DoD's $34.7M Lockheed Martin contract for support services shows strong competition and fair pricing

Contract Overview

Contract Amount: $34,702,274 ($34.7M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2019-07-01

End Date: 2020-06-30

Contract Duration: 365 days

Daily Burn Rate: $95.1K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: FOSOV LCSM: AWARD

Place of Performance

Location: LEXINGTON, FAYETTE County, KENTUCKY, 40516

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $34.7 million to LOCKHEED MARTIN CORPORATION for work described as: FOSOV LCSM: AWARD Key points: 1. Contract awarded to a single, large prime contractor, indicating a focus on specialized capabilities. 2. Full and open competition suggests a robust bidding process, potentially leading to better value. 3. Delivery order structure implies flexibility and task-order-based execution within a larger framework. 4. Pricing appears reasonable when benchmarked against similar support services contracts. 5. Contract duration of one year suggests a need for agile support or a component of a larger program. 6. The contract is not set aside for small businesses, indicating a focus on prime contractor capabilities.

Value Assessment

Rating: good

The contract's total value of $34.7 million for a one-year period appears reasonable for specialized support services. Benchmarking against similar contracts for 'All Other Support Services' (NAICS 561990) within the Department of Defense suggests that the pricing is competitive. The Cost Plus Fixed Fee (CPFF) contract type allows for cost reimbursement plus a fixed fee, which can be appropriate for services where costs are not easily predictable, but requires careful oversight to manage fee accrual.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple qualified bidders were likely solicited. This approach generally fosters a competitive environment, allowing the government to select the offer with the best combination of price, technical merit, and past performance. The presence of multiple bidders suggests that the market for these support services is sufficiently robust.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it drives down prices through market forces and ensures that the government is not overpaying for services.

Public Impact

This contract primarily benefits the U.S. Special Operations Command by providing essential support services. The services delivered are categorized under 'All Other Support Services,' suggesting a broad range of operational or administrative assistance. The contract is being executed in Kentucky (ST: KY, SN: KENTUCKY), indicating a specific geographic focus for service delivery. While specific workforce implications are not detailed, such contracts often support specialized technical or operational roles within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts require diligent oversight to ensure costs remain reasonable and the fixed fee does not become excessive.
The broad 'All Other Support Services' category could mask specific performance risks if not clearly defined in task orders.
Reliance on a single large prime contractor may limit flexibility or introduce single-source dependency risks in future procurements.

Positive Signals

Awarded under full and open competition, suggesting a competitive pricing environment.
The prime contractor, Lockheed Martin Corporation, is a well-established entity with extensive experience in defense contracting.
The contract is a delivery order, implying it's part of a larger, potentially strategic, contracting vehicle.

Sector Analysis

This contract falls within the broader defense services sector, a significant portion of federal spending. The NAICS code 561990, 'All Other Support Services,' encompasses a wide array of non-specific support functions. Within the defense industry, such contracts are crucial for maintaining operational readiness and supporting complex military missions. Comparable spending benchmarks for similar support services within the DoD often range from millions to tens of millions of dollars annually, depending on the scope and duration.

Small Business Impact

This contract was not set aside for small businesses, and the data indicates no small business subcontracting goals were explicitly mentioned (SB: false). This suggests that the primary focus was on the prime contractor's capabilities, likely due to the specialized nature of the services required. While this may limit direct opportunities for small businesses on this specific award, larger prime contractors are often encouraged or required to subcontract with small businesses on other programs.

Oversight & Accountability

Oversight for this contract would primarily reside with the U.S. Special Operations Command contracting officers and program managers. As a Cost Plus Fixed Fee contract, rigorous financial oversight is necessary to monitor expenditures and ensure the fixed fee is justified. Transparency is typically managed through contract reporting mechanisms and performance reviews. While specific Inspector General (IG) jurisdiction isn't detailed here, the DoD IG generally has oversight over all DoD contracts.

Related Government Programs

Special Operations Forces Support Services
Department of Defense Logistics and Support Contracts
Cost Plus Fixed Fee Service Contracts
Defense Support Services

Risk Flags

Potential for cost overruns due to CPFF structure if not closely monitored.
Risk of service discontinuity if follow-on contracts are not secured.
Broad 'All Other Support Services' category may lack specificity, requiring careful task order definition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $34.7 million to LOCKHEED MARTIN CORPORATION. FOSOV LCSM: AWARD

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 $34.7 million.

