DoD awards $26.15M for M77/M78 FAB and Kitting, with Lockheed Martin as prime

Contract Overview

Contract Amount: $26,151,192 ($26.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2022-05-31

End Date: 2024-11-07

Contract Duration: 891 days

Daily Burn Rate: $29.4K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: FAB AND KITTING FOR M77 M78

Place of Performance

Location: LEXINGTON, FAYETTE County, KENTUCKY, 40516

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $26.2 million to LOCKHEED MARTIN CORPORATION for work described as: FAB AND KITTING FOR M77 M78 Key points: 1. Contract value of $26.15M for specialized fabrication and kitting services. 2. Awarded under full and open competition, suggesting a competitive bidding process. 3. The contract duration of 891 days indicates a medium-term need for these services. 4. The Cost Plus Fixed Fee (CPFF) contract type may present cost control challenges. 5. Services are for the M77/M78 systems, likely supporting specific military equipment. 6. Prime contractor is Lockheed Martin Corporation, a major defense industry player. 7. The contract is a delivery order, suggesting it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract. 8. No small business set-aside was utilized for this award.

Value Assessment

Rating: fair

Benchmarking the value of this specific fabrication and kitting contract is challenging without detailed cost breakdowns. The CPFF structure inherently carries more risk for the government compared to fixed-price contracts, as costs can escalate. However, for highly specialized or uncertain scope work, CPFF can be appropriate. Comparing the per-unit cost of the 'FAB AND KITTING' to similar specialized support services for defense systems would be necessary for a more precise value assessment. The total award amount of $26.15M over nearly three years suggests a significant but not exceptionally large contract in the defense sector.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit bids. The number of bidders is not specified in the provided data, which is crucial for a complete assessment of the competition dynamics. A robust competition typically leads to better pricing and innovation. If only a few bids were received, it might suggest limited market capacity or specific technical requirements that narrowed the field, potentially impacting price discovery.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it aims to secure the best value through a broad range of offers. However, the ultimate benefit depends on the number and quality of bids received and the effectiveness of the evaluation process.

Public Impact

The primary beneficiaries are likely U.S. Special Operations Command (SOCOM) personnel who will receive kitted and fabricated components for M77/M78 systems. The services delivered include fabrication of parts and kitting of components, essential for the operational readiness of specific military equipment. The geographic impact is primarily within Kentucky (ST/SN), where the contract is being performed. Workforce implications may include specialized manufacturing and logistics roles within Lockheed Martin and its potential subcontractors in Kentucky.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contract type can lead to cost overruns if not managed diligently.
Lack of specific details on the number of bidders limits the assessment of competitive pressure on pricing.
The specialized nature of 'FAB AND KITTING' might imply limited contractor options in the future.
Performance metrics and quality control details are not provided, making it hard to gauge execution risk.
The contract's duration and value, while substantial, require ongoing monitoring to ensure continued value for money.

Positive Signals

Awarded through full and open competition, suggesting a structured procurement process.
Lockheed Martin Corporation is a reputable and experienced defense contractor with a proven track record.
The contract supports critical systems (M77/M78), indicating alignment with defense operational needs.
The delivery order structure implies it fits within a broader strategic acquisition framework.
Performance is slated to occur in Kentucky, potentially supporting regional economic activity.

Sector Analysis

This contract falls within the broader 'Support Services' sector for the Department of Defense, specifically focusing on fabrication and kitting. The North American Industry Classification System (NAICS) code 561990 ('All Other Support Services') encompasses a wide range of non-classified support activities. Within the defense industrial base, specialized fabrication and kitting are crucial for maintaining the readiness and deployability of complex weapon systems. Comparable spending benchmarks would involve analyzing other contracts for similar specialized support services, particularly those involving custom manufacturing and assembly for military hardware, often awarded to large defense primes or their specialized subcontractors.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This suggests that the procurement was open to all responsible sources, including large businesses. While there's no direct indication of subcontracting plans for small businesses, large defense contracts often include subcontracting goals. The absence of a small business set-aside means that opportunities for small businesses would likely arise through subcontracting opportunities with the prime contractor, Lockheed Martin, rather than direct prime contract awards.

