DoD awards $179M for engineering services to Lockheed Martin, with a significant portion for R&D
Contract Overview
Contract Amount: $179,289,152 ($179.3M)
Contractor: Lockheed Martin Integrated Systems, LLC
Awarding Agency: Department of Defense
Start Date: 2006-03-24
End Date: 2020-09-30
Contract Duration: 5,304 days
Daily Burn Rate: $33.8K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: COST PLUS AWARD FEE
Sector: Defense
Official Description: TAS::17 1319::TAS 200606!062062!1700!N00024!NAVAL SEA SYSTEMS COMMAND !N0002406C6272 !A!N! !N! ! !20060324!20151231!836196972!805258373!834951691!N!LOCKHEED MARTIN INTEGRATED SYS!6801 ROCKLEDGE DRIVE !BETHESDA !MD!20817!48952!683!51!MANASSAS !MANASSAS (CITY) !VIRGINIA !+000017419243!N!N!000017419243!AJ47!RDTE/ENGINEERING SCIENCES - OPERATIONAL SY DEV !S1 !SERVICES !000 !NOT DISCERNABLE !541330!E! !3! ! ! ! ! !99990909!B! ! !A! !A!N!U!2!002!B! !A!N!Z! ! !N!C!N! ! ! !C!C!A!A!000!A!D!N! ! ! !Y!1700!N00024!0001! !
Place of Performance
Location: BETHESDA, MONTGOMERY County, MARYLAND, 20817
State: Maryland Government Spending
Plain-Language Summary
Department of Defense obligated $179.3 million to LOCKHEED MARTIN INTEGRATED SYSTEMS, LLC for work described as: TAS::17 1319::TAS 200606!062062!1700!N00024!NAVAL SEA SYSTEMS COMMAND !N0002406C6272 !A!N! !N! ! !20060324!20151231!836196972!805258373!834951691!N!LOCKHEED MARTIN INTEGRATED SYS!6801 ROCKLEDGE DRIVE !BETHESDA !MD!20817!48952!683!51!MANASSA… Key points: 1. Contract awarded for R&D/Engineering Sciences - Operational Systems Development. 2. Significant portion of the contract value allocated to research, development, testing, and evaluation. 3. Contractor has a substantial track record with the Department of Defense. 4. Performance period spans over 8 years, indicating a long-term need for these services. 5. The contract type is Cost Plus Award Fee, which incentivizes performance but can lead to higher costs. 6. The contract was awarded under full and open competition, suggesting a competitive bidding process.
Value Assessment
Rating: good
The total award of $179.3 million for engineering services appears reasonable given the extensive 8-year performance period and the nature of research and development work. While specific cost breakdowns are not provided, the Cost Plus Award Fee (CPAF) structure allows for performance incentives. Benchmarking against similar large-scale R&D contracts within the defense sector would provide a more precise value-for-money assessment, but the duration and scope suggest a fair price for specialized technical services.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of two bids suggests a moderate level of competition for this specialized engineering service. While two bidders is not a large number, it does provide a basis for price comparison and negotiation, which is generally favorable for price discovery.
Taxpayer Impact: Full and open competition, even with a limited number of bidders, generally leads to better pricing for taxpayers compared to sole-source or limited competition scenarios.
Public Impact
The primary beneficiary is the Department of Defense, specifically the Naval Sea Systems Command, which will receive advanced operational systems development. Services delivered include research, development, engineering, and operational systems development, crucial for maintaining and advancing naval capabilities. The geographic impact is primarily within the United States, with the contractor's facilities in Maryland and Virginia supporting the contract. Workforce implications include employment for highly skilled engineers, scientists, and technical personnel within Lockheed Martin and its potential subcontractors.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost Plus Award Fee contracts can sometimes lead to cost overruns if not managed tightly.
- The long performance period of over 8 years increases the risk of scope creep or evolving requirements.
