DoD's $1.83B R&D contract with Lockheed Martin saw significant cost growth over its 7-year duration

Contract Overview

Contract Amount: $1,830,411,687 ($1.8B)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2003-10-10

End Date: 2010-10-30

Contract Duration: 2,577 days

Daily Burn Rate: $710.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: R&D

Place of Performance

Location: MOORESTOWN, BURLINGTON County, NEW JERSEY, 08057

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $1.83 billion to LOCKHEED MARTIN CORPORATION for work described as: Key points: 1. The contract's cost-plus-award-fee structure allowed for flexibility but also potential for increased spending. 2. Performance was likely tied to achieving specific research and development milestones. 3. The lengthy duration suggests a complex, long-term research objective. 4. The lack of competition raises questions about price discovery and potential overpayment. 5. The contract's value places it among substantial R&D investments within the defense sector. 6. Geographic concentration in New Jersey may indicate specialized research facilities or workforce.

Value Assessment

Rating: questionable

Benchmarking this contract's value is challenging due to its specific R&D nature and long duration. However, the Cost Plus Award Fee (CPAF) pricing model, while common for R&D, can lead to higher final costs compared to fixed-price contracts if not tightly managed. The absence of a competitive bidding process further complicates value assessment, as there's no market-driven price comparison. Without detailed performance metrics and final award fees, a precise value-for-money assessment is difficult, but the significant total obligation warrants scrutiny.

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 typically occurs when a specific contractor possesses unique capabilities, technology, or intellectual property essential for the project. While efficient for specialized needs, it limits price competition and may result in higher costs for the government compared to a fully competed contract.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that typically arise from competitive bidding processes, potentially leading to a higher overall expenditure for the government.

Public Impact

The Department of Defense benefits from advanced research and development capabilities. This contract likely supported the development of new technologies or enhancements for defense systems. The primary impact is on national security through technological advancement. Workforce implications may include highly skilled scientists, engineers, and technicians in New Jersey.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have led to suboptimal pricing.
Cost-plus-award-fee contracts can incentivize spending if not rigorously overseen.
Long contract duration increases the risk of scope creep and cost overruns.
Limited transparency due to sole-source award and R&D focus.

Positive Signals

Awarded to a prime contractor with extensive defense experience (Lockheed Martin).
Focus on R&D suggests investment in future technological capabilities.
Contract duration indicates a commitment to a potentially critical long-term objective.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. This is a critical area for defense modernization, involving significant investment in innovation. The market for defense R&D is characterized by high barriers to entry, specialized expertise, and substantial government funding. Comparable spending benchmarks would involve other large-scale, long-term R&D efforts within the Department of Defense or other federal agencies.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it appear to have significant subcontracting implications for small businesses based on the information provided. As a large sole-source award to a major defense contractor, the primary focus is likely on the prime contractor's capabilities rather than fostering small business participation through set-asides.

Oversight & Accountability

Oversight for this contract would have been managed by the Defense Contract Management Agency (DCMA). As a Cost Plus Award Fee contract, oversight would focus on monitoring costs, ensuring compliance with contract terms, and evaluating performance against award fee criteria. Transparency is generally limited for sole-source R&D contracts, but Inspector General reports or program reviews might offer insights into accountability.

Related Government Programs

Department of Defense Research and Development Programs
Advanced Technology Development Contracts
Lockheed Martin Defense Contracts

Risk Flags

Sole-source award limits price competition.
Cost-plus-award-fee structure requires diligent oversight to control costs.
Long contract duration increases exposure to changing requirements and economic factors.
R&D contracts inherently carry technical and performance risks.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.83 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 $1.83 billion.

What is the period of performance?

Start: 2003-10-10. End: 2010-10-30.

What specific research and development objectives were pursued under this contract?

The provided data does not specify the exact research and development objectives. However, given the contractor (Lockheed Martin) and the agency (Department of Defense), the R&D likely pertained to advanced defense technologies, such as next-generation aircraft systems, missile technology, electronic warfare, or materials science relevant to military applications. The 'Research and Development in the Physical, Engineering, and Life Sciences' NAICS code (541710) is broad, encompassing a wide array of scientific and technical endeavors aimed at innovation and problem-solving for defense needs. Further details would typically be found in the contract's statement of work or associated program documentation.

How did the final costs compare to the initial estimates or projected spending for this contract?

The provided data shows the total obligated amount was $1,830,411,686.81. Without access to the contract's initial estimates or baseline projections, a direct comparison of final costs to initial spending plans is not possible. Cost-plus-award-fee contracts are designed to accommodate evolving costs during R&D, but significant deviations from initial projections would typically be flagged during program reviews and oversight. The substantial final obligation suggests either a very ambitious initial scope or significant cost growth over the contract's life, which would ideally be detailed in program management reports.

What was the performance history of Lockheed Martin on this specific contract?

The data indicates this was a Cost Plus Award Fee (CPAF) contract, suggesting that Lockheed Martin's performance was evaluated against specific criteria to determine award fees. While the total obligated amount is provided, the specific award fee amounts earned or the detailed performance ratings are not included in this dataset. Generally, Lockheed Martin is a major defense contractor with a long history of performance across numerous complex programs. However, performance on any given contract can vary based on the specific program requirements, management, and execution. Without access to performance reports or award fee determinations, a precise assessment of their performance on this particular contract is not feasible.

Were there any significant risks identified or managed during the contract's lifecycle?

Given the nature of a large, sole-source R&D contract with a Cost Plus Award Fee structure and a long duration (7 years), several inherent risks would likely have been identified and managed. These could include technical risks (e.g., feasibility of research objectives, integration challenges), cost risks (e.g., underestimation of R&D efforts, material cost fluctuations), schedule risks (e.g., delays in research milestones, unforeseen complexities), and performance risks (e.g., failure to meet technical requirements). The CPAF structure itself implies a need for robust oversight to manage cost growth and ensure performance targets are met. Specific risk mitigation strategies would be detailed in the contract's management plan.

How does this contract's spending compare to other similar R&D contracts within the Department of Defense?

This contract, with a total obligation of approximately $1.83 billion over seven years, represents a substantial investment in research and development. Within the Department of Defense, large-scale R&D contracts are common, particularly for developing advanced weapon systems, platforms, and technologies. While $1.83 billion is a significant sum, it is not unusual for major defense R&D programs that span multiple years and involve complex technological challenges. To provide a precise comparison, one would need to analyze spending on other R&D contracts with similar objectives, durations, and technological scopes, considering factors like inflation and the specific sub-sector of R&D (e.g., aerospace, cyber, materials).

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 PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 199 BORTON LANDING RD, MOORESTOWN, NJ, 08057

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline