DoD awards $40.2M MQ9 CMS contract to Lockheed Martin for support services in Kentucky

Contract Overview

Contract Amount: $40,229,784 ($40.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2022-02-16

End Date: 2023-02-15

Contract Duration: 364 days

Daily Burn Rate: $110.5K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MQ9 CMS FY22

Place of Performance

Location: LEXINGTON, FAYETTE County, KENTUCKY, 40516

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $40.2 million to LOCKHEED MARTIN CORPORATION for work described as: MQ9 CMS FY22 Key points: 1. Contract provides essential support services for MQ9 systems, crucial for intelligence, surveillance, and reconnaissance missions. 2. Sole awardee, Lockheed Martin, has a strong track record in defense contracting, suggesting capability but limiting competitive pressure. 3. The contract duration of 364 days indicates a need for ongoing, sustained support. 4. Performance is located in Kentucky, potentially impacting local workforce and economy. 5. The Cost Plus Fixed Fee (CPFF) contract type requires careful monitoring to ensure cost control and value. 6. This award represents a small fraction of the overall DoD spending on similar support services.

Value Assessment

Rating: good

The contract value of $40.2 million for a one-year period appears reasonable for specialized support services related to advanced unmanned aerial systems like the MQ9. Benchmarking against similar support contracts for complex defense systems is challenging due to the unique nature of MQ9 operations and the specific services required. However, the CPFF structure necessitates close oversight to ensure costs remain aligned with the fixed fee and that the government receives good value for its investment. Without more granular data on the specific services rendered, a definitive value-for-money assessment is difficult, but the award to a prime contractor with extensive experience suggests a baseline level of expected performance.

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 had the opportunity to submit proposals. The specific number of bidders is not provided, but the fact that it was competed openly suggests a degree of market interest and potential for price discovery. The award to a single contractor, Lockheed Martin, implies they offered the best value proposition among the competing entities. The open competition framework is generally favorable for ensuring a competitive landscape.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it encourages multiple companies to bid, potentially driving down prices and ensuring the government secures services at a competitive rate.

Public Impact

The U.S. Special Operations Command benefits from enhanced operational capabilities through the reliable support of MQ9 systems. Intelligence, surveillance, and reconnaissance missions are supported, contributing to national security objectives. The contract's performance location in Kentucky may create or sustain jobs in the region for specialized technical support personnel. Warfighters and intelligence analysts gain access to well-maintained and operational MQ9 platforms, crucial for mission success.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contracts can incentivize contractors to increase costs to maximize their fee if not properly managed.
Reliance on a single prime contractor for critical support services could pose a risk if performance issues arise.
The specific nature of MQ9 support services may involve proprietary technologies or processes, potentially limiting future competition or increasing switching costs.

Positive Signals

Award to Lockheed Martin, a well-established defense contractor with proven experience in unmanned systems.
Contract awarded under full and open competition, suggesting a robust bidding process.
The contract duration of nearly a year indicates a stable requirement and potential for consistent service delivery.

Sector Analysis

The defense sector for unmanned aerial systems (UAS) and associated support services is a rapidly growing and technologically advanced market. The MQ9 Reaper is a significant platform within this sector, requiring specialized maintenance, logistics, and operational support. Spending in this area is driven by evolving military requirements for persistent intelligence, surveillance, and reconnaissance (ISR) capabilities. This contract fits within the broader ecosystem of defense readiness and technological modernization, where companies like Lockheed Martin are key players. Comparable spending benchmarks are difficult to pinpoint precisely due to the specialized nature of MQ9 support, but overall DoD spending on UAS and related services runs into billions annually.

Small Business Impact

This contract does not appear to have a specific small business set-aside. As a large prime contract awarded to Lockheed Martin, there may be opportunities for small businesses to participate as subcontractors. However, the extent of small business subcontracting is not detailed in the provided data. The impact on the small business ecosystem would depend on whether Lockheed Martin actively seeks out and utilizes small business capabilities for specialized support tasks related to the MQ9 program.

Oversight & Accountability

Oversight for this contract would primarily fall under the purview of the U.S. Special Operations Command (SOCOM) contracting and program management offices. The Cost Plus Fixed Fee (CPFF) structure necessitates rigorous financial oversight to ensure that costs are reasonable and allocable, and that the fixed fee is earned appropriately. Transparency is typically managed through contract reporting requirements and performance reviews. Inspector General jurisdiction would apply if any allegations of fraud, waste, or abuse arise during the contract's performance.

