DoD awards $206M to Lockheed Martin for C2BMC NEXT TASK ORDER 1, a sole-source contract

Contract Overview

Contract Amount: $206,328,676 ($206.3M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2024-05-01

End Date: 2029-04-30

Contract Duration: 1,825 days

Daily Burn Rate: $113.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS AWARD FEE

Sector: IT

Official Description: C2BMC NEXT TASK ORDER 1

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35801

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $206.3 million to LOCKHEED MARTIN CORPORATION for work described as: C2BMC NEXT TASK ORDER 1 Key points: 1. Contract awarded on a cost-plus-award-fee basis, allowing for performance incentives. 2. The contract spans five years, indicating a long-term need for these services. 3. Missile Defense Agency is the primary customer, suggesting a focus on strategic defense systems. 4. The contract is not competed, raising questions about potential price efficiencies. 5. Custom Computer Programming Services are the core offering, vital for complex defense systems. 6. The contractor, Lockheed Martin, is a major defense industry player with extensive experience.

Value Assessment

Rating: questionable

This contract's value is difficult to benchmark without detailed cost breakdowns, especially given its sole-source nature. The cost-plus-award-fee structure can lead to higher costs if not managed tightly, though it aims to incentivize performance. Comparing it to similar sole-source contracts for complex defense systems is challenging due to unique requirements. The absence of competition limits the ability to assess if the pricing represents a fair market value.

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. This approach is typically used when a specific contractor possesses unique capabilities or when urgency precludes a competitive process. The lack of competition means there was no direct price discovery through bidding, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure to drive down costs. Without a competitive process, there's less assurance that the government is receiving the best possible value for its investment.

Public Impact

The primary beneficiaries are the Department of Defense and its Missile Defense Agency, receiving critical command and control capabilities. Services delivered include custom computer programming, essential for the development and maintenance of the C2BMC system. The contract's geographic impact is national, supporting U.S. missile defense infrastructure. Workforce implications include employment for specialized software developers and engineers at Lockheed Martin and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings.
Cost-plus-award-fee contracts can incentivize spending if not rigorously overseen.
Long contract duration may reduce flexibility to adapt to evolving technological needs or market changes.
Reliance on a single large contractor can create vendor lock-in.

Positive Signals

Award to a prime contractor with extensive experience in missile defense systems.
Contract includes award fee provisions to incentivize performance and efficiency.
Long-term contract provides stability for critical defense system development and sustainment.
Focus on custom computer programming suggests tailored solutions for complex defense requirements.

Sector Analysis

This contract falls within the Information Technology and Defense sectors, specifically focusing on custom computer programming services for defense systems. The Command and Control, Battle Management, and Communications (C2BMC) system is a critical component of the Ballistic Missile Defense System. Spending in this area is substantial, driven by national security priorities and the need for advanced technological solutions. Comparable spending benchmarks are difficult to establish due to the specialized nature of C2BMC and its sole-source procurement.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Lockheed Martin is a large prime contractor, and while they may engage small businesses as subcontractors, the primary award is not directed towards them. This limits direct opportunities for small businesses to compete for the prime contract, though subcontracting could provide some indirect benefits to the small business ecosystem.

Oversight & Accountability

Oversight for this contract will likely be managed by the Missile Defense Agency, with specific contract officers and technical representatives monitoring performance and costs. The cost-plus-award-fee structure necessitates close financial oversight to ensure that costs are reasonable and that award fees are justified by performance. Transparency may be limited due to the sole-source nature and the sensitive defense applications.

Related Government Programs

Ballistic Missile Defense System
Command and Control, Battle Management, and Communications (C2BMC)
Missile Defense Agency Contracts
Lockheed Martin Defense Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Lack of public performance metrics for award fee

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $206.3 million to LOCKHEED MARTIN CORPORATION. C2BMC NEXT TASK ORDER 1

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 $206.3 million.

What is the period of performance?

Start: 2024-05-01. End: 2029-04-30.

What is the historical spending pattern for C2BMC NEXT TASK ORDER 1 or similar contracts with Lockheed Martin?

