Missile Defense Agency awards $52.5M contract to Lockheed Martin for test and program management

Contract Overview

Contract Amount: $52,485,094 ($52.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2020-07-07

End Date: 2024-04-30

Contract Duration: 1,393 days

Daily Burn Rate: $37.7K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: TEST AND PROGRAM MGT - LEVEL OF EFFORT

Place of Performance

Location: COLORADO SPRINGS, EL PASO County, COLORADO, 80921

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $52.5 million to LOCKHEED MARTIN CORPORATION for work described as: TEST AND PROGRAM MGT - LEVEL OF EFFORT Key points: 1. Contract focuses on essential test and program management services, indicating a need for specialized expertise. 2. Sole-source award to Lockheed Martin raises questions about competition and potential for price optimization. 3. The contract duration of nearly four years suggests a long-term requirement for these services. 4. Awarded as a delivery order under a larger contract, its specific value and scope warrant further examination. 5. The 'Custom Computer Programming Services' NAICS code suggests a significant IT component to the program management. 6. Cost Plus Fixed Fee pricing structure can incentivize cost overruns if not closely monitored.

Value Assessment

Rating: fair

Benchmarking the value of this specific delivery order is challenging without knowing the parent contract's terms and the specific services rendered. However, the Cost Plus Fixed Fee (CPFF) structure, while common for complex R&D, carries inherent risks of cost escalation if not rigorously managed. Comparing this to similar program management contracts within the DoD, especially those involving complex weapon systems, would be necessary for a comprehensive value assessment. The fixed fee component provides some cost certainty for the contractor's profit, but the cost reimbursement aspect requires strong oversight.

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 among multiple vendors. While sole-source awards can be justified for specialized capabilities or existing system integration, they limit the potential for competitive bidding to drive down prices and encourage innovation. The absence of competition means that the Missile Defense Agency did not benefit from a marketplace evaluation of different offerors' technical approaches and pricing.

Taxpayer Impact: Taxpayers may not be receiving the best possible price due to the lack of competitive pressure. Without a competitive process, there is a reduced incentive for the contractor to offer the most cost-effective solution.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Missile Defense Agency, which receives critical support for its testing and program management functions. Services delivered likely include planning, execution, and oversight of missile defense system testing, as well as overall program management. The geographic impact is primarily within the United States, likely at defense contractor facilities and government test ranges. Workforce implications include specialized engineers, program managers, and technical staff employed by Lockheed Martin and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and innovation.
Cost Plus Fixed Fee structure requires robust oversight to prevent cost overruns.
Lack of transparency on the parent contract makes full value assessment difficult.
Potential for vendor lock-in due to specialized nature of missile defense systems.

Positive Signals

Lockheed Martin is a major defense contractor with extensive experience in missile defense.
Contract duration indicates a stable, long-term need for these critical services.
Awarded under a larger contract structure, suggesting integration with broader program efforts.
Focus on test and program management is essential for system development and deployment.

Sector Analysis

The defense sector, particularly missile defense, is characterized by high R&D costs, long development cycles, and significant government investment. Contracts in this area often involve complex systems integration and require specialized technical expertise. Spending benchmarks for program management and testing services within this sector can vary widely based on system complexity and program phase. This contract fits within the broader landscape of DoD spending on advanced weapon systems, where large, sole-source or limited-competition contracts are not uncommon due to the unique capabilities required.

Small Business Impact

This contract does not appear to have a small business set-aside component (ss: false, sb: false). As a sole-source award to a large prime contractor, the primary impact on small businesses would be through potential subcontracting opportunities. The extent of small business participation will depend on Lockheed Martin's subcontracting plan and the specific requirements of the test and program management services. Without explicit set-asides, there's no guarantee of direct small business engagement.

Oversight & Accountability

Oversight for this contract would fall under the Department of Defense's contracting and program management offices, likely with specific oversight from the Missile Defense Agency. Accountability measures are typically embedded within the contract terms, including performance metrics, reporting requirements, and payment schedules tied to milestones. Transparency is often limited for sole-source defense contracts, especially concerning the details of the parent contract and specific cost breakdowns. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Missile Defense Systems
Ballistic Missile Defense Program
Advanced Technology Development
Systems Engineering
Program Management Support Services
Defense Contract Management Agency

Risk Flags

Sole-source award
Cost Plus Fixed Fee structure
Lack of competitive bidding
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $52.5 million to LOCKHEED MARTIN CORPORATION. TEST AND PROGRAM MGT - LEVEL OF EFFORT

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Missile Defense Agency).

