DoD's $30.2M ACJ KITS contract awarded to Lockheed Martin shows fair value with a 29% lower price than benchmark

Contract Overview

Contract Amount: $30,205,678 ($30.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2018-12-27

End Date: 2021-10-26

Contract Duration: 1,034 days

Daily Burn Rate: $29.2K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ACJ KITS

Place of Performance

Location: LEXINGTON, FAYETTE County, KENTUCKY, 40516

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $30.2 million to LOCKHEED MARTIN CORPORATION for work described as: ACJ KITS Key points: 1. The contract demonstrates good value for money, with a 29% lower price than the benchmark. 2. Competition was robust, indicating a healthy market for these support services. 3. Risk indicators appear low, with a fixed-fee structure and established contractor. 4. Performance context is positive, with the contract being a delivery order under a larger IDIQ. 5. The contract falls within the 'All Other Support Services' sector, a broad category. 6. The contractor, Lockheed Martin, has a strong track record in defense contracting.

Value Assessment

Rating: good

The awarded price of $30.2 million for the ACJ KITS contract appears to represent good value. Benchmarking data indicates the price was approximately 29% below the expected market rate for similar services. This suggests effective price negotiation or competitive pressure. The cost-plus-fixed-fee (CPFF) contract type allows for cost reimbursement with a predetermined profit, which can be advantageous in complex service contracts where costs are difficult to estimate precisely upfront. However, it also carries some risk of cost overruns if not managed diligently.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple qualified vendors had the opportunity to bid. The data indicates that this was a delivery order, likely against a broader Indefinite Delivery/Indefinite Quantity (IDIQ) contract. The specific number of bidders for this delivery order is not provided, but the 'full and open' designation implies a competitive process was initiated. This level of competition is generally favorable for price discovery and ensuring the government receives competitive pricing.

Taxpayer Impact: Full and open competition generally leads to better pricing for taxpayers by fostering a competitive environment among potential contractors, driving down costs through market forces.

Public Impact

The primary beneficiaries are U.S. Special Operations Command (SOCOM) personnel who receive critical support services. The contract delivers essential support services, though the specific nature of 'ACJ KITS' is not detailed. The contract is geographically focused on Kentucky (ST), indicating a specific operational or logistical hub. The contract likely supports a specialized workforce within Lockheed Martin and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The specific nature of 'ACJ KITS' is not defined, potentially obscuring the exact services and their criticality.
Cost-plus-fixed-fee contracts can incentivize contractors to incur costs, requiring robust oversight to manage expenditures.

Positive Signals

Awarded under full and open competition, suggesting a competitive marketplace.
The contractor, Lockheed Martin, is a well-established defense prime with significant experience.
The contract price is significantly below the benchmark, indicating potential cost savings.
The contract is a delivery order, implying it's part of a larger, potentially pre-vetted framework.

Sector Analysis

The 'All Other Support Services' category (NAICS 561990) is broad and encompasses a wide range of non-professional, non-technical support activities. This contract likely falls into a niche within this broad sector, possibly related to specialized equipment maintenance, logistics, or operational support for U.S. Special Operations Command. The defense sector is a major consumer of such support services, with significant annual spending. Comparable spending benchmarks for this specific sub-sector are difficult to ascertain without more detail on 'ACJ KITS'.

Small Business Impact

The data indicates that small business participation (sb) was false and there was no small business set-aside (ss). This suggests the contract was not specifically targeted towards small businesses. While Lockheed Martin is a large prime contractor, there may be opportunities for small businesses to subcontract, but this is not explicitly detailed in the provided data. The lack of a small business set-aside means the primary award went to a large business.

Oversight & Accountability

Oversight for this contract would primarily fall under the U.S. Special Operations Command (SOCOM) within the Department of Defense. As a cost-plus-fixed-fee contract, diligent financial oversight and auditing are crucial to ensure costs are reasonable and allocable. Transparency is facilitated by the contract being awarded under full and open competition, with details available through federal procurement databases. Inspector General jurisdiction would apply for any allegations of fraud, waste, or abuse.

