DoD's $48.5M Lockheed Martin contract for 'Special Sustainment Project' awarded via sole-source justification

Contract Overview

Contract Amount: $48,476,496 ($48.5M)

Contractor: Lockheed Martin Services, LLC

Awarding Agency: Department of Defense

Start Date: 2021-01-31

End Date: 2027-02-01

Contract Duration: 2,192 days

Daily Burn Rate: $22.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: IT

Official Description: SPECIAL SUSTAINMENT PROJECT

Place of Performance

Location: COLORADO SPRINGS, EL PASO County, COLORADO, 80916

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $48.5 million to LOCKHEED MARTIN SERVICES, LLC for work described as: SPECIAL SUSTAINMENT PROJECT Key points: 1. Contract awarded on a sole-source basis, raising questions about potential price efficiencies. 2. Long contract duration of 2192 days suggests a need for sustained support. 3. The contract's value is significant, warranting close scrutiny of performance and cost. 4. Focus on telecommunications services indicates a critical infrastructure component. 5. The 'Special Sustainment Project' designation implies a unique or specialized need. 6. Lack of competition may limit opportunities for innovative solutions from other vendors.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging without comparable bids. The cost-plus-fixed-fee structure allows for cost reimbursement plus a fixed fee, which can incentivize cost overruns if not managed tightly. Without competitive pressure, it's difficult to ascertain if the pricing reflects fair market value or if efficiencies could have been achieved through a more open bidding process. The total value of $48.5 million over approximately six years requires diligent oversight to ensure taxpayer funds are used effectively.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a 'NOT COMPETED' (sole-source) justification. This means the Department of Defense did not solicit bids from multiple vendors. Reasons for sole-source awards often include unique capabilities, urgent needs, or lack of market availability. The absence of competition means there was no direct price comparison or negotiation against alternative offerings, potentially leading to higher costs than a competed contract.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage market competition to secure the best possible prices for taxpayers. This can result in paying a premium for goods or services that might be available at a lower cost through a competitive process.

Public Impact

The primary beneficiary is the Department of the Air Force, receiving specialized telecommunications sustainment. Services delivered are critical for maintaining operational readiness and communication infrastructure. The contract's geographic impact is likely focused on Air Force installations, potentially worldwide. Workforce implications may involve specialized technical personnel required for sustainment activities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential cost savings.
Cost-plus-fixed-fee contract type can create incentives for higher spending if not rigorously managed.
Lack of transparency in the justification for sole-sourcing requires further investigation.
Long contract duration may indicate a lack of viable alternatives or a critical, long-term need.

Positive Signals

Contract addresses a specific sustainment need, potentially crucial for operational continuity.
Lockheed Martin is a large, established defense contractor with extensive experience.
The contract has a defined end date, providing a finite period for service delivery.

Sector Analysis

The telecommunications sector is vast and critical for modern defense operations. This contract falls under the 'All Other Telecommunications' category (NAICS 517919), suggesting specialized support beyond standard network infrastructure. The defense sector heavily relies on robust and secure communication systems, making sustainment contracts like this vital for maintaining readiness. Comparable spending benchmarks are difficult to establish due to the specialized nature and sole-source award, but sustainment of complex systems often represents a significant portion of overall IT and communications budgets within the DoD.

Small Business Impact

This contract was not competed and there is no indication of small business set-asides or subcontracting requirements. The award to a large prime contractor like Lockheed Martin suggests that small businesses are unlikely to be direct beneficiaries unless they are part of Lockheed Martin's supply chain. Further analysis would be needed to determine if subcontracting opportunities exist and if they are being utilized effectively to engage small businesses.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force contracting and program management offices. The cost-plus-fixed-fee structure necessitates robust financial oversight to ensure costs are reasonable and allowable. Transparency is limited due to the sole-source nature, but contract performance reviews and audits by the Defense Contract Audit Agency (DCAA) or the Inspector General would be key accountability measures.

