DoD's $23.16M MH-60M Kitting Contract Awarded to Lockheed Martin Corporation

Contract Overview

Contract Amount: $23,159,810 ($23.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2018-08-15

End Date: 2022-12-31

Contract Duration: 1,599 days

Daily Burn Rate: $14.5K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MH60M BLOCK 1 KITTING

Place of Performance

Location: LEXINGTON, FAYETTE County, KENTUCKY, 40516

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $23.2 million to LOCKHEED MARTIN CORPORATION for work described as: MH60M BLOCK 1 KITTING Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed carefully. 3. Performance period spans over 1500 days, indicating a long-term requirement for these services. 4. The contract is for kitting services, a crucial but often overlooked component of complex equipment sustainment. 5. The awardee, Lockheed Martin Corporation, is a major defense contractor with extensive experience. 6. The contract was awarded by the U.S. Special Operations Command, highlighting its specialized nature.

Value Assessment

Rating: fair

Benchmarking the value of this specific kitting contract is challenging without detailed cost breakdowns and comparisons to similar specialized kitting services. The Cost Plus Fixed Fee (CPFF) structure inherently carries risk for the government, as costs can escalate. While the total award amount is $23.16 million, the fixed fee component is critical for assessing contractor profit margins and overall value. Without more granular data on the fixed fee and the direct costs incurred, a definitive value-for-money assessment is difficult. However, the duration of the contract (nearly 4.5 years) suggests a significant and ongoing need, potentially justifying the investment if the kitting is essential for operational readiness.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that the government solicited bids from all responsible sources. The number of bidders is not specified, but this approach generally fosters price discovery and encourages competitive pricing. The fact that it was competed openly suggests that the government sought the best value proposition available in the market for these specialized kitting services. The absence of specific bidder numbers or award details limits a deeper analysis of the competitive intensity.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it aims to secure the most competitive pricing and best value by allowing a wide range of potential suppliers to bid.

Public Impact

Special Operations Forces personnel benefit from the timely and accurate provision of kitted components for MH-60M helicopters. The contract ensures the operational readiness and sustainment of critical aviation assets used in special operations missions. Services are likely delivered within Kentucky, where the contract's place of performance is indicated. The contract supports specialized logistics and supply chain functions within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can incentivize higher spending if cost controls are not robust.
Lack of specific competition details (number of bidders) makes it hard to gauge the full extent of price pressure.
The specialized nature of kitting for MH-60M might limit the pool of truly capable and competitive vendors.

Positive Signals

Awarded through full and open competition, which is a positive signal for market engagement.
Long contract duration suggests a stable and predictable requirement, allowing for potential economies of scale.
The awardee, Lockheed Martin, is a prime contractor with established processes for complex defense logistics.

Sector Analysis

The defense logistics and support services sector is a significant component of the overall defense industrial base. Kitting services, while often niche, are critical for ensuring that complex military platforms like the MH-60M helicopter have all necessary components readily available for maintenance, repair, and operational deployment. Spending in this area is driven by the need to maintain high levels of readiness for specialized military units. Comparable spending benchmarks would typically be found within broader logistics support contracts for aviation platforms, though specific kitting data is less commonly aggregated.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a large prime contract awarded to Lockheed Martin Corporation, there may be subcontracting opportunities for small businesses within the supply chain for the kitted components. However, without specific subcontracting plans or goals outlined in the award, the direct impact on the small business ecosystem is unclear. The focus appears to be on a large prime contractor fulfilling a specialized requirement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management structures, likely involving the U.S. Special Operations Command. Accountability measures would be tied to the terms of the Cost Plus Fixed Fee contract, including adherence to cost ceilings, delivery schedules, and quality standards. Transparency is generally facilitated through contract award databases, but detailed cost performance reports are typically internal. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

MH-60M Helicopter Support
Special Operations Aviation Logistics
Defense Kitting and Packaging Services
Lockheed Martin Defense Contracts
Cost Plus Fixed Fee Contracts

Risk Flags

Cost Plus Fixed Fee contract type carries inherent risk of cost overruns.
Limited public information on the number of bidders or specific evaluation criteria.
Specialized nature of kitting may limit the competitive landscape.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.2 million to LOCKHEED MARTIN CORPORATION. MH60M BLOCK 1 KITTING

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 $23.2 million.

What is the period of performance?

Start: 2018-08-15. End: 2022-12-31.

