DoD's $47.7M MQ-9 Maintenance Contract Awarded to Lockheed Martin Amidst Full and Open Competition

Contract Overview

Contract Amount: $47,696,373 ($47.7M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2019-10-28

End Date: 2021-02-15

Contract Duration: 476 days

Daily Burn Rate: $100.2K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MQ9 MAINTENANCE SUPPORT

Place of Performance

Location: LEXINGTON, FAYETTE County, KENTUCKY, 40516

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $47.7 million to LOCKHEED MARTIN CORPORATION for work described as: MQ9 MAINTENANCE SUPPORT Key points: 1. Contract value represents a significant investment in critical MQ-9 Reaper drone sustainment. 2. Awarded via full and open competition, suggesting a robust market for these specialized services. 3. The contract duration of over a year indicates a need for ongoing, sustained support. 4. The use of a Cost Plus Fixed Fee (CPFF) pricing structure warrants scrutiny for cost control. 5. Geographic location in Kentucky may point to specific operational or logistical hubs. 6. The absence of small business set-asides suggests the primary contractor is expected to handle the bulk of the work.

Value Assessment

Rating: fair

Benchmarking the value of this $47.7 million contract is challenging without specific performance metrics or comparable contracts for MQ-9 maintenance. The CPFF structure, while allowing flexibility, can lead to cost overruns if not managed tightly. Comparing this to other complex aerospace maintenance contracts suggests the pricing is within a typical range for specialized military hardware, but the fixed fee component's adequacy for Lockheed Martin's overhead and profit needs further analysis.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. The specific number of bidders is not provided, but the nature of the competition suggests a healthy market for MQ-9 maintenance services. This approach generally fosters competitive pricing and encourages innovation among potential contractors.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that aims to secure the best possible price and service quality for essential defense support.

Public Impact

The U.S. Special Operations Command benefits from enhanced readiness and operational capability of its MQ-9 fleet. Services delivered include essential maintenance and support for the MQ-9 Reaper, a critical intelligence, surveillance, and reconnaissance (ISR) platform. The contract's performance in Kentucky suggests a potential impact on the local workforce and economy in that region. This contract supports the sustainment of advanced unmanned aerial vehicle technology, crucial for national security operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) pricing structure can incentivize higher costs if not rigorously monitored.
Lack of specific performance metrics makes it difficult to assess the true value for money.
Limited transparency on the number of bidders in the full and open competition.
Potential for contractor to pass through costs without sufficient justification under CPFF.

Positive Signals

Awarded through full and open competition, indicating a competitive market.
Contract supports a critical defense asset (MQ-9 Reaper), ensuring operational readiness.
Long-term sustainment contract suggests a stable and predictable need for services.
Lockheed Martin is a well-established defense contractor with extensive experience in aerospace systems.

Sector Analysis

The MQ-9 Reaper is a significant platform in the unmanned aerial systems (UAS) sector, which is a rapidly growing segment of the aerospace and defense industry. This contract falls within the broader defense services market, characterized by long-term sustainment and maintenance agreements for complex military hardware. Spending in this area is driven by the need to maintain the operational readiness of aging and advanced platforms, with market size influenced by geopolitical factors and technological advancements in drone warfare.

Small Business Impact

This contract does not appear to have a small business set-aside, as indicated by 'sb: false'. This suggests that the primary contract was awarded to a large business, Lockheed Martin Corporation. There is no explicit information on subcontracting plans for small businesses within this specific award notice. The impact on the small business ecosystem would depend on whether Lockheed Martin engages small businesses as subcontractors for specialized support services.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the U.S. Special Operations Command (SOCOM) contracting and program management offices. Accountability measures are inherent in the CPFF contract type, requiring detailed cost reporting and justification. Transparency is generally facilitated through contract award databases, though specific performance details and cost breakdowns may be sensitive. The Inspector General for the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse.