Historical spending data for this specific task order is not available as it is a new award. However, Lockheed Martin has been a significant contractor for the Missile Defense Agency and the C2BMC program for many years. Previous task orders and contracts related to C2BMC have involved substantial funding, often in the hundreds of millions of dollars annually, reflecting the complexity and criticality of the system. Analyzing past performance and spending trends for the C2BMC program under Lockheed Martin's stewardship would provide context, but direct comparisons to this specific $206 million award require detailed historical contract data which is not provided here.

How does the pricing structure (Cost Plus Award Fee) compare to other defense IT contracts?

Cost Plus Award Fee (CPAF) is a common contract type in the defense sector, particularly for complex research, development, and systems integration efforts where performance outcomes are difficult to define precisely upfront. It allows the government to reimburse the contractor for allowable costs and provides an additional fee based on meeting or exceeding performance objectives. Compared to fixed-price contracts, CPAF can offer more flexibility but also carries a higher risk of cost overruns if not managed diligently. Many large-scale IT and defense system development contracts utilize CPAF or similar incentive-based fee structures to align contractor performance with government objectives.

What are the specific performance metrics tied to the award fee in this contract?

The specific performance metrics tied to the award fee for the C2BMC NEXT TASK ORDER 1 contract are not publicly detailed in the provided data. Typically, for CPAF contracts, these metrics are defined in the contract's Performance Work Statement (PWS) and include areas such as technical performance, schedule adherence, cost control, and quality of deliverables. For a system like C2BMC, metrics could involve system availability, response times, successful integration with other defense assets, and the effectiveness of software updates. The Missile Defense Agency would have established these criteria to incentivize Lockheed Martin to achieve specific program goals.

What is Lockheed Martin's track record with the Missile Defense Agency and the C2BMC program?

Lockheed Martin has a long-standing and extensive track record as a prime contractor for the Missile Defense Agency (MDA) and is the lead systems integrator for the Command and Control, Battle Management, and Communications (C2BMC) system. They have been instrumental in the development, deployment, and sustainment of C2BMC for many years. Their experience includes integrating various sensor and weapon systems into a cohesive network to provide a common operational picture for missile defense. While specific performance details vary across contracts, their continued selection for major programs like this indicates a generally positive relationship and perceived capability by the MDA.

Given the sole-source nature, what mechanisms are in place to ensure fair pricing and prevent cost escalation?

While sole-source awards inherently limit direct price competition, several mechanisms are typically in place to ensure fair pricing and prevent cost escalation. These include rigorous government cost analysis, negotiation of contract terms and fee structures, and robust oversight. For a Cost Plus Award Fee (CPAF) contract, the government closely monitors allowable costs and establishes clear performance metrics for the award fee. Independent government cost estimators may review proposed costs, and contract officers negotiate fee percentages. Furthermore, the Defense Contract Audit Agency (DCAA) often audits contractor costs to ensure compliance with regulations and contract terms. Transparency in reporting and regular reviews are crucial.

What is the potential impact of this contract on the broader missile defense technology market?

This contract reinforces Lockheed Martin's dominant position as the prime integrator for the C2BMC system, a critical node in the U.S. missile defense architecture. As a sole-source award, it limits opportunities for competitors to gain a foothold or demonstrate their capabilities within this specific, high-value segment of the missile defense market. However, it also signifies continued investment and development in advanced command and control technologies, which can spur innovation within Lockheed Martin and its supply chain. The long-term nature of the contract suggests a stable demand for these specialized IT services, potentially influencing R&D priorities for other companies operating in related defense technology areas.

Industry Classification

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

Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HQ085223R0003

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 9970 FEDERAL DR, COLORADO SPRINGS, CO, 80921

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

Financial Breakdown

Contract Ceiling: $550,223,237

Exercised Options: $550,223,237

Current Obligation: $206,328,676

Subaward Activity

Number of Subawards: 80

Total Subaward Amount: $57,115,304

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HQ085224D0003

IDV Type: IDC

Timeline