What is the typical profit margin for Lockheed Martin on Cost Plus Fixed Fee contracts of this nature?

Assessing the precise profit margin for Lockheed Martin on this specific Cost Plus Fixed Fee (CPFF) contract is challenging without access to detailed contract financials, including the fixed fee amount relative to the estimated cost. CPFF contracts are designed to cover all allowable costs plus a fixed fee representing profit. Historically, fixed fees on CPFF contracts can range from 3% to 15% of the estimated cost at award, depending on the contract's complexity, risk, and the nature of the work. For a large defense contractor like Lockheed Martin, operating in a specialized area like MH-60M kitting for Special Operations Command, the fee would likely be negotiated based on market rates, perceived risk, and the strategic importance of the program. Without the specific fixed fee percentage or amount, it's impossible to provide a definitive profit margin. However, the government's oversight aims to ensure the fee is fair and reasonable for the services rendered and the risks assumed by the contractor.

How does the $23.16 million total award compare to historical spending on MH-60M kitting or similar support services?

Direct historical spending comparisons for 'MH-60M kitting' specifically are difficult to isolate from broader MH-60M support contracts or general aviation logistics spending. The $23.16 million awarded over approximately 1599 days (roughly 4.4 years) translates to an average annual spend of approximately $5.26 million. This figure represents the total contract value, including estimated costs and the fixed fee. To benchmark this effectively, one would need to identify previous contracts for the same or similar kitting services for the MH-60M or comparable special operations aircraft. Such data might reveal trends in pricing, scope, and duration. Without access to a comprehensive database of past kitting-specific contracts for this platform, it's hard to definitively state if this award represents an increase, decrease, or stable level of spending compared to historical norms. However, the duration and value suggest a consistent, long-term requirement.

What are the primary risks associated with a Cost Plus Fixed Fee contract for kitting services?

The primary risk associated with a Cost Plus Fixed Fee (CPFF) contract for kitting services, like the one awarded to Lockheed Martin for the MH-60M, is the potential for cost escalation beyond initial estimates. While the 'fixed fee' component provides a defined profit margin for the contractor, the 'cost plus' element means the government bears the risk of actual costs incurred. If the contractor's costs for materials, labor, or overhead are higher than anticipated, the total amount paid by the government will increase, potentially exceeding the original budget projections. Effective oversight, stringent cost accounting standards, and clear definitions of allowable costs are crucial to mitigate this risk. Additionally, if the kitting involves complex or novel components, unforeseen technical challenges could drive up costs. The government must ensure robust monitoring to prevent inefficiencies or unnecessary expenditures from inflating the final price.

Given Lockheed Martin's status as a major defense contractor, does this contract indicate a lack of competition in specialized defense support services?

The award of this contract to Lockheed Martin Corporation, a major defense contractor, does not inherently indicate a lack of competition in specialized defense support services, especially since it was awarded under 'full and open competition.' This designation means the opportunity was advertised broadly, allowing any responsible source to submit a bid. While large, established companies often have advantages due to existing infrastructure, expertise, and past performance, the competitive process itself is designed to evaluate all proposals based on defined criteria (e.g., technical approach, past performance, price). The fact that it was competed openly suggests that the U.S. Special Operations Command sought the best available solution. However, the specialized nature of MH-60M kitting might mean that the pool of highly qualified bidders is smaller than for more common services, potentially leading to fewer bids than in less specialized markets. The government's goal is to secure the best value, regardless of contractor size, through a competitive process.

What are the performance implications of the contract duration (1599 days)?

The contract duration of 1599 days (approximately 4.4 years) signifies a long-term, stable requirement for the MH-60M kitting services. From a performance perspective, this extended period allows the contractor, Lockheed Martin, to potentially optimize its processes, invest in specialized tooling or personnel, and build deep expertise related to the specific kitting needs of the MH-60M. For the U.S. Special Operations Command, it ensures continuity of supply and support for a critical aviation platform, reducing the administrative burden and potential disruption associated with frequent re-competitions. This long-term engagement can foster a stronger working relationship between the government and the contractor, potentially leading to improved service quality and responsiveness. However, it also necessitates robust government oversight throughout the contract's life to ensure ongoing value and address any performance issues that may arise.

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: $23,159,810

Exercised Options: $23,159,810

Current Obligation: $23,159,810

Subaward Activity

Number of Subawards: 15

Total Subaward Amount: $1,627,675

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