DoD awards $47M MQ-9 CMS contract to Lockheed Martin for support services in Kentucky

Contract Overview

Contract Amount: $47,021,503 ($47.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2023-02-16

End Date: 2024-02-15

Contract Duration: 364 days

Daily Burn Rate: $129.2K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MQ-9 CMS FY23

Place of Performance

Location: LEXINGTON, FAYETTE County, KENTUCKY, 40516

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $47.0 million to LOCKHEED MARTIN CORPORATION for work described as: MQ-9 CMS FY23 Key points: 1. Contract provides essential support services for MQ-9 systems, crucial for intelligence, surveillance, and reconnaissance missions. 2. The single award delivery order was competed full and open, suggesting a competitive process. 3. The contract duration of 364 days indicates a need for ongoing, sustained support. 4. The contractor, Lockheed Martin, is a major defense contractor with extensive experience in aerospace and defense systems. 5. The contract is a Cost Plus Fixed Fee type, which can incentivize cost control while ensuring contractor profit. 6. Geographic focus on Kentucky highlights regional support infrastructure for critical defense assets.

Value Assessment

Rating: good

The contract value of $47,021,503 for 364 days of support services for MQ-9 CMS appears reasonable given the specialized nature of the equipment and the contractor's expertise. Benchmarking against similar support contracts for advanced unmanned aerial systems is challenging due to proprietary data and unique system requirements. However, the Cost Plus Fixed Fee (CPFF) structure, while allowing for flexibility, requires careful monitoring to ensure costs remain within acceptable parameters and that the fixed fee adequately compensates the contractor for their efforts without excessive profit.

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 'full and open' designation suggests a robust competitive environment. This approach is generally favored as it allows the government to solicit the best possible technical solutions and pricing from a wide range of qualified contractors, potentially leading to better value.

Taxpayer Impact: A full and open competition process is beneficial for taxpayers as it increases the likelihood of securing competitive pricing and innovative solutions, thereby maximizing the return on investment for defense spending.

Public Impact

U.S. Special Operations Command benefits from enhanced operational capabilities through sustained support for MQ-9 systems. Intelligence, surveillance, and reconnaissance (ISR) missions are supported, providing critical data for national security. The contract's performance in Kentucky supports regional employment and specialized technical expertise within the state. The MQ-9 platform's effectiveness is maintained, ensuring readiness for critical defense operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts require diligent oversight to prevent cost overruns and ensure the fixed fee remains appropriate.
Reliance on a single large contractor like Lockheed Martin could limit future competition or innovation from smaller firms.

Positive Signals

Awarded through full and open competition, indicating a competitive process that should yield fair pricing.
Lockheed Martin's established track record in defense systems suggests a high likelihood of successful performance.
The contract duration of nearly a year implies a stable and predictable support structure for critical assets.

Sector Analysis

This contract falls within the broader aerospace and defense sector, specifically supporting unmanned aerial systems (UAS) and their associated command, control, and maintenance systems. The market for UAS support services is growing rapidly as these platforms become increasingly integral to military operations. Spending in this area is driven by technological advancements and the demand for persistent ISR capabilities. Comparable spending benchmarks are difficult to ascertain precisely due to the specialized nature of MQ-9 systems and the specific support requirements.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large contract awarded to a major defense contractor, it is unlikely that significant subcontracting opportunities for small businesses will be mandated or readily available, unless specifically included in the contract's terms. This could limit the direct impact on the small business defense ecosystem for this particular award.

Oversight & Accountability

Oversight for this contract would primarily fall under the U.S. Special Operations Command (SOCOM) within the Department of Defense. As a Cost Plus Fixed Fee contract, rigorous financial oversight and performance monitoring are crucial to ensure that costs are reasonable and that the contractor meets all performance requirements. Transparency is typically managed through contract reporting mechanisms and potential audits by the Defense Contract Audit Agency (DCAA) or the Inspector General.

