DoD awards $39.6M contract for support services to Lockheed Martin, raising value-for-money questions

Contract Overview

Contract Amount: $39,637,633 ($39.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2020-06-23

End Date: 2021-06-30

Contract Duration: 372 days

Daily Burn Rate: $106.6K/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 $39.6 million to LOCKHEED MARTIN CORPORATION for work described as: FOSOV LCSM: AWARD Key points: 1. The contract's cost-plus-fixed-fee structure may incentivize higher spending without strict cost controls. 2. Limited public data on performance metrics makes it difficult to assess the value delivered for the funds obligated. 3. The single award to Lockheed Martin, a large incumbent contractor, suggests potential for limited competition. 4. The contract duration of 372 days is relatively short, indicating a need for ongoing support services. 5. The specific services provided under this award are not detailed, hindering a precise understanding of the value proposition.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to the lack of detailed service descriptions and performance data. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex services, can lead to cost overruns if not managed diligently. Without comparable contract data or clear performance metrics, it's difficult to definitively assess if the $39.6 million obligated represents a fair price for the services rendered. The absence of a fixed-fee component in the contract details also raises concerns about the contractor's incentive to control costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were theoretically allowed to submit proposals. However, the award went to a single contractor, Lockheed Martin Corporation. The specific number of bids received and the evaluation process are not publicly detailed, making it hard to ascertain the true level of competition. A single award, even from full and open competition, can sometimes indicate that only one offeror met the stringent requirements or that the market for such specialized services is concentrated.

Taxpayer Impact: While full and open competition is generally favorable for taxpayers, the lack of transparency regarding the number of bidders and the final awardee's dominance in the defense sector warrants scrutiny to ensure competitive pricing was achieved.

Public Impact

This contract primarily benefits the U.S. Special Operations Command (SOCOM) by providing necessary support services. The services delivered are crucial for the operational readiness and effectiveness of special operations forces. The contract's geographic impact is centered in Kentucky (ST), where the contractor's facility is located. While not explicitly a workforce-focused contract, it supports specialized roles within the defense industry, potentially sustaining high-skilled jobs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee structure may not provide sufficient cost control incentives.
Lack of detailed performance metrics makes value assessment difficult.
Concentration of awards to large, incumbent contractors can stifle competition.
Limited transparency on the competitive bidding process for this specific award.

Positive Signals

Awarded under full and open competition, theoretically allowing broad market participation.
Contractor is a well-established entity with significant experience in defense services.
Contract supports critical mission requirements for U.S. Special Operations Command.

Sector Analysis

This contract falls within the broader 'All Other Support Services' category (NAICS 561990), which encompasses a wide range of non-professional services. Within the defense sector, such contracts are vital for maintaining operational capabilities, logistics, and specialized technical support. The market for these services is often dominated by large, experienced defense contractors like Lockheed Martin, who possess the security clearances, infrastructure, and expertise required. Comparable spending benchmarks are difficult to establish without more specific service details, but the defense support services market is substantial, with billions spent annually across various agencies.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. The award to a large prime contractor like Lockheed Martin suggests that opportunities for small businesses may be limited unless they are part of the prime's supply chain. This could mean fewer direct opportunities for small businesses to engage with the government on this specific contract, potentially impacting the small business ecosystem if such awards are common.

Oversight & Accountability

Oversight for this contract would primarily fall under the U.S. Special Operations Command (SOCOM) and the Department of Defense. Accountability measures would be tied to the terms of the Cost Plus Fixed Fee (CPFF) contract, requiring the contractor to demonstrate performance and justify costs. Transparency is limited by the public availability of detailed performance reports and cost breakdowns. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Department of Defense Support Services
Special Operations Forces Support
Logistics and Technical Support Contracts
Cost-Plus-Fixed-Fee Contracts
Defense Industry Services

Risk Flags

Cost-plus-fixed-fee structure
Lack of detailed performance metrics
Single award despite full and open competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $39.6 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 $39.6 million.

What is the period of performance?

