DoD's $46.6M contract for MELB 6R PRODUCTION awarded to Lockheed Martin Corporation

Contract Overview

Contract Amount: $46,664,824 ($46.7M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2023-03-06

End Date: 2027-08-10

Contract Duration: 1,618 days

Daily Burn Rate: $28.8K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MELB 6R PRODUCTION

Place of Performance

Location: LEXINGTON, FAYETTE County, KENTUCKY, 40516

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $46.7 million to LOCKHEED MARTIN CORPORATION for work described as: MELB 6R PRODUCTION Key points: 1. Contract value of $46.6 million over its period of performance. 2. Awarded under full and open competition, suggesting a robust bidding process. 3. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns. 4. Performance period spans from March 2023 to August 2027. 5. The North American Industry Classification System (NAICS) code is 561990, indicating 'All Other Support Services'. 6. The contract is a Delivery Order, suggesting it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract. 7. The awardee, Lockheed Martin Corporation, is a major defense contractor. 8. The contract is being performed in Kentucky (KY).

Value Assessment

Rating: fair

The contract value of $46.6 million for 'All Other Support Services' is substantial. Without specific details on the services rendered, it's difficult to benchmark against similar contracts. The Cost Plus Fixed Fee (CPFF) contract type introduces risk, as costs can escalate beyond initial estimates, potentially impacting value for money. Further analysis would require understanding the deliverables and comparing the fixed fee percentage to industry standards for similar complex support services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. This typically fosters a competitive environment, which can lead to better pricing and innovation. The number of bidders is not specified, but the 'full and open' designation suggests multiple entities likely vied for this award, providing a basis for price discovery.

Taxpayer Impact: A full and open competition generally benefits taxpayers by promoting a competitive marketplace that can drive down costs and improve the quality of services received.

Public Impact

This contract is expected to support U.S. Special Operations Command (SOCOM) operations. The services provided are categorized under 'All Other Support Services', which could encompass a wide range of activities critical to military readiness. The contract's performance location in Kentucky may have implications for the local workforce and economy. The duration of the contract, spanning over four years, suggests a need for sustained support services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contract type can incentivize contractor to increase costs to maximize profit.
Lack of specific service details makes it difficult to assess true value for money.
Long performance period (over 4 years) increases exposure to potential cost escalations or scope creep.

Positive Signals

Awarded through full and open competition, suggesting a competitive bidding process.
Awardee is a large, established defense contractor with a track record in government contracts.
Contract is a Delivery Order, likely part of a larger, potentially pre-vetted IDIQ contract.

Sector Analysis

The defense sector is characterized by complex, high-value contracts for goods and services. This contract falls under 'All Other Support Services,' a broad category that can include logistics, maintenance, technical support, and program management. The market for defense support services is dominated by large prime contractors like Lockheed Martin, with significant competition often occurring during the initial IDIQ contract award phase, followed by task order competition. Spending in this category is substantial, reflecting the ongoing need for operational and logistical support for military assets and personnel.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the awardee is Lockheed Martin Corporation, a large prime contractor, it is possible that small businesses could be involved as subcontractors. However, without specific subcontracting plans or goals outlined in the award data, the direct impact on the small business ecosystem is unclear. Further investigation into subcontracting requirements would be needed to assess the extent of small business participation.

Oversight & Accountability

Oversight for this contract would primarily fall under the U.S. Special Operations Command (SOCOM) and the Department of Defense (DoD). As a Cost Plus Fixed Fee contract, rigorous financial oversight and auditing are crucial to ensure costs are reasonable and allocable. Transparency would be enhanced through regular reporting requirements from the contractor and potential reviews by DoD Inspector General offices. The specific oversight mechanisms would depend on the detailed terms and conditions of the delivery order.

