DoD's $23M contract for logistics support to Lockheed Martin raises questions on value and competition

Contract Overview

Contract Amount: $23,047,843 ($23.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2018-08-23

End Date: 2023-08-22

Contract Duration: 1,825 days

Daily Burn Rate: $12.6K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF BASE YEAR - BASE MFP-11 AND MFP 2 FUNDED LOG SUPPORT

Place of Performance

Location: LEXINGTON, FAYETTE County, KENTUCKY, 40516

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $23.0 million to LOCKHEED MARTIN CORPORATION for work described as: IGF::OT::IGF BASE YEAR - BASE MFP-11 AND MFP 2 FUNDED LOG SUPPORT Key points: 1. The contract's cost-plus-fixed-fee structure warrants scrutiny for potential cost overruns. 2. Limited public data on performance metrics makes a comprehensive value assessment challenging. 3. The sole-source nature of this award limits competitive pressure and potentially inflates costs. 4. The contract duration of five years suggests a long-term need for these services. 5. The geographic focus on Kentucky for logistics support may indicate specific operational requirements. 6. The absence of small business set-asides warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: questionable

Benchmarking the value of this $23 million contract is difficult due to the lack of detailed performance data and the cost-plus-fixed-fee pricing structure. This structure can incentivize contractors to increase costs, as their fee is fixed regardless of the total project cost. Without comparable contracts for similar logistics support services under similar conditions, it's hard to definitively assess if the pricing is competitive or if the government is receiving good value for its investment. The fixed fee component offers some predictability, but the overall cost efficiency remains a concern.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed openly. While sole-source awards can be necessary in specific circumstances, such as when only one vendor possesses the required capabilities or when urgency dictates, they inherently limit competition. This lack of competition means that the government did not benefit from the price discovery and innovation that typically arise from multiple bidders vying for a contract. The absence of a competitive process raises concerns about whether the most cost-effective solution was secured.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the best possible price, as there was no competitive pressure to drive down costs. This can lead to higher overall spending for the government.

Public Impact

The U.S. Special Operations Command benefits from enhanced logistics support, crucial for operational readiness. Services delivered include essential support functions that enable the effective deployment and sustainment of special operations forces. The primary geographic impact is in Kentucky, suggesting a concentration of operational or logistical activities in the state. The contract supports a specialized segment of the defense workforce, likely involving skilled logistics and support personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Cost-plus-fixed-fee structure may incentivize cost escalation, requiring robust oversight.
Lack of detailed performance metrics hinders objective assessment of contractor effectiveness.
Absence of small business participation raises concerns about equitable distribution of contract value.

Positive Signals

Contract provides essential logistics support to critical U.S. Special Operations Command missions.
Fixed fee component offers some cost predictability within the overall contract.
Long-term contract (5 years) indicates a sustained need and potential for stable support.

Sector Analysis

This contract falls within the broader defense logistics and support services sector. The market for such services is substantial, driven by the complex needs of military operations. Lockheed Martin, as a major defense contractor, is a significant player in this space. Comparable spending benchmarks are difficult to establish without more specific service details, but the overall defense logistics market is valued in the billions annually. This contract represents a specific, albeit substantial, allocation within that larger ecosystem.

Small Business Impact

The contract data indicates that small business participation was not a stated requirement or set-aside. This raises questions about whether opportunities for small businesses to subcontract were explored or offered. Without specific subcontracting plans or set-aside provisions, it's possible that small businesses were excluded from a portion of this significant contract value, potentially limiting their growth and contribution to the defense industrial base.

Oversight & Accountability

Oversight for this contract would primarily fall under the U.S. Special Operations Command's contracting and program management offices. Given the sole-source nature and cost-plus-fixed-fee structure, rigorous oversight is crucial to monitor costs, ensure performance standards are met, and prevent potential fraud or abuse. Transparency is limited due to the lack of competitive bidding and detailed public reporting on performance. The Inspector General for the Department of Defense would have jurisdiction for audits and investigations if concerns arise.

Related Government Programs

Defense Logistics Agency Support Contracts
Special Operations Forces Support Services
Military Base Operations Support
Contractor Logistics Support (CLS)

Risk Flags

Sole-source award without clear justification
Cost-plus-fixed-fee structure with potential for cost overruns
Lack of transparency in performance metrics
Absence of small business participation requirements

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.0 million to LOCKHEED MARTIN CORPORATION. IGF::OT::IGF BASE YEAR - BASE MFP-11 AND MFP 2 FUNDED LOG SUPPORT

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (U.S. Special Operations Command).

