DoD's $45M R&D contract with Lockheed Martin shows strong competition and fair pricing

Contract Overview

Contract Amount: $45,007,937 ($45.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2007-04-12

End Date: 2012-04-10

Contract Duration: 1,825 days

Daily Burn Rate: $24.7K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: R&D

Official Description: TRACER

Place of Performance

Location: GOODYEAR, MARICOPA County, ARIZONA, 85338

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $45.0 million to LOCKHEED MARTIN CORPORATION for work described as: TRACER Key points: 1. Contract awarded through full and open competition, indicating a robust bidding process. 2. Pricing appears competitive when benchmarked against similar R&D efforts. 3. No significant risk indicators identified in the contract's performance history. 4. This contract represents a small portion of the DoD's overall R&D spending. 5. Lockheed Martin is a major defense contractor with a proven track record. 6. The contract's duration and cost structure suggest a well-defined research scope.

Value Assessment

Rating: good

The contract's total value of approximately $45 million over five years suggests a reasonable investment for advanced research and development. Benchmarking against similar large-scale R&D contracts within the Department of Defense indicates that the pricing structure, likely a Cost Plus Fixed Fee (CPFF), is within expected ranges for complex, high-risk projects. While specific per-unit cost data is not available for R&D, the overall value appears aligned with industry standards for cutting-edge technological development.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. The presence of two bidders suggests a healthy level of competition for this specific R&D requirement. This competitive environment is generally favorable for price discovery and ensures that the government receives proposals from multiple qualified entities, potentially leading to better value.

Taxpayer Impact: Full and open competition typically benefits taxpayers by driving down costs through a competitive bidding process, ensuring that the selected contractor offers the most advantageous terms.

Public Impact

The primary beneficiaries are the Department of Defense, which gains access to advanced research and development capabilities. The contract supports the development of new technologies relevant to national security. Geographic impact is concentrated in Arizona, where Lockheed Martin's facility is located. Workforce implications include employment for highly skilled scientists, engineers, and technicians.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Positive Signals

Awarded via full and open competition.
Contractor is a well-established industry leader.
Contract duration is reasonable for the scope of R&D.
Pricing appears to be within market norms for R&D.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. The defense R&D market is characterized by significant government investment, often driven by national security imperatives. Comparable spending benchmarks in this sector involve substantial multi-year investments in areas like advanced materials, aerospace, and defense systems. Lockheed Martin, as a prime contractor, operates within a highly competitive landscape for these types of contracts.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by the 'false' value for 'sb'. Furthermore, the 'sb' flag being false suggests no specific subcontracting goals for small businesses were mandated within this particular award. This means the primary contractor, Lockheed Martin, has discretion over subcontracting opportunities, and there may be fewer direct opportunities for small businesses to participate in this specific contract's execution.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program management office within the Department of the Army. Accountability measures are inherent in the Cost Plus Fixed Fee structure, which requires detailed reporting and justification of costs. Transparency is generally maintained through contract databases and reporting requirements, though specific R&D details may be subject to security classifications. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Research and Development Programs
Advanced Technology Development Contracts
Aerospace and Defense Research Initiatives

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $45.0 million to LOCKHEED MARTIN CORPORATION. TRACER

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 Army).

What is the total obligated amount?

The obligated amount is $45.0 million.

What is the period of performance?

Start: 2007-04-12. End: 2012-04-10.

What is Lockheed Martin's track record with similar R&D contracts for the Department of Defense?

Lockheed Martin Corporation is a major defense contractor with extensive experience in research and development for the Department of Defense. They have a long history of securing and successfully executing large-scale R&D contracts across various domains, including aerospace, defense systems, and advanced technologies. Their track record typically involves complex projects requiring significant scientific and engineering expertise. While specific performance metrics for past R&D contracts are often not publicly detailed due to proprietary or security reasons, their consistent position as a leading defense contractor suggests a generally positive history of delivering on contractual obligations and technological advancements. The government's continued awarding of significant contracts to Lockheed Martin indicates a level of confidence in their capabilities and past performance.

How does the $45 million value compare to other R&D contracts of similar scope?

The $45 million total value for this five-year R&D contract is within a moderate range for significant research initiatives within the Department of Defense. Large-scale R&D projects, especially those involving cutting-edge technologies or complex systems development, can easily reach hundreds of millions or even billions of dollars over their lifecycle. Conversely, smaller, more focused research efforts might be valued in the single-digit millions. Given that this contract was awarded through full and open competition and involved a major defense contractor like Lockheed Martin, the $45 million figure suggests a substantial but not exceptionally large project. It indicates a focused effort on specific research objectives rather than a broad, multi-faceted program. Benchmarking against publicly available data for similar R&D efforts suggests this value is competitive and reflects the typical investment required for advanced technological development in the defense sector.

What are the primary risks associated with this type of Cost Plus Fixed Fee (CPFF) contract for R&D?

Cost Plus Fixed Fee (CPFF) contracts, while common for R&D, carry inherent risks. For the government, the primary risk is that the contractor may not manage costs as efficiently as possible, knowing that their fee is fixed regardless of the final cost. This can lead to cost overruns if not carefully monitored. There's also a risk that the contractor might prioritize activities that maximize their fee or minimize their effort, rather than strictly adhering to the most cost-effective path to achieving the research objectives. For the contractor, the risk lies in underestimating the costs involved in the research, potentially leading to a reduced profit margin if the fixed fee doesn't adequately cover unforeseen expenses. Effective oversight, detailed reporting requirements, and clear performance metrics are crucial to mitigate these risks for both parties.

What is the expected program effectiveness or outcome based on the contract details?

Based on the contract details, the expected program effectiveness centers on the successful advancement of physical, engineering, and life sciences research relevant to the Department of Defense's mission. As a Cost Plus Fixed Fee contract awarded through full and open competition, the expectation is that Lockheed Martin will leverage its expertise to achieve specific research and development milestones. The effectiveness will be measured by the successful completion of the research objectives outlined in the contract, the development of new technologies or scientific understanding, and the potential applicability of these advancements to future defense capabilities. While the precise outcomes are inherent to the nature of R&D and can be unpredictable, the contract structure aims to incentivize the contractor to deliver valuable research findings and technological prototypes or concepts.

How has historical spending in this NAICS code (541710) trended for the Department of the Army?

Historical spending by the Department of the Army within NAICS code 541710 (Research and Development in the Physical, Engineering, and Life Sciences) has generally been substantial and consistent, reflecting the ongoing need for technological superiority in defense. While specific year-over-year trends can fluctuate based on budgetary allocations, strategic priorities, and the initiation of new research programs, the overall investment in this sector remains a significant component of the Army's budget. Periods of heightened geopolitical tension or rapid technological advancement often correlate with increased spending in R&D. The Army consistently awards numerous contracts in this category to a range of large defense contractors and research institutions, indicating a sustained commitment to innovation and scientific exploration to maintain a strategic advantage.

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

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W15P7T06RP238

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 1300 S LITCHFIELD RD STE 9, GOODYEAR, AZ, 85338

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

Financial Breakdown

Contract Ceiling: $70,173,900

Exercised Options: $45,007,937

Current Obligation: $45,007,937

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline