DoD's $2.15B Lockheed Martin R&D Contract: High Cost, Limited Competition Raises Concerns
Contract Overview
Contract Amount: $2,153,013,459 ($2.2B)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2005-01-28
End Date: 2011-09-30
Contract Duration: 2,436 days
Daily Burn Rate: $883.8K/day
Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Number of Offers Received: 2
Pricing Type: COST PLUS AWARD FEE
Sector: R&D
Place of Performance
Location: OWEGO, TIOGA County, NEW YORK, 13827
State: New York Government Spending
Plain-Language Summary
Department of Defense obligated $2.15 billion to LOCKHEED MARTIN CORPORATION for work described as: Key points: 1. Significant investment in R&D, primarily with Lockheed Martin. 2. Full and open competition was used, but exclusion of sources suggests potential limitations. 3. Contract duration is substantial, indicating long-term project scope. 4. The sector is Research and Development in Physical, Engineering, and Life Sciences.
Value Assessment
Rating: questionable
The contract's total award value is high at over $2.15 billion. Without specific per-unit cost data or benchmarks for similar R&D efforts, it's difficult to definitively assess value for money. The Cost Plus Award Fee structure can incentivize performance but also carries inherent cost risks.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This indicates that while competition was sought, specific sources were excluded, potentially limiting the competitive landscape and impacting price discovery.
Taxpayer Impact: The substantial investment of over $2.15 billion represents a significant allocation of taxpayer funds towards R&D. The effectiveness and efficiency of this spending will determine the ultimate return on investment for taxpayers.
Public Impact
Taxpayers are funding advanced research and development with potential long-term implications. The contract's focus on physical, engineering, and life sciences could lead to technological advancements. The significant expenditure highlights the Department of Defense's commitment to innovation in these critical areas.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- High contract value
- Limited competition due to source exclusion
- Long contract duration
- Cost Plus Award Fee structure can lead to cost overruns
Positive Signals
- Focus on critical R&D areas
- Potential for technological advancement
Sector Analysis
This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. Spending in this area is crucial for national security and technological advancement, but often involves high costs and inherent uncertainties.
Small Business Impact
The data does not indicate any specific provisions or set-asides for small businesses in this contract. Large-scale R&D contracts are often dominated by major defense contractors, potentially limiting opportunities for smaller enterprises.
Oversight & Accountability
The contract was managed by the Defense Contract Management Agency, suggesting oversight is in place. However, the long duration and complex nature of R&D contracts necessitate continuous monitoring to ensure accountability and effective use of funds.
Related Government Programs
- Research and Development in the Physical, Engineering, and Life Sciences
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- High total contract value
- Potential for limited competition due to source exclusion
- Long contract duration (over 6 years)
- Cost Plus Award Fee structure carries inherent cost risk
- Lack of specific per-unit cost data for benchmarking
Tags
research-and-development-in-the-physical, department-of-defense, ny, dca, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $2.15 billion to LOCKHEED MARTIN CORPORATION. See the official description on USAspending.
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 $2.15 billion.
What is the period of performance?
Start: 2005-01-28. End: 2011-09-30.
What specific R&D advancements were achieved under this contract, and do they justify the $2.15 billion expenditure?
Without detailed project reports and outcome assessments, it is impossible to determine if the $2.15 billion expenditure was fully justified by the R&D advancements. The effectiveness of Cost Plus Award Fee contracts relies heavily on clearly defined performance metrics and rigorous evaluation to ensure taxpayer value is realized through tangible, impactful results.
How did the exclusion of sources impact the final contract price and the overall competitiveness of the bidding process?
The exclusion of specific sources, even under a full and open competition framework, inherently limits the number of potential bidders. This reduction in competition can lead to less aggressive pricing and potentially higher costs for the government compared to a scenario with broader participation. The specific rationale for exclusion would be critical to understanding its impact.
What mechanisms were in place to ensure the Cost Plus Award Fee structure incentivized efficient R&D and prevented cost overruns?
The effectiveness of a Cost Plus Award Fee structure hinges on well-defined performance objectives, clear award criteria, and robust oversight. Mechanisms likely included regular performance reviews, milestone tracking, and independent cost analysis. However, the inherent nature of R&D means some cost variability is expected, making continuous monitoring crucial.
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: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Solicitation Procedures: SEALED BID
Offers Received: 2
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Parent Company: Lockheed Martin Corp (UEI: 834951691)
Address: 1801 STATE ROUTE 17C, OWEGO, NY, 23
Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $1,983,254,081
Exercised Options: $271,075,575
Current Obligation: $2,153,013,459
Contract Characteristics
Cost or Pricing Data: NO
Timeline
Start Date: 2005-01-28
Current End Date: 2011-09-30
Potential End Date: 2011-09-30 00:00:00
Last Modified: 2014-02-27
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