DoD's $63.8M sole-source contract for telecom sustainment awarded to Lockheed Martin Services, LLC

Contract Overview

Contract Amount: $63,755,998 ($63.8M)

Contractor: Lockheed Martin Services, LLC

Awarding Agency: Department of Defense

Start Date: 2024-12-31

End Date: 2024-12-31

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CALENDAR YEAR 2024 SUSTAINMENT

Place of Performance

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

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $63.8 million to LOCKHEED MARTIN SERVICES, LLC for work described as: CALENDAR YEAR 2024 SUSTAINMENT Key points: 1. Contract awarded on a sole-source basis, raising questions about potential cost efficiencies. 2. Significant spending on telecommunications sustainment indicates a critical need for ongoing support. 3. The firm-fixed-price contract type aims to control costs, but competition dynamics are absent. 4. Awarded to a single vendor, limiting opportunities for market-driven innovation and pricing. 5. The contract duration is for the full calendar year 2024, suggesting a stable, long-term requirement. 6. Focus on sustainment implies maintenance and support of existing systems rather than new development.

Value Assessment

Rating: questionable

Benchmarking the value of this $63.8 million contract is challenging due to its sole-source nature. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value or if taxpayers are receiving optimal value for money. The absence of competition may lead to higher costs compared to a scenario with multiple bidders vying for the contract. Further analysis would require access to historical pricing data for similar sustainment services or internal cost estimates.

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 approach typically occurs when a specific vendor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. The lack of competition means there were no other bidders, which can limit price discovery and potentially lead to higher costs for the government.

Taxpayer Impact: The sole-source award means taxpayers may not benefit from the cost savings that typically arise from a competitive bidding process. Without competing offers, the government has less leverage to negotiate the lowest possible price.

Public Impact

The Department of Defense, specifically the Department of the Air Force, is the primary beneficiary of these telecommunications sustainment services. The contract ensures the continued operation and maintenance of critical telecommunications infrastructure. Services are likely to support military operations and communications networks, potentially impacting national security. The geographic impact is likely concentrated where Air Force telecommunications systems are deployed, potentially nationwide or globally. Workforce implications may include continued employment for Lockheed Martin Services, LLC personnel involved in sustainment activities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings for taxpayers.
Lack of transparency in the justification for sole-sourcing could obscure potential alternatives.
Reliance on a single vendor for critical sustainment may pose long-term supply chain risks.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to an established contractor like Lockheed Martin suggests a known entity with potentially reliable service delivery.
Sustainment contract ensures continuity of essential telecommunications services.

Sector Analysis

The telecommunications sector is vast, encompassing network infrastructure, equipment, and services. Federal spending in this area often supports critical national infrastructure, defense communications, and civilian agency operations. This contract, focused on sustainment for the Department of Defense, falls within the broader IT and Defense sectors. Comparable spending benchmarks for telecommunications sustainment can vary widely based on the complexity and scale of the systems being supported.

Small Business Impact

This contract does not appear to involve a small business set-aside, as it was awarded to Lockheed Martin Services, LLC, a large defense contractor. There is no explicit information provided regarding subcontracting plans for small businesses. The absence of a set-aside suggests that opportunities for small businesses to directly participate in this specific contract may be limited, though they could potentially be involved as subcontractors to the prime vendor.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management oversight structures. Accountability measures are inherent in the firm-fixed-price contract type, which obligates the contractor to deliver specified services within the agreed-upon price. Transparency regarding the sole-source justification and performance metrics would be key areas for assessment, with potential oversight from the Government Accountability Office (GAO) or the Department of Defense Inspector General if issues arise.

Related Government Programs

Defense-wide Telecommunications Services
Air Force IT Services
Network Infrastructure Support Contracts
Command, Control, Communications, and Intelligence (C3I) Systems

Risk Flags

Sole-source award may indicate a lack of market research or potential for inflated pricing.
Absence of competition limits opportunities for innovation and cost reduction.
Contract duration and value warrant scrutiny to ensure ongoing value for money.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $63.8 million to LOCKHEED MARTIN SERVICES, LLC. CALENDAR YEAR 2024 SUSTAINMENT

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 $63.8 million.

