DoD's $176M Engineering Services Contract Awarded to Lockheed Martin for Long-Term Support
Contract Overview
Contract Amount: $175,777,813 ($175.8M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2020-07-15
End Date: 2031-12-30
Contract Duration: 4,185 days
Daily Burn Rate: $42.0K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: FY20 ENGINEERING SERVICES
Place of Performance
Location: MIDDLE RIVER, BALTIMORE County, MARYLAND, 21220
State: Maryland Government Spending
Plain-Language Summary
Department of Defense obligated $175.8 million to LOCKHEED MARTIN CORPORATION for work described as: FY20 ENGINEERING SERVICES Key points: 1. Contract value represents a significant investment in long-term engineering support for the Navy. 2. The award to a single, large incumbent contractor suggests a focus on continuity and specialized expertise. 3. The extended duration of the contract (over 11 years) indicates a need for sustained, complex services. 4. The Cost Plus Fixed Fee (CPFF) contract type may allow for flexibility but requires careful oversight to manage costs. 5. The absence of small business set-asides warrants further examination of subcontracting opportunities. 6. The contract's focus on engineering services aligns with critical defense modernization efforts.
Value Assessment
Rating: fair
Benchmarking the value of this $175.8 million contract is challenging without specific service details and comparable contracts. However, the Cost Plus Fixed Fee (CPFF) structure, while common for complex R&D or services where costs are uncertain, can lead to higher overall expenditures compared to fixed-price contracts if not managed diligently. The duration of over 11 years suggests a substantial, ongoing need, and the pricing will depend heavily on labor rates and indirect costs, which should be scrutinized against industry standards and historical Navy contracts for similar engineering services.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, indicating that multiple bidders were likely considered. The fact that Lockheed Martin was ultimately awarded the contract suggests they offered the best value proposition among the competitors. The level of competition, while initially broad, resulted in a single award, which is typical for large, complex service contracts requiring specialized capabilities.
Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it aims to secure the best possible pricing and value through a competitive bidding process, preventing potential price gouging.
Public Impact
The Department of the Navy benefits from sustained engineering expertise for critical programs. This contract supports advanced technological development and maintenance within naval systems. The primary geographic impact is likely within Maryland, where the contractor's operations are based. The contract supports a highly skilled engineering workforce, contributing to specialized job creation and retention.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- The CPFF contract type can incentivize cost overruns if not rigorously monitored.
- Long-term contracts may reduce opportunities for new entrants and innovative solutions.
- Lack of explicit small business set-aside raises concerns about broader economic inclusion.
Positive Signals
- Awarded through full and open competition, suggesting a competitive process.
- Long contract duration indicates a stable, long-term need and potential for deep expertise development.
- The contractor, Lockheed Martin, is a major defense entity with a proven track record.
Sector Analysis
This contract falls within the Engineering Services sector (NAICS 541330), a critical component of the broader aerospace and defense industry. The market for defense engineering services is substantial, driven by continuous modernization requirements and the complexity of military platforms. Spending benchmarks for similar long-term engineering support contracts within the DoD can range from tens to hundreds of millions of dollars, depending on the scope and duration. This award to Lockheed Martin is consistent with the trend of large, established defense contractors securing significant, long-term service agreements.
Small Business Impact
The data indicates that this contract was not set aside for small businesses (sb: false). While the primary awardee is a large corporation, the contract's extensive duration and scope may present opportunities for small businesses to participate as subcontractors. However, the absence of a specific small business set-aside means that the extent of small business involvement will depend on Lockheed Martin's subcontracting strategy and the availability of relevant small business capabilities.
Oversight & Accountability
Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. Given the CPFF structure and long duration, robust oversight mechanisms, including regular performance reviews, cost audits, and progress reporting, will be crucial. Transparency will be facilitated through contract reporting systems, and potential issues could fall under the jurisdiction of the Department of Defense Inspector General.
Related Government Programs
- Naval Sea Systems Command (NAVSEA) Contracts
- Department of Defense Engineering Services
- Aerospace and Defense Contracting
- Long-Term Service Agreements
- Cost Plus Fixed Fee Contracts
Risk Flags
- Long contract duration may limit future flexibility.
- CPFF contract type requires diligent cost oversight.
- Potential for limited small business participation.
- Incumbent contractor award may reduce new market entrants.