Start: 2020-06-23. End: 2021-06-30.

What specific services are being provided under this $39.6 million award, and how do they align with SOCOM's mission requirements?

The provided data classifies this contract under NAICS code 561990, 'All Other Support Services,' and identifies the awardee as Lockheed Martin Corporation for the Department of Defense, specifically U.S. Special Operations Command (SOCOM). However, the specific nature of the 'support services' is not detailed. These could range from administrative and logistical support to highly specialized technical or operational assistance. Given SOCOM's mission, these services likely contribute to the readiness, planning, execution, or sustainment of special operations. Without further details, it's impossible to precisely align the services with mission requirements or assess their criticality beyond the general understanding of SOCOM's operational needs.

How does the Cost Plus Fixed Fee (CPFF) pricing structure for this contract compare to industry standards for similar support services, and what are the implications for cost control?

The Cost Plus Fixed Fee (CPFF) structure is common for contracts involving research, development, or complex services where the scope of work is not precisely defined at the outset, making fixed-price contracts impractical. For this $39.6 million award, CPFF means Lockheed Martin will be reimbursed for allowable costs plus a predetermined fixed fee representing profit. While this structure allows flexibility, it places a significant burden on the government to meticulously audit costs to prevent overruns. Industry standards vary, but effective CPFF contracts require robust government oversight, clear performance metrics, and strong negotiation of the fee. The implication for cost control is that the government relies heavily on its oversight team to ensure costs remain reasonable and that the contractor is incentivized to perform efficiently, as the profit (fee) is fixed regardless of the final cost incurred.

What was the competitive landscape for this contract, and how did the 'full and open competition' designation translate into actual bidder participation?

The contract was awarded under 'full and open competition,' theoretically allowing any interested and capable source to submit a bid. However, the data indicates a single award to Lockheed Martin Corporation. This outcome raises questions about the actual level of competition achieved. It's possible that while the solicitation was open, only one proposal was received, or only one proposal was deemed technically acceptable or best value by the U.S. Special Operations Command. Alternatively, the market for these specific services might be highly concentrated, with few entities possessing the necessary qualifications, clearances, or capabilities. Without data on the number of proposals received and the evaluation process, it's difficult to definitively assess the effectiveness of the 'full and open competition' in driving competitive pricing and innovation.

What is Lockheed Martin Corporation's track record with SOCOM and the Department of Defense for similar support services, and does it indicate a history of cost efficiency or performance issues?

Lockheed Martin Corporation is a major defense contractor with extensive experience serving the Department of Defense and its various components, including U.S. Special Operations Command (SOCOM). While specific performance data for this particular $39.6 million award is not publicly detailed, the company generally has a long history of performing large, complex defense contracts. Analyzing their broader track record would involve reviewing past contract performance evaluations (e.g., CPARS), any past performance disputes, and their history with cost overruns or schedule delays on similar service contracts. Generally, large incumbents like Lockheed Martin are awarded contracts due to their established infrastructure, expertise, and existing relationships. However, this also necessitates careful oversight to ensure they are not leveraging their position to the detriment of cost efficiency or competitive fairness.

How does the $39.6 million obligated amount for this 372-day contract compare to historical spending patterns for similar support services within SOCOM or the broader DoD?

Comparing the $39.6 million obligated amount for this 372-day contract (approximately 1.2 years) requires context regarding the specific services provided, which are not detailed under the 'All Other Support Services' category. If these services are highly specialized, technical, or mission-critical for SOCOM, the cost per day ($~106,553) might be within a reasonable range for such high-demand capabilities. However, without knowing the exact nature of the services, it's difficult to benchmark against historical spending. General DoD support services can vary widely in cost. A review of SOCOM's historical contract awards for similar NAICS codes or service descriptions would be necessary to identify trends, potential cost escalations, or significant deviations that might warrant further investigation into value for money.

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: $39,637,633

Exercised Options: $39,637,633

Current Obligation: $39,637,633

Subaward Activity

Number of Subawards: 49

Total Subaward Amount: $26,253,546

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