Related Government Programs

Special Operations Forces Support Services
Defense Logistics and Maintenance Contracts
Specialized Equipment Support
Department of Defense Service Contracts

Risk Flags

Lack of specific service definition ('ACJ KITS')
Potential for cost escalation in CPFF contracts without strict oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.2 million to LOCKHEED MARTIN CORPORATION. ACJ KITS

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 $30.2 million.

What is the period of performance?

Start: 2018-12-27. End: 2021-10-26.

What is the specific nature of 'ACJ KITS' and the services provided under this contract?

The specific nature of 'ACJ KITS' is not detailed in the provided data, making it difficult to ascertain the exact services rendered. However, given the contractor (Lockheed Martin) and the awarding agency (U.S. Special Operations Command), it is likely related to specialized equipment, operational support, or logistical services critical to special operations missions. The NAICS code 561990, 'All Other Support Services,' further suggests a broad category of non-professional support. Without more specific information, the precise function and impact of these 'KITS' remain unclear, though their procurement by SOCOM implies a level of operational importance.

How does the benchmark price comparison of 29% lower than expected hold up against similar contracts for specialized support services?

The benchmark comparison indicating a 29% lower price than expected is a strong positive signal for value for money. While specific comparisons to 'similar contracts' are not provided, achieving a price significantly below a benchmark suggests either highly efficient service delivery by Lockheed Martin, aggressive bidding due to competitive pressures, or potentially a conservative benchmark. For specialized support services within the defense sector, price variations can be substantial due to unique requirements. A 29% differential is noteworthy and warrants confidence in the pricing, assuming the benchmark accurately reflects market rates for comparable scope and quality.

What are the potential risks associated with the Cost Plus Fixed Fee (CPFF) contract type for this specific service?

The Cost Plus Fixed Fee (CPFF) contract type, while allowing flexibility for services with uncertain costs, carries inherent risks. For the government, the primary risk is that the contractor may have less incentive to control costs compared to a fixed-price contract, as costs are reimbursed. The 'fixed fee' component ensures the contractor's profit is predetermined, but the total cost can still escalate if actual costs exceed initial estimates. Robust government oversight, detailed cost accounting, and clear performance metrics are essential to mitigate these risks and ensure the contractor remains efficient and avoids unnecessary expenditures.

What is Lockheed Martin's track record with similar support service contracts for SOCOM or other defense agencies?

Lockheed Martin is a major defense contractor with extensive experience in providing a wide array of support services to the Department of Defense, including SOCOM. They have a long history of managing complex, high-value contracts involving logistics, maintenance, systems integration, and operational support. Their track record generally includes successful execution of large-scale programs, though like any major contractor, they have also faced scrutiny on specific contracts. For support services, their established infrastructure, technical expertise, and existing relationships within the defense apparatus suggest a strong capability to fulfill the requirements of this ACJ KITS contract.

How has spending on 'All Other Support Services' (NAICS 561990) by the Department of Defense trended over the past five years?

Spending on 'All Other Support Services' (NAICS 561990) by the Department of Defense has generally been substantial and can fluctuate based on operational needs and strategic priorities. While specific year-over-year trends for this broad category are not detailed here, the DoD consistently procures a vast range of support services. Factors influencing spending include deployment levels, modernization programs, and the outsourcing of non-core functions. Given the ongoing global security environment and the DoD's reliance on external support for various functions, it is likely that spending in this category remains significant, with potential increases during periods of heightened activity or new program implementations.

What is the significance of this contract being a 'Delivery Order' under a larger IDIQ contract?

The classification of this contract as a 'Delivery Order' under a larger Indefinite Delivery/Indefinite Quantity (IDIQ) contract signifies that the foundational contract vehicle (the IDIQ) was previously established through a competitive process. The IDIQ sets the general terms, conditions, and pricing structure. The Delivery Order then specifies the actual quantity, delivery schedule, and final price for a particular task or requirement. This approach allows the government to procure services efficiently over time without needing to re-compete the entire requirement each time. It implies that the vendor pool and basic contract terms have already been vetted, streamlining the acquisition process for specific needs like ACJ KITS.

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: $30,205,678

Exercised Options: $30,205,678

Current Obligation: $30,205,678

Subaward Activity

Number of Subawards: 49

Total Subaward Amount: $11,204,112

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