Related Government Programs

MQ-9 Reaper Program
Unmanned Aerial Systems (UAS) Support Contracts
Defense Intelligence, Surveillance, and Reconnaissance (ISR) Services
Aerospace and Defense Contractor Support

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight to manage potential cost escalations.
Reliance on a single large contractor may limit future competitive options.
Specific performance metrics and deliverables are not detailed in the provided data.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $47.0 million to LOCKHEED MARTIN CORPORATION. MQ-9 CMS FY23

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 $47.0 million.

What is the period of performance?

Start: 2023-02-16. End: 2024-02-15.

What is Lockheed Martin's track record with similar MQ-9 support contracts?

Lockheed Martin Corporation is a primary contractor for numerous defense systems, including significant involvement with the MQ-9 Reaper program and its predecessors. Their track record typically includes providing sustainment, upgrades, and operational support for complex aerospace platforms. While specific details on past MQ-9 CMS contracts are often proprietary, Lockheed Martin's extensive experience in managing large, complex defense contracts suggests a strong capability to fulfill the requirements of this award. Their history involves delivering integrated solutions across various defense domains, often involving long-term sustainment and lifecycle support, which aligns with the nature of this contract.

How does the $47 million contract value compare to other MQ-9 support contracts?

Direct comparison of the $47 million contract value for this specific MQ-9 CMS support services delivery order to other MQ-9 support contracts is challenging due to variations in scope, duration, specific system configurations, and the nature of the services provided (e.g., sustainment, training, software development, hardware maintenance). Contracts for advanced unmanned aerial systems can range from tens of millions to hundreds of millions of dollars over their lifecycle. This $47 million award for a 364-day period represents a significant investment in maintaining the operational readiness and effectiveness of the MQ-9 platform, suggesting a substantial requirement for specialized technical support and maintenance within the U.S. Special Operations Command.

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

The primary risk with a Cost Plus Fixed Fee (CPFF) contract is the potential for cost overruns. While the 'fixed fee' component provides the contractor with a predetermined profit margin, the 'cost plus' element means the government reimburses the contractor for allowable costs incurred. If costs escalate beyond initial estimates, the government bears the financial burden, potentially exceeding the anticipated budget. Effective risk mitigation requires robust government oversight, detailed cost tracking, and clear definition of allowable costs to ensure the contractor maintains cost consciousness. The CPFF structure can also incentivize contractors to incur costs to ensure the fixed fee is realized, necessitating careful monitoring of performance and efficiency.

How effective is the MQ-9 platform in supporting Special Operations Command missions?

The MQ-9 Reaper platform is highly effective and a critical asset for U.S. Special Operations Command (SOCOM) missions, primarily due to its capabilities in intelligence, surveillance, and reconnaissance (ISR), as well as its precision strike capabilities. Its long endurance allows for persistent monitoring of areas of interest, providing real-time situational awareness to ground forces and decision-makers. The platform's ability to carry various payloads, including sophisticated sensors and munitions, makes it versatile for a wide range of operations, from counter-terrorism to supporting humanitarian efforts. The continued investment in its support services, as indicated by this contract, underscores its ongoing importance and effectiveness in enabling SOCOM's diverse operational requirements.

What are the historical spending patterns for MQ-9 support services by the Department of Defense?

Historical spending patterns for MQ-9 support services by the Department of Defense have shown a consistent and increasing trend over the past decade, reflecting the platform's growing operational tempo and strategic importance. The DoD, including various branches like the Air Force, SOCOM, and others, allocates substantial annual budgets towards the sustainment, modernization, and operational support of its MQ-9 fleet. This spending encompasses contractor logistics support, spare parts, software updates, training, and system upgrades. The total annual expenditure can fluctuate based on specific program needs, new acquisitions, and evolving mission requirements, often reaching hundreds of millions of dollars across the department for all MQ-9 related support.

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: $47,021,503

Exercised Options: $47,021,503

Current Obligation: $47,021,503

Subaward Activity

Number of Subawards: 6

Total Subaward Amount: $202,472

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