- Limited competition (2 bidders) may not have driven the absolute lowest price possible.
- Reliance on a single large contractor for critical R&D could pose a long-term strategic risk.
Positive Signals
- Awarded under full and open competition, ensuring a broad initial search for qualified contractors.
- The Cost Plus Award Fee structure incentivizes contractor performance and successful outcomes.
- The contractor, Lockheed Martin, is a major defense contractor with extensive experience in this domain.
- The contract duration suggests a stable, long-term requirement, allowing for focused development and integration.
Sector Analysis
This contract falls within the Defense sector, specifically focusing on Research, Development, Test, and Evaluation (RDT&E) for operational systems. The North American Industry Classification System (NAICS) code 541330 (Engineering Services) is broad, but the context points to specialized defense engineering. Spending in this area is critical for maintaining technological superiority. Comparable spending benchmarks would involve looking at other large R&D contracts awarded by the Navy or DoD for similar system development.
Small Business Impact
This contract does not appear to have a small business set-aside component, as the primary awardee is Lockheed Martin, a large defense contractor. There is no explicit mention of subcontracting goals for small businesses within the provided data. Therefore, the direct impact on the small business ecosystem is likely minimal, though large prime contractors often engage small businesses for specialized support services.
Oversight & Accountability
Oversight for this contract would primarily be managed by the Defense Contract Management Agency (DCMA) and the Naval Sea Systems Command (NAVSEA). As a Cost Plus Award Fee contract, performance metrics and award fee evaluations are key accountability measures. Transparency is generally maintained through contract award databases and reporting requirements, though detailed cost breakdowns and performance reviews are typically internal to the government and contractor.
Related Government Programs
- Naval Sea Systems Command (NAVSEA) Contracts
- Department of Defense Research and Development
- Lockheed Martin Defense Contracts
- Engineering Services for Defense Systems
- Operational Systems Development Contracts
Risk Flags
- Long contract duration may reduce flexibility.
- Cost Plus Award Fee structure requires careful oversight to manage costs.
- Limited competition (2 bidders) may impact price competitiveness.
Tags
defense, department-of-defense, naval-sea-systems-command, lockheed-martin, engineering-services, research-and-development, cost-plus-award-fee, definitive-contract, full-and-open-competition, maryland, virginia, systems-development
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $179.3 million to LOCKHEED MARTIN INTEGRATED SYSTEMS, LLC. TAS::17 1319::TAS 200606!062062!1700!N00024!NAVAL SEA SYSTEMS COMMAND !N0002406C6272 !A!N! !N! ! !20060324!20151231!836196972!805258373!834951691!N!LOCKHEED MARTIN INTEGRATED SYS!6801 ROCKLEDGE DRIVE !BETHESDA !MD!20817!48952!683!51!MANASSAS !MANASSAS (CITY) !VIRGINIA !+000017419243!N!N!000017419243!AJ47!RDTE/ENGINEERING SCIENCES - OPERATIONAL SY DEV !S1 !SERVICES !000 !NOT DISCERNABLE !541330!E
Who is the contractor on this award?
The obligated recipient is LOCKHEED MARTIN INTEGRATED SYSTEMS, LLC.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $179.3 million.
What is the period of performance?
Start: 2006-03-24. End: 2020-09-30.
What is Lockheed Martin's track record with similar R&D contracts for the Navy?
Lockheed Martin is a major defense contractor with a long and extensive history of performing research, development, and systems integration for the U.S. Navy and the Department of Defense across various platforms and capabilities. They have consistently secured large, complex contracts for advanced technologies, including naval systems, aerospace, and cybersecurity. Their track record typically involves successful program execution, though like any large contractor, they have also faced scrutiny on specific programs regarding cost and schedule performance. For this specific contract (N0002406C6272), the award was for RDT&E/Engineering Sciences - Operational Systems Development, a core area of expertise for Lockheed Martin, suggesting a strong alignment between their capabilities and the government's requirements.