Tags
defense, department-of-defense, department-of-the-navy, engineering-services, definitive-contract, cost-plus-fixed-fee, full-and-open-competition, lockheed-martin-corporATION, maryland, long-term-contract, professional-services, fiscal-year-2020
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $175.8 million to LOCKHEED MARTIN CORPORATION. FY20 ENGINEERING SERVICES
Who is the contractor on this award?
The obligated recipient is LOCKHEED MARTIN CORPORATION.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Navy).
What is the total obligated amount?
The obligated amount is $175.8 million.
What is the period of performance?
Start: 2020-07-15. End: 2031-12-30.
What is Lockheed Martin's track record with the Department of the Navy for similar engineering services?
Lockheed Martin Corporation is a major defense contractor with extensive experience supporting the Department of the Navy across a wide array of programs. Their track record typically includes providing complex engineering, integration, and sustainment services for naval platforms, including ships, aircraft, and combat systems. Historical data would likely show numerous contracts, varying in value and duration, for research, development, testing, and evaluation (RDT&E), as well as sustainment engineering. Performance reviews and past performance evaluations from previous Navy contracts would be key indicators of their capability and reliability in fulfilling the requirements of this new definitive contract.
How does the $175.8 million value compare to other long-term engineering support contracts awarded by the Navy?
The $175.8 million value over an 11-year period (approximately $16 million per year) is substantial but falls within the typical range for large, complex engineering support contracts awarded by the Department of the Navy. Major shipbuilding programs, aircraft modernization efforts, or advanced technology development projects often involve contracts of similar or even greater magnitude. Benchmarking requires comparing the specific services rendered, the complexity of the systems supported, and the labor categories involved against other definitive contracts or indefinite-delivery/indefinite-quantity (IDIQ) vehicles for engineering services. Without more granular data on the scope, the $16M/year figure suggests significant, ongoing technical support.
What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract of this duration?
The primary risks associated with a CPFF contract of this duration (over 11 years) revolve around cost control and contractor performance. For the government, the risk is that the 'cost plus' element could lead to higher-than-anticipated expenditures if the contractor's costs escalate due to inefficiencies, scope creep, or inadequate cost management. The 'fixed fee' provides the contractor with a guaranteed profit margin, which might reduce their incentive to aggressively control costs. Over such a long period, ensuring the contractor maintains focus on efficiency, innovation, and delivering value, rather than simply maximizing billable hours, is critical. Robust oversight and clear performance metrics are essential to mitigate these risks.
How might the extended contract end date (2031) impact future technological integration or competition?
An extended contract end date of December 30, 2031, presents both opportunities and challenges for future technological integration and competition. On one hand, it provides stability and allows for deep integration of services and development of specialized knowledge by Lockheed Martin, potentially leading to more efficient and tailored solutions over time. On the other hand, such a long commitment might stifle competition by locking in a single provider for an extended period, potentially delaying the adoption of newer technologies or alternative solutions that could emerge. It could also create a barrier for smaller, more agile companies seeking to enter the market or offer innovative approaches, as opportunities may be limited until the contract expires.
What is the significance of the 'Engineering Services' (NAICS 541330) classification for this contract?
The classification 'Engineering Services' (NAICS 541330) signifies that the core purpose of this contract is to procure professional services from engineers and architects. This typically includes activities such as design, development, consulting, and project management related to various engineering disciplines. For the Department of the Navy, this classification indicates a need for specialized technical expertise to support the design, development, testing, maintenance, or modernization of complex military systems, infrastructure, or technologies. It implies that the work will involve applying scientific and engineering principles to solve technical problems and achieve specific project objectives.
What does the 'MD' (Maryland) state code suggest about the contract's operational focus or location?
The 'MD' state code, indicating Maryland, likely signifies the primary location where the contract will be performed or where the contractor's relevant facility is situated. Maryland is a major hub for the U.S. defense industry, hosting numerous government agencies, military installations, and defense contractors, including Lockheed Martin. This suggests that the engineering services provided under this contract will likely be executed by personnel working in Maryland, potentially supporting nearby naval commands or defense programs concentrated in the Mid-Atlantic region. It implies a focus on activities within this key defense corridor.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: GUIDED MISSLES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: N0002419R5393
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 2323 EASTERN BLVD, BALTIMORE, MD, 21220
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: $333,267,744
Exercised Options: $249,180,782
Current Obligation: $175,777,813
Actual Outlays: $10,755,634
Subaward Activity
Number of Subawards: 109
Total Subaward Amount: $16,380,479
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2020-07-15
Current End Date: 2031-12-30
Potential End Date: 2032-12-30 00:00:00
Last Modified: 2026-01-09
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