What is the total obligated amount?

The obligated amount is $23.0 million.

What is the period of performance?

Start: 2018-08-23. End: 2023-08-22.

What is Lockheed Martin's track record with similar sole-source logistics support contracts for the DoD?

Assessing Lockheed Martin's track record with similar sole-source logistics support contracts requires a deep dive into historical contract awards and performance reviews, which are not readily available in the provided data. Generally, large defense contractors like Lockheed Martin have extensive experience fulfilling complex logistics requirements for various branches of the military. However, sole-source awards, by their nature, bypass the competitive scrutiny that typically validates pricing and performance against market alternatives. Therefore, while Lockheed Martin is a capable provider, the lack of competition in this specific instance means that its performance and pricing cannot be benchmarked against other potential suppliers for this particular service. Further analysis would involve examining past performance evaluations (if public) and any documented issues or successes on comparable sole-source agreements.

How does the cost-plus-fixed-fee structure compare to other contract types for logistics support, and what are the implications for value?

The Cost-Plus-Fixed-Fee (CPFF) contract type, used here, reimburses the contractor for allowable costs and pays a fixed fee. This structure is often used when the scope of work is not precisely defined or when there's uncertainty in the costs. While the fixed fee provides some cost certainty for the contractor's profit, the overall cost to the government can be unpredictable as it depends on the actual costs incurred. Compared to Firm-Fixed-Price (FFP) contracts, where the contractor bears the risk of cost overruns, CPFF shifts more cost risk to the government. For logistics support, FFP contracts are generally preferred for driving value and efficiency when requirements are well-defined. The CPFF structure here suggests potential complexities or uncertainties in the logistics support, but it also necessitates robust government oversight to manage costs effectively and ensure value is achieved.

What are the specific risks associated with a sole-source award for essential logistics support?

The primary risk of a sole-source award for essential logistics support is the lack of competitive pressure, which can lead to inflated prices and reduced innovation. Without competing bids, the government may overpay for services that could be obtained more affordably through open competition. There's also a risk of complacency from the sole provider, potentially leading to decreased service quality or responsiveness over time, as there are no immediate alternatives for the government to switch to. Furthermore, sole-source awards can create a dependency on a single contractor, which can be problematic if that contractor faces financial difficulties, operational issues, or decides to exit the market. This dependency can disrupt critical logistics operations.

What performance metrics are typically used for logistics support contracts, and how are they measured in this case?

Typical performance metrics for logistics support contracts often include on-time delivery rates, order accuracy, inventory management efficiency, response times to requests, equipment availability, and overall cost-effectiveness. For this specific contract, the provided data does not include details on the performance work statement or the metrics used to measure Lockheed Martin's performance. Given the sole-source and CPFF nature, it is crucial that the U.S. Special Operations Command has established clear, measurable performance standards and a robust system for monitoring and evaluating Lockheed Martin's adherence to them. Without this information, it's impossible to assess the effectiveness of the services delivered beyond the contract's existence.

How does this $23 million contract fit into the broader spending patterns for U.S. Special Operations Command logistics?

This $23 million contract represents a specific allocation for logistics support services to Lockheed Martin by the U.S. Special Operations Command (SOCOM). To understand its place within broader spending patterns, one would need to analyze SOCOM's historical budget allocations and contract awards for logistics over several fiscal years. This contract's value should be compared against the total SOCOM budget, its logistics-specific budget lines, and the number and value of other logistics contracts awarded, both sole-source and competed. If SOCOM consistently awards large sole-source contracts for logistics, it suggests a strategic approach or a market reality. Conversely, if this is an outlier, it warrants closer examination of the justification for its sole-source nature and its value proposition relative to other spending.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Other Support Services › All Other Support Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: H9225416R0001

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 5749 BRIAR HILL RD, LEXINGTON, KY, 40516

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: $23,191,268

Exercised Options: $23,047,843

Current Obligation: $23,047,843

Actual Outlays: $46,155

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $88,996

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: H9225417D0001

IDV Type: IDC

Timeline