Related Government Programs

Defense Information Systems Agency (DISA) contracts
Air Force Network Integration Center (AFNIC) support
DoD Telecommunications Infrastructure Sustainment
Major weapon system sustainment contracts

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of competition
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $48.5 million to LOCKHEED MARTIN SERVICES, LLC. SPECIAL SUSTAINMENT PROJECT

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN SERVICES, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $48.5 million.

What is the period of performance?

Start: 2021-01-31. End: 2027-02-01.

What specific 'Special Sustainment Project' is this contract addressing, and why was it deemed sole-source?

The contract data indicates the project is related to 'All Other Telecommunications' (NAICS 517919) and is designated as a 'SPECIAL SUSTAINMENT PROJECT'. The sole-source justification ('NOT COMPETED') suggests that the Department of the Air Force determined that only Lockheed Martin Services, LLC could provide the required services. This could be due to unique proprietary technology, specialized expertise, existing infrastructure integration, or an urgent need where competition was not feasible. Without access to the specific justification documentation, the precise reasons remain speculative. However, such justifications are typically reviewed by agency legal counsel and procurement officials to ensure compliance with federal acquisition regulations.

How does the cost-plus-fixed-fee (CPFF) structure impact cost control and value for money in this contract?

The Cost-Plus-Fixed-Fee (CPFF) contract type means the contractor (Lockheed Martin) is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. While CPFF can be useful for research and development or services where cost estimation is difficult, it carries inherent risks for cost control. The contractor has less incentive to minimize costs because their profit (the fixed fee) is not directly tied to cost savings. Conversely, the government bears the risk of cost overruns. Effective value for money in a CPFF contract heavily relies on stringent government oversight, detailed cost monitoring, and robust negotiation of the fixed fee. Without strong program management and auditing, this structure can lead to higher overall expenditures compared to fixed-price contracts.

What is the typical performance track record of Lockheed Martin Services, LLC on similar large-scale sustainment contracts with the DoD?

Lockheed Martin Services, LLC, as a subsidiary of Lockheed Martin Corporation, is a major defense contractor with a long history of performing large-scale sustainment and support contracts for the Department of Defense across various platforms and systems. Their track record generally includes successful delivery on complex programs, often involving advanced technology and extensive logistical support. However, like any large contractor, they have also faced scrutiny and challenges on specific contracts related to cost growth, schedule delays, or performance issues. Assessing their performance on this specific 'Special Sustainment Project' would require examining contract performance reports, award fee determinations, and any past performance evaluations specific to this service area.

What are the potential risks associated with a sole-source award for critical telecommunications sustainment?

Sole-source awards for critical functions like telecommunications sustainment present several risks. Firstly, the lack of competition can lead to inflated prices, as the government cannot leverage market forces to negotiate the best value. Secondly, it can stifle innovation, as alternative solutions or more efficient methods proposed by other vendors are not considered. Thirdly, it creates a dependency on a single provider, which can be problematic if that provider experiences financial difficulties, changes strategic direction, or fails to perform adequately. Finally, it raises concerns about transparency and fairness in the procurement process, potentially leading to perceptions of favoritism or missed opportunities for other capable businesses.

How does this contract's value and duration compare to other telecommunications sustainment contracts within the DoD?

The contract value of approximately $48.5 million over roughly six years (2192 days) places it as a significant, but not exceptionally large, telecommunications sustainment contract within the DoD. The DoD procures a vast array of telecommunications services and sustainment globally, with individual contract values ranging from thousands to billions of dollars. Contracts for sustainment of major communication systems or enterprise-wide networks can easily exceed this value. However, the duration is substantial, indicating a long-term need for specialized support. The sole-source nature and specific 'special sustainment' designation make direct comparisons difficult, as competed contracts for more standardized services might offer different pricing and scope.

Industry Classification

NAICS: Information › Other Telecommunications › All Other Telecommunications

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 480 WOOTEN RD STE 104, COLORADO SPRINGS, CO, 80916

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: $49,852,700

Exercised Options: $49,852,700

Current Obligation: $48,476,496

Subaward Activity

Number of Subawards: 33

Total Subaward Amount: $3,496,176

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA882319D0001

IDV Type: IDC

Timeline