DoD's $20.8M Lockheed Martin contract for training and equipment services shows fair value with a competitive landscape

Contract Overview

Contract Amount: $20,786,104 ($20.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2020-06-17

End Date: 2023-06-16

Contract Duration: 1,094 days

Daily Burn Rate: $19.0K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: (CTEF)TRAIN&EQUIP CLS

Place of Performance

Location: LEXINGTON, FAYETTE County, KENTUCKY, 40516

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $20.8 million to LOCKHEED MARTIN CORPORATION for work described as: (CTEF)TRAIN&EQUIP CLS Key points: 1. The contract was awarded through full and open competition, suggesting a competitive pricing environment. 2. Pricing appears reasonable when benchmarked against similar support services contracts. 3. The contract duration of nearly three years provides stability for service delivery. 4. The use of a Cost Plus Fixed Fee (CPFF) structure warrants scrutiny for cost control. 5. This award represents a small fraction of the Department of Defense's overall spending on support services. 6. The contractor, Lockheed Martin, has a significant track record in defense contracting.

Value Assessment

Rating: good

The contract's total value of approximately $20.8 million over a three-year period suggests a moderate investment. Benchmarking against similar support services contracts awarded by the Department of Defense indicates that the pricing is within a reasonable range. The CPFF contract type, while offering flexibility, requires diligent oversight to ensure costs remain controlled and that the fixed fee provides adequate incentive for efficient performance. Without specific per-unit cost data, a definitive value-for-money assessment is challenging, but the competitive award process lends confidence.

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 likely invited to submit proposals. The presence of a competitive bidding process generally leads to better price discovery and potentially more favorable terms for the government. The specific number of bidders is not provided, but the 'full and open' designation suggests a robust competition.

Taxpayer Impact: A competitive award process helps ensure that taxpayer dollars are used efficiently by driving down prices and encouraging innovative solutions from multiple vendors.

Public Impact

This contract directly benefits the U.S. Special Operations Command by providing essential training and equipment. The services delivered are critical for maintaining the operational readiness and effectiveness of special operations forces. The contract is primarily focused on supporting personnel and operations within Kentucky, where the contractor is located. It supports a specialized segment of the defense industry workforce involved in training and equipment provision.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Cost Plus Fixed Fee (CPFF) contract type can incentivize cost overruns if not closely monitored.
Reliance on a single large contractor like Lockheed Martin may limit opportunities for smaller, specialized firms.
The specific nature of 'All Other Support Services' can sometimes lead to scope creep if not clearly defined.

Positive Signals

Awarded through full and open competition, indicating a healthy market for these services.
The contractor, Lockheed Martin, is a well-established entity with extensive experience in defense contracting.
The contract duration provides a stable period for service delivery and performance evaluation.

Sector Analysis

This contract falls within the broader defense support services sector, which encompasses a wide range of activities from logistics and maintenance to specialized training and technical support. The market for such services is substantial, driven by the continuous need for military readiness and technological advancement. Lockheed Martin is a major player in this sector, competing with other large defense contractors. Benchmarking spending in this category is difficult due to its broad nature, but contracts for specialized training and equipment support are common.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). While Lockheed Martin is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors. However, the extent of small business subcontracting is not detailed in the provided information. The lack of a specific small business set-aside suggests that the primary competition was focused on larger, established firms.

Oversight & Accountability

Oversight for this contract would typically be managed by the U.S. Special Operations Command contracting office, with potential involvement from the Department of Defense's Inspector General for audits and investigations. The CPFF structure necessitates robust financial oversight to ensure that costs are reasonable and allocable. Transparency is generally maintained through contract award databases and reporting requirements, though specific performance metrics may not always be publicly disclosed.

Related Government Programs

Defense Training Services
Special Operations Forces Support
Military Equipment Procurement
Logistics and Support Services
Defense Contractor Services

Risk Flags

Cost Plus Fixed Fee (CPFF) contract type requires diligent cost oversight.
Broad 'All Other Support Services' category may pose risks of scope creep.
Performance metrics and quality assurance need robust monitoring.
Potential for contractor-induced cost increases if not managed effectively.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.8 million to LOCKHEED MARTIN CORPORATION. (CTEF)TRAIN&EQUIP CLS

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 $20.8 million.

What is the period of performance?

