DoD awards $40.3M MQ9 maintenance contract to Lockheed Martin, highlighting a need for specialized support services

Contract Overview

Contract Amount: $40,294,463 ($40.3M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2021-02-16

End Date: 2022-02-15

Contract Duration: 364 days

Daily Burn Rate: $110.7K/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 $40.3 million to LOCKHEED MARTIN CORPORATION for work described as: MQ9 MAINTENANCE SUPPORT Key points: 1. Contract value represents a significant investment in maintaining critical MQ9 assets. 2. Sole awardee suggests a specialized capability or limited market for this specific support. 3. Cost-plus-fixed-fee structure may incentivize cost overruns if not closely monitored. 4. Contract duration of one year indicates a need for ongoing, potentially recurring, support. 5. Geographic location in Kentucky points to a specific operational or maintenance hub. 6. The 'All Other Support Services' NAICS code suggests a broad scope of potential activities.

Value Assessment

Rating: fair

The contract value of $40.3 million for one year of MQ9 maintenance support appears substantial. Without specific benchmarks for MQ9 maintenance, it's difficult to definitively assess value for money. The Cost Plus Fixed Fee (CPFF) contract type can lead to higher costs if the contractor's expenses are not well-managed and scrutinized. Further analysis would require comparing this contract's per-unit costs or total value against similar maintenance contracts for comparable unmanned aerial vehicles or specific MQ9 support tasks.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. However, the fact that only one award was made suggests that Lockheed Martin was either the only bidder or the only one that met all the stringent requirements for this specialized MQ9 maintenance support. This level of competition, while broad in initial opportunity, resulted in a single source for execution, which could limit price negotiation leverage.

Taxpayer Impact: While full and open competition is generally beneficial for taxpayers by encouraging multiple bids, the single award outcome means taxpayers are relying on the performance and pricing of one contractor. The government must ensure robust oversight to guarantee fair pricing and efficient service delivery.

Public Impact

The U.S. Special Operations Command benefits from the continued operational readiness of MQ9 aircraft. This contract ensures the availability of critical intelligence, surveillance, and reconnaissance (ISR) capabilities. The services are likely delivered at a specific military installation in Kentucky, supporting regional defense infrastructure. The contract supports a specialized technical workforce, potentially including engineers, technicians, and logistics personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contract type can lead to cost escalations if not managed tightly.
Limited competition resulting in a single award may reduce price negotiation leverage.
The broad 'All Other Support Services' NAICS code could mask specific cost drivers.
Contract duration of one year may not reflect long-term sustainment needs or costs.

Positive Signals

Awarded under full and open competition, ensuring a wide initial opportunity for vendors.
Contractor (Lockheed Martin) is a major defense contractor with extensive experience in aerospace and defense systems.
Focus on MQ9 maintenance directly supports critical national security missions.
Specific location in Kentucky may indicate efficient logistics or proximity to operational units.

Sector Analysis

The Unmanned Aerial Vehicle (UAV) market, particularly for military applications like the MQ9 Reaper, is a significant segment of the broader aerospace and defense industry. This contract falls within the defense sector's support services sub-category, focusing on the sustainment and maintenance of advanced ISR platforms. The global defense MRO (Maintenance, Repair, and Overhaul) market is substantial, with governments investing heavily in keeping sophisticated assets operational. This contract represents a portion of that investment, ensuring the readiness of a key strategic asset.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, Lockheed Martin, is a large defense corporation. There is no explicit information provided regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem is likely minimal unless Lockheed Martin voluntarily engages small businesses for specific support services not detailed in this award.

Oversight & Accountability

Oversight for this contract would primarily fall under the U.S. Special Operations Command (SOCOM) and potentially the Department of Defense's contracting oversight bodies. The Cost Plus Fixed Fee (CPFF) structure necessitates rigorous financial oversight to ensure costs are reasonable and allocable. Transparency is typically managed through contract reporting mechanisms and performance reviews. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

MQ9 Reaper Program Support
Unmanned Aerial Vehicle Maintenance
Defense Contractor Services
Special Operations Forces Support
Aerospace Maintenance Contracts

Risk Flags

Potential for cost overruns due to CPFF structure.
Limited competition resulting in a single award.
Broad NAICS code may obscure specific cost drivers.
Reliance on a single large contractor.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $40.3 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 $40.3 million.

What is the period of performance?

Start: 2021-02-16. End: 2022-02-15.

What is Lockheed Martin's track record with MQ9 maintenance and similar defense contracts?

Lockheed Martin is a primary contractor for the MQ9 Reaper program, involved in its development and production. Their track record with MQ9 maintenance and support is extensive, given their role as a key manufacturer. They hold numerous other large defense contracts across various platforms, demonstrating significant experience in complex aerospace maintenance, logistics, and sustainment. Analyzing their past performance on similar CPFF contracts would reveal their ability to manage costs and deliver services effectively within budgetary constraints. Historical data on contract awards and performance reviews for Lockheed Martin would provide further insight into their reliability and efficiency in fulfilling government requirements.

How does the $40.3 million contract value compare to historical spending on MQ9 maintenance?

Comparing this $40.3 million contract to historical spending requires access to detailed historical data for MQ9 maintenance across different commands and fiscal years. Without that specific data, it's challenging to establish a direct benchmark. However, the value suggests a significant annual investment in keeping the MQ9 fleet operational. Factors influencing this value include the number of aircraft supported, the scope of maintenance (depot vs. line), the complexity of required repairs, and the specific support services included (e.g., logistics, training, technical support). Annual spending on MQ9 sustainment can fluctuate based on operational tempo, fleet age, and technological upgrades, making year-over-year comparisons essential for trend analysis.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for maintenance?

The primary risk with a CPFF contract for maintenance is the potential for cost overruns. While the contractor receives a fixed fee, the 'cost plus' element means the government reimburses the contractor's allowable costs. If the contractor does not have strong internal cost controls or if unforeseen technical issues arise, the total cost to the government can exceed initial estimates. This structure can incentivize contractors to incur higher costs, as their fee is fixed regardless of the total expenditure. Effective government oversight, including detailed auditing of expenses and robust performance metrics, is crucial to mitigate these risks and ensure value for money.

How does the 'All Other Support Services' NAICS code (561990) impact the understanding of this contract's scope?

The NAICS code 561990, 'All Other Support Services,' is very broad and indicates that the contract encompasses a wide range of support activities that do not fit into more specific categories. For MQ9 maintenance, this could include logistical support, technical assistance, program management, administrative services, and potentially specialized repair or overhaul functions. The broadness means the specific deliverables and cost drivers might not be immediately apparent without reviewing the contract's statement of work. This lack of specificity can make it harder to benchmark costs against more narrowly defined service contracts and requires diligent oversight to ensure all reimbursed costs are directly related to essential MQ9 support.

What is the significance of the contract being awarded to Lockheed Martin for MQ9 maintenance?

The significance of awarding this MQ9 maintenance contract to Lockheed Martin lies in their established role as a primary contractor for the platform. This continuity can ensure efficient knowledge transfer and maintain operational readiness without significant disruption. Lockheed Martin possesses deep technical expertise regarding the MQ9 system, potentially leading to higher quality maintenance and faster issue resolution. However, reliance on a single, large incumbent contractor can also present challenges, such as potentially higher pricing due to limited competition and the need for robust government oversight to ensure accountability and value.

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

Parent Company: Lockheed Martin Corp

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: $40,294,463

Exercised Options: $40,294,463

Current Obligation: $40,294,463

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: H9225417D0001

IDV Type: IDC

Timeline