Related Government Programs

MQ9 Reaper Program
Unmanned Aerial Systems (UAS) Support Services
Special Operations Forces (SOF) Equipment Maintenance
Intelligence, Surveillance, and Reconnaissance (ISR) Platforms

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight.
Sole awardee may limit future competitive pressure.
Dependence on a single contractor for critical support.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $40.2 million to LOCKHEED MARTIN CORPORATION. MQ9 CMS FY22

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 $40.2 million.

What is the period of performance?

Start: 2022-02-16. End: 2023-02-15.

What is Lockheed Martin's track record with similar MQ9 support contracts?

Lockheed Martin is a primary contractor for the MQ9 program, involved in its development, production, and sustainment. Their track record with similar support contracts for advanced defense platforms is extensive, encompassing maintenance, logistics, training, and system upgrades. Given their role as a major defense industrial base participant, they possess significant experience in managing complex support requirements for unmanned systems. This includes adhering to stringent performance metrics, managing supply chains, and ensuring operational readiness. Past performance evaluations from the DoD would provide more specific insights into their success rates and any challenges encountered on previous, comparable contracts.

How does the $40.2 million contract value compare to other MQ9 support contracts?

Direct comparison of this $40.2 million contract value to other MQ9 support contracts is challenging without access to a comprehensive database of all awarded contracts and their specific scopes of work. However, the value appears to be within a reasonable range for a one-year support delivery order for a complex platform like the MQ9, especially considering it covers a broad spectrum of 'All Other Support Services.' Larger, multi-year sustainment contracts for the entire MQ9 fleet would naturally be significantly higher in value. This specific award likely represents a portion of the overall sustainment budget allocated to U.S. Special Operations Command for their MQ9 assets, focusing on particular operational needs or geographic regions.

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

The primary risk with a CPFF contract is the potential for cost overruns if the contractor does not manage expenses efficiently, as the fee is fixed regardless of the final cost. This structure can incentivize contractors to incur higher costs, as their profit margin is based on a percentage of the allowable costs, although the fee itself is fixed. Effective oversight is crucial to ensure that all incurred costs are reasonable, allocable, and necessary for contract performance. Another risk is ensuring that the fixed fee adequately compensates the contractor for the effort and risk undertaken, while still representing good value for the government. Without stringent cost monitoring and performance management, CPFF contracts can be less cost-effective than fixed-price arrangements.

How effective is full and open competition in ensuring value for taxpayer money on this contract?

Full and open competition is generally considered the most effective method for ensuring value for taxpayer money. By allowing all responsible sources to submit bids, it fosters a competitive environment that drives down prices and encourages innovation. In this case, the fact that the contract was awarded under full and open competition suggests that multiple companies vied for the opportunity, and Lockheed Martin was selected as the best value. This process helps to establish a market-based price and reduces the likelihood of the government overpaying. However, the effectiveness is contingent on the quality and number of bidders, and the clarity of the solicitation requirements.

What is the historical spending trend for MQ9 CMS support services by the Department of Defense?

Historical spending on MQ9 systems and their associated support services by the Department of Defense has shown a consistent upward trend over the past decade, reflecting the increasing reliance on unmanned aerial vehicles for ISR and combat missions. While specific figures for 'MQ9 CMS Support Services' are not readily available without deep dives into budget documents, overall DoD spending on the MQ9 program itself, including procurement and sustainment, has been in the billions of dollars annually. This trend is driven by technological advancements, evolving operational requirements, and the platform's proven effectiveness in various theaters of operation. Future spending is likely to remain robust, potentially increasing as new capabilities are integrated and the fleet continues to expand.

What are the potential performance implications of awarding this contract to a single entity like Lockheed Martin?

Awarding this contract to a single entity, Lockheed Martin, has several performance implications. On the positive side, it provides continuity and leverages the contractor's established expertise and familiarity with the MQ9 system, potentially leading to efficient and high-quality service delivery. Lockheed Martin's deep involvement with the MQ9 platform suggests a strong understanding of its complexities. However, relying on a sole awardee can also introduce risks. It may reduce competitive pressure to innovate or improve efficiency over time. Furthermore, if Lockheed Martin experiences performance issues or capacity constraints, there are limited immediate alternatives for the U.S. Special Operations Command to pivot to, potentially impacting operational readiness.

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: $40,229,784

Exercised Options: $40,229,784

Current Obligation: $40,229,784

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $983,530

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