What is the period of performance?

Start: 2024-12-31. End: 2024-12-31.

What is the historical spending trend for telecommunications sustainment services by the Department of the Air Force?

Analyzing historical spending trends for telecommunications sustainment by the Department of the Air Force is crucial for understanding the context of the current $63.8 million contract. Without specific historical data provided, a general observation is that federal agencies, particularly the DoD, consistently invest significant resources in maintaining and upgrading their communication networks. This includes costs associated with hardware maintenance, software updates, network management, and technical support. Trends often show an increase in spending over time due to the aging of infrastructure, the need to integrate new technologies, and evolving cybersecurity threats. Understanding if this $63.8 million represents an increase, decrease, or stable level of spending compared to previous years would provide valuable insight into the program's trajectory and the agency's priorities.

What specific telecommunications systems or infrastructure does this contract cover?

The provided data indicates the contract covers 'All Other Telecommunications' (NAICS code 517919) and is for 'Sustainment' for the Department of the Air Force. However, it does not specify the exact telecommunications systems or infrastructure. This broad categorization suggests the contract likely encompasses a range of services essential for the ongoing operation of the Air Force's communication networks. This could include, but is not limited to, maintenance of satellite communication systems, terrestrial network infrastructure, radio communication equipment, secure communication lines, and associated software and hardware. The 'sustainment' aspect implies a focus on keeping existing systems operational, performing repairs, providing technical support, and ensuring the overall health and readiness of these critical assets rather than the procurement of entirely new systems.

What is the justification for awarding this contract on a sole-source basis to Lockheed Martin Services, LLC?

The justification for a sole-source award typically stems from specific circumstances where only one vendor can meet the requirement. For Lockheed Martin Services, LLC, this could be due to possessing unique proprietary technology, specialized expertise, or being the only entity capable of providing sustainment for specific, legacy, or highly integrated telecommunications systems within the Air Force. Often, the original equipment manufacturer or a highly specialized service provider is the sole source. Without the specific justification document (e.g., a Justification and Approval for Other Than Full and Open Competition - J&A), it's impossible to definitively state the reason. However, common rationales include the need for interoperability with existing systems, urgent requirements where competition is not feasible, or when the cost of switching vendors would be prohibitive.

How does the firm-fixed-price contract type mitigate risks for the government in this sustainment effort?

The firm-fixed-price (FFP) contract type is generally considered advantageous for the government when the scope of work is well-defined and risks are manageable. In the context of this telecommunications sustainment contract, an FFP structure means that Lockheed Martin Services, LLC is obligated to perform the specified work for a predetermined price. This provides the government with cost certainty, as the total expenditure is fixed, barring any contract modifications. It shifts the risk of cost overruns from the government to the contractor. If Lockheed Martin incurs higher-than-expected costs in providing sustainment services, those additional expenses are absorbed by the contractor, not the government. This structure incentivizes the contractor to manage its costs efficiently to maintain profitability.

What are the potential performance metrics or service level agreements (SLAs) associated with this contract?

While the provided data does not detail specific performance metrics or Service Level Agreements (SLAs) for this contract, sustainment contracts, especially for critical defense telecommunications, typically include stringent performance requirements. These often revolve around system uptime, response times for technical support, repair turnaround times, and the availability of key personnel. For example, SLAs might mandate a certain percentage of network availability (e.g., 99.9%), require technicians to respond to critical outages within a specified timeframe (e.g., 2 hours), and set targets for resolving issues within a defined period. Failure to meet these SLAs can result in financial penalties or other contractual remedies, ensuring the contractor remains accountable for delivering reliable and effective sustainment services.

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: FIRM FIXED PRICE (J)

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: $63,755,998

Exercised Options: $63,755,998

Current Obligation: $63,755,998

Subaward Activity

Number of Subawards: 96

Total Subaward Amount: $24,431,416

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