How does the $179.3 million award compare to other engineering services contracts for naval systems?
The $179.3 million award for over 8 years of service is substantial but falls within the typical range for large-scale, long-term research and development and engineering services contracts awarded by the Naval Sea Systems Command (NAVSEA). NAVSEA frequently awards contracts in the hundreds of millions, and sometimes billions, for complex system development, modernization, and sustainment. The specific nature of 'Operational Systems Development' suggests a focus on advanced capabilities, which inherently commands significant investment. Without direct comparison to contracts with identical scopes and durations, it's difficult to definitively benchmark, but the amount is consistent with the high-value, specialized nature of defense R&D.
What are the primary risks associated with a Cost Plus Award Fee (CPAF) contract of this magnitude?
The primary risks with a CPAF contract of this magnitude ($179.3 million) revolve around cost control and the potential for cost growth. While the 'award fee' component incentivizes performance, the 'cost plus' aspect means the government pays the contractor's allowable costs plus a fee that can be adjusted based on performance. Risks include: 1) Difficulty in accurately estimating costs for R&D, which is inherently uncertain. 2) Potential for the contractor to incur higher costs to achieve performance targets that maximize the award fee, even if not strictly necessary. 3) Government oversight challenges in verifying the allowability and allocability of all costs. 4) The award fee criteria must be clearly defined and measurable to ensure it truly drives desired outcomes without encouraging unnecessary spending.
How effective is 'full and open competition' when only two bids are received?
Full and open competition is the preferred method for maximizing competition and achieving best value, but its effectiveness is diminished when only two bids are received. While two bids are better than one (sole source), it indicates a limited pool of capable offerors for this specific requirement. This limited competition can reduce the downward pressure on price and potentially lead to a higher contract cost than if more bidders had participated. The government's ability to negotiate effectively is also somewhat constrained. However, if the two bidders are highly capable and the evaluation criteria are robust, a competitive outcome can still be achieved, albeit potentially less competitive than ideal.
What is the historical spending trend for engineering services under NAICS code 541330 within the Department of Defense?
Spending within the Department of Defense (DoD) for engineering services under NAICS code 541330 has historically been substantial and represents a significant portion of the DoD's contracting budget. This code encompasses a wide array of services, from basic design to highly specialized R&D and systems engineering. Over the years, the DoD has consistently awarded billions of dollars annually to various contractors for these services, reflecting the ongoing need for technical expertise in areas like weapon system development, modernization, and sustainment. Trends often show increasing complexity and specialization, driving demand for advanced engineering capabilities, particularly in areas like cybersecurity, AI, and advanced materials.
What are the implications of the contract's long duration (over 8 years) on program flexibility and cost?
A long contract duration, such as the over 8 years for this engineering services contract, has several implications. Positively, it provides stability and allows the contractor to invest in specialized resources and personnel, fostering deeper expertise and potentially leading to more integrated solutions. It also reduces the administrative burden of frequent re-competition. However, it also introduces risks: 1) Reduced flexibility for the government to adapt to changing technological landscapes or strategic priorities. 2) Potential for cost escalation over the long term due to inflation or unforeseen market changes. 3) Increased risk of contractor complacency or 'lock-in' if alternatives are not actively considered. Effective contract management, including regular reviews and potential for modifications, is crucial to mitigate these risks.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: RESEARCH AND DEVELOPMENT › General Science and Technology R&D Services
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 2
Pricing Type: COST PLUS AWARD FEE (R)
Evaluated Preference: NONE
Contractor Details
Parent Company: Lockheed Martin Corp
Address: 6801 ROCKLEDGE DRIVE, BETHESDA, MD, 20817
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $201,755,596
Exercised Options: $16,836,040
Current Obligation: $179,289,152
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2006-03-24
Current End Date: 2020-09-30
Potential End Date: 2020-09-30 00:00:00
Last Modified: 2025-07-25
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