Missile Defense Agency awards $945.7M contract to Lockheed Martin for R&D, raising value-for-money questions

Contract Overview

Contract Amount: $63,628,809 ($63.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2005-12-12

End Date: 2011-09-10

Contract Duration: 2,098 days

Daily Burn Rate: $30.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: Defense

Official Description: 200605!600237!9700!HQ0006!MISSILE DEFENSE AGENCY !HQ000606C0001 !A!N! !N! ! !20051212!20101211!945757268!945757268!834951691!N!LOCKHEED MARTIN CORPORATION !1210 MASSILLON ROAD !AKRON !OH!44315!01000!153!39!AKRON !SUMMIT !OHIO !+000007000000!N!N!000149220102!AC21!RDTE/MISSILE AND SPACE SYSTEMS-BASIC RESEARCH !A2 !MISSILE AND SPACE SYSTEMS !CAA !MDA SUPPORT !541710!E! !3! ! ! ! ! !99990909!B! ! !A! !D!U!S!1!001!N!1G!Z!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! !Y! ! !0001! !

Place of Performance

Location: AKRON, SUMMIT County, OHIO, 44315

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $63.6 million to LOCKHEED MARTIN CORPORATION for work described as: 200605!600237!9700!HQ0006!MISSILE DEFENSE AGENCY !HQ000606C0001 !A!N! !N! ! !20051212!20101211!945757268!945757268!834951691!N!LOCKHEED MARTIN CORPORATION !1210 MASSILLON ROAD !AKRON !OH!44315!01000!153!39!AKRON !SUMM… Key points: 1. Contract awarded on a sole-source basis, limiting price competition and potentially increasing costs. 2. Significant contract value for research and development, requiring close scrutiny of deliverables and outcomes. 3. Long performance period of nearly 6 years suggests a sustained need for these services. 4. Contractor's extensive experience in missile systems positions them as a key player in this domain. 5. Focus on basic research indicates early-stage development, with outcomes not immediately quantifiable. 6. Geographic concentration of the contractor in Ohio may have local economic implications.

Value Assessment

Rating: questionable

The contract's value of $945.7 million over nearly six years for research and development warrants careful examination. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or alternative providers. The 'cost-no-fee' contract type suggests that the government will reimburse allowable costs, but the absence of a fee might indicate a unique relationship or a focus on cost control, though this is not guaranteed. Further analysis of the specific research objectives and achieved milestones would be necessary to fully assess value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning that only one contractor, Lockheed Martin Corporation, was solicited. This approach bypasses the typical competitive bidding process, which can lead to a lack of price discovery and potentially higher costs for the government. While sole-source awards are sometimes justified for specialized capabilities or urgent needs, the rationale for not competing this significant R&D contract requires further investigation.

Taxpayer Impact: The lack of competition means taxpayers may not have received the most advantageous pricing. Without competing bids, there's a risk that the selected contractor's price is not the lowest possible for the services rendered.

Public Impact

The primary beneficiary is the Missile Defense Agency, which receives critical research and development support for its programs. Services delivered include basic research in missile and space systems, contributing to future defense capabilities. The geographic impact is concentrated around the contractor's location in Akron, Ohio, potentially benefiting the local economy through employment and subcontracts. Workforce implications include the employment of highly skilled scientists and engineers involved in advanced research.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Long contract duration may lead to cost overruns if not managed effectively.
Research and Development contracts can have uncertain outcomes and deliverables.
Lack of transparency in the sole-source justification process.

Positive Signals

Contract awarded to a well-established defense contractor with expertise in missile systems.
Focus on basic research aligns with long-term strategic defense goals.
Contract type (Cost No Fee) may encourage cost consciousness from the contractor.
Contractor's location in Ohio could support regional economic development.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on missile and space systems. The North American Industry Classification System (NAICS) code 541710, 'Research and Development in the Physical, Engineering, and Life Sciences,' encompasses a broad range of scientific and technical services. Spending in this area is crucial for maintaining technological superiority in defense. Comparable spending benchmarks would typically involve analyzing other R&D contracts within the Department of Defense for similar scope and duration, though sole-source awards make direct comparisons challenging.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the sole-source nature and the specialized R&D focus, it is unlikely that subcontracting opportunities for small businesses were a primary consideration in the award. Further investigation into the contractor's subcontracting plan would be needed to determine any potential impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Missile Defense Agency's program management and the Defense Contract Management Agency (DCMA). As a sole-source award, transparency might be limited compared to competitively bid contracts. Accountability measures would rely on the agency's ability to monitor research progress, cost expenditures, and adherence to contract terms. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Missile Defense Systems
Advanced Research Projects Agency (ARPA) Contracts
Department of Defense Research and Development
Lockheed Martin Corporation Contracts
Space and Missile Systems Center Contracts

Risk Flags

Sole Source Justification
Lack of Competition
Potential for Overpricing
Uncertain R&D Outcomes

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $63.6 million to LOCKHEED MARTIN CORPORATION. 200605!600237!9700!HQ0006!MISSILE DEFENSE AGENCY !HQ000606C0001 !A!N! !N! ! !20051212!20101211!945757268!945757268!834951691!N!LOCKHEED MARTIN CORPORATION !1210 MASSILLON ROAD !AKRON !OH!44315!01000!153!39!AKRON !SUMMIT !OHIO !+000007000000!N!N!000149220102!AC21!RDTE/MISSILE AND SPACE SYSTEMS-BASIC RESEARCH !A2 !MISSILE AND SPACE SYSTEMS !CAA !MDA SUPPORT !541710!E! !3! ! ! ! ! !999

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $63.6 million.

What is the period of performance?

Start: 2005-12-12. End: 2011-09-10.

What specific research objectives were outlined in this sole-source contract, and how were they justified as unique to Lockheed Martin?

The provided data indicates the contract was for 'MISSILE AND SPACE SYSTEMS - BASIC RESEARCH' under NAICS code 541710. The specific research objectives are not detailed in the summary data. However, sole-source justifications typically require the agency to demonstrate that only one responsible source is capable of providing the required service or product. This often involves unique capabilities, proprietary technology, or urgent and compelling needs that cannot be met through competition. For this contract, the Missile Defense Agency would have had to articulate why Lockheed Martin's specific expertise, existing research, or technological base was essential and irreplaceable for the stated basic research goals in missile and space systems.

How does the 'Cost No Fee' (CNF) contract type impact the government's financial risk and the contractor's incentive?

A 'Cost No Fee' (CNF) contract is a type of cost-reimbursement contract where the contractor is reimbursed for allowable costs but receives no fee or profit. This structure is typically used when the level of risk or uncertainty is high, or when the contractor is a non-profit organization or government-owned facility. For the government, the primary financial risk is the reimbursement of all allowable costs, which can be unpredictable. The contractor has little financial incentive to control costs beyond the desire to maintain a good relationship for future contracts, as their profit is not tied to cost savings. This contrasts with fixed-price contracts where the contractor bears more risk and has a direct incentive to manage costs efficiently to maximize profit.

What is the historical spending pattern for similar missile defense R&D contracts awarded by the Missile Defense Agency?

Analyzing historical spending patterns for similar Missile Defense Agency (MDA) R&D contracts is crucial for context. While this specific contract awarded $945.7 million, understanding the typical scale, duration, and competition levels of MDA's R&D portfolio provides insight. Historically, MDA has awarded large, complex contracts for missile defense technologies. However, the prevalence of sole-source awards for basic research in this domain versus competitive procurements for more mature technologies would be a key area of analysis. Examining trends in contract values, contractor selection, and performance periods over the past decade could reveal whether this $945.7 million award is an outlier or representative of MDA's R&D investment strategy.

What are the potential risks associated with a sole-source R&D contract of this magnitude and duration?

A sole-source Research and Development (R&D) contract of this magnitude ($945.7 million) and duration (nearly 6 years) carries several potential risks. Firstly, the lack of competition means the government may not be achieving the best possible price, as there's no market pressure to drive down costs. Secondly, R&D inherently involves uncertainty; the outcomes are not guaranteed, and the project could yield less valuable results than anticipated. Without competitive benchmarking, assessing the 'value for money' becomes more challenging. Thirdly, a long-term sole-source relationship can lead to contractor complacency or a lack of innovation if not rigorously managed and overseen. Finally, the justification for the sole-source award itself needs to be robust to ensure public funds are being used appropriately.

Can the performance metrics or deliverables for this contract be assessed to determine its effectiveness?

The provided data does not include specific performance metrics or deliverables for this contract. Assessing the effectiveness of an R&D contract, especially one focused on basic research, is complex. Effectiveness is typically measured against the achievement of research objectives, the advancement of scientific knowledge, and the potential for future technological application. Without access to the contract's statement of work, milestones, and progress reports, a definitive assessment of its effectiveness is not possible from the summary data alone. The 'Cost No Fee' structure also means that contractor profit isn't directly tied to performance, shifting the onus of oversight heavily onto the government.

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: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

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: 1210 MASSILLON ROAD, AKRON, OH, 13

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

Contract Characteristics

Consolidated Contract: Yes

Cost or Pricing Data: YES

Timeline