What is the total obligated amount?

The obligated amount is $52.5 million.

What is the period of performance?

Start: 2020-07-07. End: 2024-04-30.

What is the specific nature of the 'test and program management' services provided under this contract, and how do they align with the Missile Defense Agency's overall mission?

The contract specifies 'TEST AND PROGRAM MGT - LEVEL OF EFFORT' with NAICS code 541511 (Custom Computer Programming Services). This suggests the services involve significant effort in managing and executing testing phases for missile defense systems, likely encompassing planning, coordination, data analysis, and reporting. It may also include managing the overall program lifecycle, including budget, schedule, and risk. These services are critical for ensuring the effectiveness, reliability, and readiness of missile defense capabilities, directly supporting the MDA's mission to defend the U.S. against ballistic missile threats. The 'level of effort' designation implies that the contractor will be reimbursed for the actual labor hours and direct costs incurred, rather than a fixed scope of work.

Given this is a sole-source award, what justifications were provided by the Missile Defense Agency for not competing this requirement?

Sole-source awards typically require a justification and approval (J&A) process, detailing why full and open competition is not feasible or not in the government's best interest. For a contractor like Lockheed Martin, the justification might stem from the unique capabilities required, the need for continuity with existing systems they developed or manage, or the proprietary nature of certain technologies. The Missile Defense Agency would need to demonstrate that only Lockheed Martin possesses the necessary expertise, infrastructure, or intellectual property to perform these specific test and program management functions effectively. Without access to the specific J&A document, the precise rationale remains undisclosed, but it generally points to a lack of viable alternatives.

How does the Cost Plus Fixed Fee (CPFF) pricing structure potentially impact cost control and value for money in this contract?

The Cost Plus Fixed Fee (CPFF) structure reimburses the contractor for allowable costs incurred plus a predetermined fixed fee representing profit. While it allows for flexibility in scope and is often used for research and development or services where the scope is not well-defined, it presents risks. The government bears the cost risk, meaning if costs increase, the government pays more. The fixed fee provides a profit incentive, but it doesn't directly incentivize cost reduction by the contractor. Effective cost control relies heavily on robust government oversight, detailed cost monitoring, and strict adherence to contract terms to prevent unnecessary expenditures and ensure the fixed fee remains a fair profit for the effort expended.

What is the historical spending pattern for similar test and program management services within the Missile Defense Agency or the broader Department of Defense?

Historical spending on test and program management within the DoD, particularly for complex programs like missile defense, is substantial. Agencies like the Missile Defense Agency (MDA) consistently allocate significant portions of their budgets to ensure the development, testing, and operational readiness of sophisticated systems. While specific figures for comparable contracts are often sensitive or embedded within larger program budgets, it's understood that these services represent a critical and ongoing investment. Trends often show a reliance on incumbent contractors due to system complexity and long program lifecycles, leading to multi-year contracts and delivery orders. Benchmarking requires detailed analysis of contract databases, focusing on similar NAICS codes and contract types within the defense sector.

What are the potential risks associated with a long-duration contract (nearly 4 years) for test and program management, especially under a sole-source arrangement?

Long-duration contracts, particularly sole-source ones, carry several risks. Firstly, there's a risk of complacency or reduced urgency from the contractor over time, as competitive pressure is absent. Secondly, the government may be locked into a specific approach or technology that could become outdated, with limited ability to pivot without significant cost or contractual renegotiation. Thirdly, cost escalation over the contract's life is a concern, as initial estimates may not account for unforeseen challenges or inflation. Finally, the lack of periodic re-competition means opportunities to reassess market prices and potentially secure better value are missed. Robust performance management and clear exit strategies are crucial to mitigate these risks.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Custom Computer Programming Services

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HQ014711R0003

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 700 N FREDERICK AVE, GAITHERSBURG, MD, 20878

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $53,212,061

Exercised Options: $53,212,061

Current Obligation: $52,485,094

Actual Outlays: $14,948,218

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HQ014712D0003

IDV Type: IDC

Timeline