Related Government Programs

U.S. Special Operations Command Contracts
Department of Defense Support Services
Cost Plus Fixed Fee Contracts
Defense Logistics and Support Services

Risk Flags

Cost Plus Fixed Fee contract type carries inherent risk of cost overruns.
Broad NAICS code 'All Other Support Services' lacks specificity regarding deliverables.
Long contract duration increases exposure to changing requirements and economic fluctuations.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $46.7 million to LOCKHEED MARTIN CORPORATION. MELB 6R PRODUCTION

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 $46.7 million.

What is the period of performance?

Start: 2023-03-06. End: 2027-08-10.

What specific services are encompassed by 'All Other Support Services' under this contract?

The NAICS code 561990, 'All Other Support Services,' is a broad category that can include a wide array of non-manufacturing services. For a defense contract with SOCOM, these services could range from specialized technical support, program management, logistics and supply chain management, facility support, training services, to operational support. Without the specific SOW (Statement of Work) or PWS (Performance Work Statement) for this delivery order, the precise nature of the services remains undefined. However, given the awardee and agency, it is likely related to supporting special operations forces' unique requirements, potentially involving advanced technology, intelligence, or specialized equipment maintenance and operation.

How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types for similar defense support services?

Cost Plus Fixed Fee (CPFF) contracts are common in defense for services where the scope is not precisely defined or involves significant research and development. In a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This structure incentivizes cost control to some extent, as the fee is fixed, but it also carries risk for the government if costs escalate significantly beyond projections. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers more flexibility for evolving requirements but less cost certainty. Compared to Cost Plus Incentive Fee (CPIF) or Cost Plus Award Fee (CPAF), the profit potential for the contractor is capped, potentially offering less incentive for exceptional performance but also less risk of excessive profit if costs are managed poorly. For stable, well-defined services, FFP is generally preferred for cost predictability.

What is Lockheed Martin Corporation's track record with Cost Plus Fixed Fee contracts for the Department of Defense?

Lockheed Martin Corporation, as one of the largest defense contractors globally, has extensive experience with various contract types, including Cost Plus Fixed Fee (CPFF). They regularly execute large-scale, complex programs for the Department of Defense (DoD) that often necessitate CPFF structures due to the inherent uncertainties in development, integration, and long-term support of advanced defense systems. Historical data indicates that Lockheed Martin has managed numerous CPFF contracts across different service branches and agencies. While specific performance metrics for all past CPFF contracts are not publicly detailed, their continued success in winning and performing on major DoD programs suggests a capability to manage the financial and operational aspects of such agreements, albeit with the inherent risks associated with cost-reimbursable contract types.

What are the potential risks associated with a four-year performance period for this type of support service contract?

A four-year performance period for support services, especially under a CPFF structure, presents several potential risks. Firstly, the extended duration increases the likelihood of scope creep, where requirements may evolve or expand beyond the original intent, potentially leading to cost increases if not managed carefully. Secondly, economic factors such as inflation or changes in labor costs over four years can impact the actual costs incurred by the contractor, which are reimbursable. Thirdly, maintaining consistent service quality and contractor performance over such a long period requires robust oversight and performance management. Finally, if the fixed fee was negotiated based on initial cost estimates, and actual costs rise significantly due to unforeseen circumstances, the contractor's profit margin might be squeezed, potentially impacting morale or willingness to go above and beyond.

How does the $46.6 million contract value compare to typical spending for 'All Other Support Services' by SOCOM?

Determining how $46.6 million compares to typical spending for 'All Other Support Services' by SOCOM requires access to historical spending data and a more precise definition of the services rendered under NAICS code 561990. SOCOM procures a vast array of specialized services to support its unique global mission. Contracts for intelligence analysis, special mission support, advanced technology integration, and specialized training can all fall under this broad category and vary significantly in value. A $46.6 million contract over four years averages around $11.65 million per year. This figure could be considered moderate to substantial depending on the criticality and complexity of the services. Without comparative data specific to SOCOM's procurement of services under this NAICS code, it's challenging to definitively label this value as high or low relative to benchmarks.

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: $46,664,824

Exercised Options: $46,664,824

Current Obligation: $46,664,824

Subaward Activity

Number of Subawards: 15

Total Subaward Amount: $822,588

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