Related Government Programs

MQ-9 Reaper Program
Unmanned Aerial Systems (UAS) Support
Aerospace Maintenance Services
Department of Defense Sustainment Contracts
Special Operations Forces Equipment

Risk Flags

Cost Plus Fixed Fee (CPFF) pricing structure requires diligent oversight to prevent cost creep.
Potential for performance issues impacting critical MQ-9 operational readiness.
Lack of specific performance metrics in the award data makes value assessment difficult.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.7 million to LOCKHEED MARTIN CORPORATION. MQ9 MAINTENANCE 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 $47.7 million.

What is the period of performance?

Start: 2019-10-28. End: 2021-02-15.

What is Lockheed Martin Corporation's track record with similar MQ-9 maintenance contracts?

Lockheed Martin Corporation, as a prime contractor for the MQ-9 Reaper platform itself, possesses extensive experience with its systems. While specific details on prior MQ-9 maintenance contracts awarded to Lockheed Martin are not provided in this data snippet, the company's history includes significant involvement in the sustainment and upgrade of various military aircraft and unmanned systems. Their established relationship with the Department of Defense and familiarity with the MQ-9's operational requirements suggest a strong capability to fulfill this contract. However, a deeper dive into their performance on past, similar contracts, including any past performance issues or commendations, would be necessary for a comprehensive assessment.

How does the Cost Plus Fixed Fee (CPFF) pricing structure compare to other contract types for this type of service?

The Cost Plus Fixed Fee (CPFF) structure used for this MQ-9 maintenance contract is common for services where the scope of work can be difficult to define precisely upfront or is expected to evolve. It allows the contractor (Lockheed Martin) to recover all allowable costs incurred, plus a predetermined fixed fee representing profit. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers more flexibility for the government if requirements change but carries a higher risk of cost growth if not managed diligently. Other types like Cost Plus Incentive Fee (CPIF) or Cost Plus Award Fee (CPAF) introduce performance incentives. For complex, evolving maintenance needs like those for advanced drones, CPFF can be appropriate, but it necessitates robust government oversight to control costs and ensure value.

What are the primary risks associated with this contract, and how are they being mitigated?

The primary risks associated with this $47.7 million MQ-9 maintenance contract include potential cost overruns due to the CPFF structure, performance deficiencies impacting MQ-9 operational readiness, and schedule delays. The CPFF structure itself is a risk if the government's oversight is insufficient to control allowable costs. Mitigation strategies would typically involve stringent cost monitoring, performance metrics tied to availability and reliability of the MQ-9s, regular progress reviews, and clear communication channels between the U.S. Special Operations Command and Lockheed Martin. The contractor's established expertise and the competitive nature of the award also serve as indirect risk mitigators, suggesting a commitment to successful performance.

What is the historical spending pattern for MQ-9 maintenance support by the Department of Defense?

Historical spending on MQ-9 maintenance support by the Department of Defense has been substantial and is likely to continue growing as the MQ-9 fleet matures and requires more extensive upkeep. The MQ-9 Reaper has been a workhorse for ISR and strike missions for many years, necessitating ongoing sustainment investments. While specific historical figures for this exact contract line item are not available in the provided data, overall DoD spending on unmanned systems maintenance and support runs into billions of dollars annually. Factors influencing this spending include the size of the MQ-9 fleet, operational tempo, aging components, and upgrades. This $47.7 million award represents a portion of that larger, consistent investment in keeping these critical assets mission-ready.

How does the geographic location in Kentucky (ST: KY, SN: KENTUCKY) influence the contract's execution and cost?

The specified location in Kentucky (ST: KY, SN: KENTUCKY) for this MQ-9 maintenance contract likely indicates a key operational base or maintenance hub for U.S. Special Operations Command (SOCOM) assets. This geographic placement can influence execution by concentrating maintenance activities, potentially reducing transit times for personnel and parts, and leveraging existing infrastructure. Cost implications may arise from local labor rates, facility costs, and logistical expenses specific to Kentucky. Proximity to operational units could also enhance responsiveness. Without more context on the specific facility or base, it's difficult to quantify the exact cost impact, but it suggests a strategic decision to co-locate maintenance support with operational needs.

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: $91,227,794

Exercised Options: $47,696,373

Current Obligation: $47,696,373

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