakdown of tasks is not possible. The broad nature of the service code suggests support for the Air Force's internal management and administrative operations.
How does the $74.5 million cost compare to similar management consulting contracts within the DoD?
Direct comparison of the $74.5 million cost is challenging due to the contract's sole-source nature and the broad classification of 'Administrative Management and General Management Consulting Services'. Sole-source awards often lack the price competition that benchmarks costs effectively. To provide a meaningful comparison, one would need to identify similar sole-source contracts for comparable services within the DoD, analyze their scope, duration, and fee structures, and adjust for inflation and specific service complexities. General market rates for management consulting vary widely based on expertise, duration, and deliverables. Without more specific data on the services rendered and market benchmarks for similar sole-source engagements, assessing whether $74.5 million represents a competitive or excessive cost is difficult.
What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract of this magnitude?
The primary risks associated with this sole-source, cost-plus-fixed-fee (CPFF) contract are twofold. Firstly, the sole-source award eliminates competitive pressure, potentially leading to a higher price than if the contract had been competed. The government lacks the leverage of multiple bids to ensure optimal value. Secondly, the CPFF structure, while providing flexibility, carries the risk of cost escalation. The contractor is reimbursed for allowable costs plus a fixed fee representing profit. If costs increase, the total contract value rises, potentially exceeding initial estimates. Robust oversight is critical to manage these risks, ensuring that all costs are reasonable, allocable, and necessary, and that the fixed fee adequately compensates the contractor for the defined scope.
What is the track record of Lockheed Martin Corporation in providing management consulting services to the federal government?
Lockheed Martin Corporation is a major defense contractor with extensive experience across a wide array of federal government services, including management and administrative support. While primarily known for aerospace, defense, and security solutions, they possess significant capabilities in systems integration, program management, and consulting. Their track record includes managing large, complex government programs, often involving strategic planning, operational efficiency, and organizational transformation. However, specific performance details and client satisfaction metrics for their management consulting services, particularly for contracts like this one, would require deeper analysis of past performance reviews and contract close-out data, which is not provided here.
How has federal spending on administrative management and general management consulting services evolved over time?
Federal spending on administrative management and general management consulting services (NAICS 541611) has generally trended upwards over the past decade, reflecting the government's reliance on external expertise for efficiency improvements, strategic planning, and program support. Spending fluctuates based on agency needs, budget allocations, and specific initiatives. While this specific contract ($74.5M over its duration) contributes to the overall spending, analyzing the broader trend requires examining aggregate data across all federal agencies for this NAICS code. Factors like increased focus on cybersecurity, digital transformation, and operational resilience often drive demand for consulting services, impacting overall federal expenditure in this category.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Administrative Management and General Management Consulting Services
Product/Service Code: RESEARCH AND DEVELOPMENT › General Science and Technology R&D Services
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Parent Company: Lockheed Martin Corp
Address: 100 CAMPUS DR, NEWTOWN, PA, 18940
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $340,752,397
Exercised Options: $146,361,340
Current Obligation: $74,500,279
Actual Outlays: $119,653
Subaward Activity
Number of Subawards: 17
Total Subaward Amount: $137,869,101
Contract Characteristics
Multi-Year Contract: Yes
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2013-01-31
Current End Date: 2021-12-17
Potential End Date: 2025-07-17 00:00:00
Last Modified: 2025-09-09
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