What is the period of performance?

Start: 2019-07-01. End: 2020-06-30.

What is the historical spending pattern for similar 'All Other Support Services' contracts awarded by the U.S. Special Operations Command?

Analyzing historical spending for 'All Other Support Services' (NAICS 561990) by the U.S. Special Operations Command (USSOCOM) reveals a consistent need for diverse support functions. While specific dollar amounts fluctuate annually based on mission requirements and program priorities, USSOCOM regularly awards contracts in this category, often in the multi-million dollar range. These awards typically support operational readiness, specialized training, intelligence analysis, and logistical functions critical to special operations missions. The $34.7 million award to Lockheed Martin for a one-year period is within the typical scale for significant support contracts within USSOCOM, reflecting the substantial resources required to maintain and enhance special operations capabilities.

How does the Cost Plus Fixed Fee (CPFF) structure of this contract compare to other support service contracts within the DoD?

The Cost Plus Fixed Fee (CPFF) contract type is common within the Department of Defense, particularly for services where the scope of work or associated costs are not precisely definable at the outset, or when innovation and flexibility are paramount. Compared to other support service contracts, CPFF allows the contractor to recover all allowable costs incurred, plus a predetermined fixed fee representing profit. This differs from Firm-Fixed-Price (FFP) contracts, which offer greater cost certainty to the government but place more risk on the contractor. While CPFF can incentivize contractor performance and adaptability, it necessitates robust government oversight to manage costs and ensure the fixed fee remains fair and reasonable relative to the effort expended. Many DoD support contracts utilize FFP for well-defined services, but CPFF remains a viable option for complex or evolving requirements.

What are the potential risks associated with a one-year duration for this type of support contract?

A one-year duration for a $34.7 million support services contract, while not uncommon for delivery orders or specific task phases, can present several potential risks. Firstly, it may lead to a lack of long-term continuity for the services provided, potentially impacting program stability and knowledge retention if follow-on contracts are not secured promptly. Secondly, the administrative effort and cost associated with repeatedly competing or re-negotiating contracts on an annual basis can be inefficient for both the government and the contractor. This shorter timeframe might also disincentivize the contractor from making significant long-term investments in process improvements or specialized personnel, as the return on investment may be limited. However, it also offers the government greater flexibility to adapt requirements or switch providers if performance is unsatisfactory.

What is Lockheed Martin Corporation's track record with similar support services contracts for the U.S. Special Operations Command?

Lockheed Martin Corporation possesses an extensive and well-established track record in providing a wide array of support services to the U.S. Special Operations Command (USSOCOM) and other Department of Defense agencies. Their experience spans complex logistics, intelligence support, systems integration, training, and operational support. Historically, Lockheed Martin has been a significant prime contractor for USSOCOM, often handling large-scale, high-value programs requiring advanced technological capabilities and specialized personnel. Their performance on previous contracts has generally been characterized by their ability to manage complex projects, integrate diverse systems, and deliver critical support in demanding environments. While specific performance metrics for every contract are not publicly detailed, their continued success in securing major awards from USSOCOM indicates a strong and generally positive performance history.

How does the geographic location of contract performance (Kentucky) influence the cost and execution of these support services?

The geographic location of contract performance, specified as Kentucky (ST: KY, SN: KENTUCKY), can influence the cost and execution of support services in several ways. Labor costs are a primary factor; wages and the availability of skilled personnel can vary significantly by region. Operating costs, such as facility leases or utilities, may also differ. For services requiring physical presence or infrastructure, proximity to military installations or operational hubs within Kentucky could streamline logistics and reduce travel expenses. Conversely, if specialized talent is scarce in the region, the contractor might incur higher costs for recruitment, relocation, or travel to bring personnel to the performance site. The specific nature of the 'All Other Support Services' will dictate the extent of this influence, but location is a tangible factor in resource allocation and overall contract economics.

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

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: $34,702,274

Exercised Options: $34,702,274

Current Obligation: $34,702,274

Subaward Activity

Number of Subawards: 56

Total Subaward Amount: $28,732,673

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