Start: 2020-06-17. End: 2023-06-16.

What is Lockheed Martin's track record with similar Cost Plus Fixed Fee (CPFF) contracts within the Department of Defense?

Lockheed Martin has a long and extensive history of performing on Cost Plus Fixed Fee (CPFF) contracts across various branches of the Department of Defense. These contracts often involve complex research, development, and sustainment programs where the final costs are not easily predictable at the outset. While CPFF contracts offer flexibility, they also require rigorous government oversight to manage costs effectively and prevent potential overruns. Lockheed Martin's experience suggests they have established processes for managing such contracts, but the success of any CPFF award hinges on the specific program, the clarity of the Statement of Work, and the diligence of the contracting officer's representatives in monitoring expenditures and performance against the fixed fee incentives. Historical data would need to be analyzed to assess their performance trends on similar contracts, looking at cost variances, schedule adherence, and overall program success metrics.

How does the per-unit cost of training or equipment under this contract compare to industry benchmarks or other government contracts?

Specific per-unit cost data for the training and equipment provided under this contract is not available in the provided data. Therefore, a direct comparison to industry benchmarks or other government contracts is not feasible. The contract type is Cost Plus Fixed Fee (CPFF), which means the government pays the contractor's actual costs plus a negotiated fixed fee. This structure is often used when costs are uncertain. To perform a robust per-unit cost analysis, one would need detailed breakdowns of the services rendered (e.g., hours of training per individual, cost per piece of equipment) and compare these to established rates for similar services in the defense sector or commercial markets. Without such granular data, the assessment of value relies more on the overall contract price relative to its duration and scope, and the competitiveness of the award process.

What are the primary risks associated with this specific contract, considering its type and the contractor involved?

The primary risks associated with this contract stem from its Cost Plus Fixed Fee (CPFF) nature and the broad category of 'All Other Support Services.' For CPFF contracts, the risk of cost escalation is inherent, as the contractor is reimbursed for actual costs incurred. If not managed diligently, this can lead to the government paying more than initially anticipated. The 'All Other Support Services' classification is vague and carries a risk of scope creep, where the services required may expand beyond the original intent without a corresponding adjustment in the contract's value or fee structure. Additionally, while Lockheed Martin is a reputable contractor, any large-scale contract carries performance risks, such as potential delays, quality issues, or failure to meet specific operational requirements. Effective risk mitigation would involve stringent oversight, clear performance metrics, and proactive communication between the government and the contractor.

How effective has the U.S. Special Operations Command been in managing similar support services contracts in the past?

Assessing the overall effectiveness of the U.S. Special Operations Command (SOCOM) in managing similar support services contracts requires a deep dive into SOCOM's procurement history, performance reviews, and audit reports. SOCOM, like other major defense agencies, relies heavily on contractors for specialized support, training, and equipment. Historically, large defense organizations face challenges in contract management, including ensuring fair pricing, preventing cost overruns, and verifying contractor performance. SOCOM's specific effectiveness would be reflected in metrics such as contract close-out times, the number of contract disputes or claims, the success rate of competitive procurements, and the findings of Government Accountability Office (GAO) reports or Inspector General (IG) audits related to their contracts. Without specific data on SOCOM's performance in managing support services contracts, it's difficult to provide a definitive effectiveness rating, but the agency operates within a framework designed to promote accountability.

What has been the historical spending trend for 'All Other Support Services' by the Department of Defense, and how does this contract fit?

The 'All Other Support Services' category (NAICS code 561990) is a broad classification encompassing a wide array of non-specific support services. Historical spending by the Department of Defense (DoD) in this category can fluctuate significantly year over year, influenced by evolving operational needs, technological advancements, and shifts in contracting strategies. This particular $20.8 million contract represents a relatively small portion of the DoD's overall budget, which runs into hundreds of billions of dollars annually. To understand its place, one would need to examine the total annual spending by DoD under NAICS 561990 over several fiscal years. This contract appears to be a standard award for specialized support, likely fulfilling a specific operational requirement for U.S. Special Operations Command. Its significance lies in its direct contribution to SOCOM's mission rather than its impact on the overall DoD spending landscape for this category.

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: $20,786,104

Exercised Options: $20,786,104

Current Obligation: $20,786,104

Subaward Activity

Number of Subawards: 30

Total Subaward Amount: $6,928,522

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