Oversight & Accountability

Oversight for this contract would primarily reside with the U.S. Special Operations Command (SOCOM) contracting and program management offices. As a Cost Plus Fixed Fee (CPFF) contract, rigorous oversight of incurred costs, performance, and compliance with contract terms is essential. Transparency is facilitated through contract award databases like FPDS. Accountability measures would be embedded in the contract's performance standards and reporting requirements. The Inspector General for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

M77/M78 Weapon Systems Support
Special Operations Forces Equipment Procurement
Defense Fabrication Services
Military Logistics and Kitting
Lockheed Martin Defense Contracts
Department of Defense Support Services

Risk Flags

Cost Plus Fixed Fee (CPFF) contract type requires diligent cost oversight.
Limited information on the number of bidders restricts full competition assessment.
Specialized nature of services may limit future competition.
No explicit mention of small business subcontracting goals.
Performance metrics and quality assurance details not provided.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.2 million to LOCKHEED MARTIN CORPORATION. FAB AND KITTING FOR M77 M78

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 $26.2 million.

What is the period of performance?

Start: 2022-05-31. End: 2024-11-07.

What is the specific nature of the 'FAB AND KITTING' for the M77/M78 systems, and why is it critical?

The 'FAB AND KITTING' likely refers to the custom manufacturing (fabrication) of specific components or assemblies required for the M77/M78 systems, followed by the collation and packaging (kitting) of these parts, along with other necessary items, into ready-to-deploy kits. The M77/M78 designation is not publicly detailed, but such systems in military contexts often require specialized, precisely manufactured parts that may not be off-the-shelf. Kitting is crucial for streamlining logistics, ensuring that all necessary components for maintenance, repair, or operational use are grouped together, reducing assembly time and preventing errors or omissions in the field. The criticality stems from ensuring the operational readiness and effectiveness of the underlying M77/M78 military equipment, which could be anything from a weapon platform to a communication system.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other contract types in terms of value for money for the government?

Cost Plus Fixed Fee (CPFF) contracts are generally considered riskier for the government compared to fixed-price contracts (like Firm-Fixed-Price or Fixed-Price Incentive). In a CPFF structure, the contractor is reimbursed for all allowable costs plus a predetermined fixed fee representing their profit. This means the government bears the risk of cost overruns. While CPFF can be suitable for research and development or situations with high uncertainty where the scope is difficult to define precisely upfront, it offers less incentive for the contractor to control costs compared to fixed-price contracts. For routine services or well-defined requirements, fixed-price contracts typically offer better value for money by shifting cost risk to the contractor and incentivizing efficiency.

What are the potential risks associated with Lockheed Martin Corporation as the prime contractor for this specialized service?

While Lockheed Martin is a highly experienced and reputable defense contractor, potential risks associated with their prime contractorship include the inherent risks of the CPFF structure, such as potential cost escalation if not rigorously managed. There's also the risk of performance issues, although less likely given their track record; however, any large organization can face execution challenges. Another consideration is the potential for limited competition in future related procurements if Lockheed Martin becomes the sole or primary provider of these specialized fabrication and kitting services, potentially impacting long-term value. Furthermore, the complexity of integrating fabricated parts and kitted components into larger systems requires meticulous quality control and supply chain management, areas where oversight is critical.

Given the 'full and open competition' award, what does this imply about the market for specialized fabrication and kitting services?

An award under 'full and open competition' suggests that the market for these specialized fabrication and kitting services for the M77/M78 systems is considered sufficiently robust to allow multiple potential bidders. This implies that the government did not perceive a need to restrict the competition due to unique capabilities or sole-source justifications. It indicates that there are likely several companies capable of meeting the technical requirements, which is generally positive for price discovery and innovation. However, the actual number of bids received is a critical factor; if only a few bids were submitted, it might still point to a niche market or high barriers to entry, even within a full and open framework.

How does the geographic location in Kentucky (ST/SN) influence the contract's execution or oversight?

The performance location in Kentucky (ST/SN) primarily influences the logistical aspects of contract execution and potentially the local economic impact. It means that Lockheed Martin or its subcontractors will be operating facilities or performing work within that state. Oversight might involve site visits by government representatives to the Kentucky location to monitor progress, quality, and compliance. From an economic perspective, the contract could create or sustain jobs in the advanced manufacturing, logistics, or support services sectors within Kentucky. The specific location doesn't inherently increase or decrease risk unless there are known logistical challenges or specific regulatory environments in that area that impact defense contracting.

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: $26,151,192

Exercised Options: $26,151,192

Current Obligation: $26,151,192

Subaward Activity

Number of Subawards: 19

Total Subaward Amount: $2,145,136

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