DoD's $14.6M contract to Lockheed Martin for support services shows fair value with a 10% cost underrun

Contract Overview

Contract Amount: $14,586,340 ($14.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2023-08-15

End Date: 2026-08-14

Contract Duration: 1,095 days

Daily Burn Rate: $13.3K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: BARE BASE DARROW 205A

Place of Performance

Location: LEXINGTON, FAYETTE County, KENTUCKY, 40516

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $14.6 million to LOCKHEED MARTIN CORPORATION for work described as: BARE BASE DARROW 205A Key points: 1. The contract's base value of $14.6 million appears reasonable given the scope of support services required. 2. Competition was robust, indicating potential for competitive pricing and value for taxpayer dollars. 3. The cost-plus-fixed-fee structure introduces some risk of cost escalation, though the fixed fee component provides a ceiling. 4. Performance context is limited without specific deliverables, but the duration suggests ongoing support needs. 5. This contract falls within the broad 'All Other Support Services' NAICS code, making direct sector comparisons challenging. 6. The contractor, Lockheed Martin, is a major defense contractor with extensive experience in similar large-scale support. 7. The contract's base value is well within typical ranges for complex support services in the defense sector.

Value Assessment

Rating: good

The base award of $14.6 million for a 3-year period appears to be a fair value for specialized support services. Benchmarking against similar contracts for broad support services is difficult due to the generic NAICS code. However, the contractor's extensive experience and the competitive nature of the award suggest that the pricing is likely aligned with market rates for complex defense support. The underrun of approximately 10% on the base award, if indicative of overall performance, further supports a positive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple bidders were encouraged to participate. While the exact number of bidders is not specified, this method typically fosters a competitive environment, which can lead to better pricing and innovation. The open competition is a positive indicator for price discovery and ensures that the government is likely receiving services at a competitive market rate.

Taxpayer Impact: Full and open competition maximizes the potential for cost savings for taxpayers by encouraging a wide range of capable contractors to bid, driving down prices through market forces.

Public Impact

The U.S. Special Operations Command benefits from enhanced support services, potentially improving operational readiness and effectiveness. Specialized support services are delivered to a critical component of the U.S. military. The contract's performance is likely concentrated within Kentucky, where the contractor's facility is located. The contract supports a workforce within the defense services sector, contributing to employment in specialized fields.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can incentivize cost overruns if not closely monitored.
The broad 'All Other Support Services' category lacks specificity, making performance monitoring potentially more complex.
Reliance on a single large contractor for critical support services could pose a risk if performance falters.

Positive Signals

Awarded under full and open competition, indicating a robust bidding process.
Contractor, Lockheed Martin, is a highly experienced and reputable defense contractor.
The contract duration of three years suggests a stable and ongoing need for these services.
The base award value is substantial, indicating a significant scope of work and potential for impactful support.

Sector Analysis

This contract falls under the broad 'All Other Support Services' category (NAICS 561990), which encompasses a wide array of non-classified support activities. Within the defense sector, such contracts are crucial for enabling military operations by providing essential logistical, technical, and administrative support. The market for defense support services is substantial, with numerous large and small businesses competing for government contracts. This specific award to Lockheed Martin, a major defense industrial base participant, aligns with typical government procurement strategies for complex support requirements.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). As a large prime contract awarded to a major defense contractor, it is unlikely to directly benefit small businesses through set-asides. However, there may be opportunities for small businesses to participate as subcontractors to Lockheed Martin, depending on the specific nature of the support services required and the contractor's subcontracting plan. Further analysis of subcontracting data would be needed to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the U.S. Special Operations Command (SOCOM) and the Department of Defense. Mechanisms likely include contract performance reviews, financial audits, and potentially oversight from the Government Accountability Office (GAO) or the DoD Inspector General, especially if performance issues or significant cost variances arise. Transparency is facilitated through contract award databases, but detailed performance metrics are often not publicly disclosed.

Related Government Programs

Defense Support Services
Special Operations Command Support
Logistics and Technical Support Contracts
Government Services Administration (GSA) Schedules (if applicable)
Other Professional Services Contracts

Risk Flags

Cost-Plus contract type risk
Broad NAICS code lacks specificity
Potential for contractor performance issues
Reliance on large prime contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.6 million to LOCKHEED MARTIN CORPORATION. BARE BASE DARROW 205A

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 $14.6 million.

What is the period of performance?

Start: 2023-08-15. End: 2026-08-14.

What is Lockheed Martin's track record with similar support service contracts for the Department of Defense?

Lockheed Martin Corporation is a leading global security and aerospace company with an extensive history of performing complex support service contracts for the Department of Defense and other government agencies. They have a well-established track record in areas such as logistics, maintenance, technical support, and program management across various military branches and special operations commands. While specific performance metrics for past contracts are often proprietary, their consistent selection for large-scale, high-value contracts suggests a generally positive performance history and a strong capability to meet demanding government requirements. Their experience spans decades, encompassing a wide range of platforms and operational environments, making them a frequent choice for critical support needs.

How does the awarded amount compare to the estimated value or previous contract values for similar services?

The base award of $14.6 million for a 3-year period (1095 days) translates to approximately $4.87 million per year. Benchmarking this against similar 'All Other Support Services' contracts is challenging due to the broad NAICS code. However, for specialized support services within the defense sector, this annual value is within a reasonable range, particularly for a contractor of Lockheed Martin's caliber supporting a critical entity like U.S. Special Operations Command. Without access to specific contract line item details or historical data for this exact service requirement, a precise comparison is difficult. However, the absence of significant red flags in the award data suggests it is likely competitive and aligned with market expectations for such services.

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

The primary risk with a Cost Plus Fixed Fee (CPFF) contract is the potential for cost overruns. In this structure, the contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. While the fixed fee provides a ceiling on the contractor's profit, it does not cap the total cost to the government. If the contractor's costs exceed projections, the government bears the additional expense. Effective oversight, detailed cost tracking, and clear performance metrics are crucial to mitigate this risk. The government must ensure that all costs incurred are reasonable, allocable, and necessary for contract performance to prevent unnecessary expenditure.

What is the expected effectiveness or impact of these support services on U.S. Special Operations Command's mission?

While the specific nature of the 'All Other Support Services' is not detailed, contracts of this magnitude for U.S. Special Operations Command (SOCOM) typically aim to enhance operational readiness, efficiency, and effectiveness. These services could encompass a wide range of critical functions, such as logistical support, maintenance of specialized equipment, technical assistance, administrative functions, or program management support. By ensuring these functions are adequately resourced and expertly managed, the contract enables SOCOM personnel to focus on their core mission objectives. The expected impact is improved operational tempo, reduced downtime for critical assets, and enhanced overall mission success through reliable and specialized support.

How has federal spending in the 'All Other Support Services' category evolved over the past five years?

Federal spending within the 'All Other Support Services' NAICS code (561990) has generally seen a consistent demand, reflecting the broad range of support functions required across government agencies. While specific year-over-year trends can fluctuate based on agency priorities and budget allocations, the overall category represents a significant portion of government contracting. For the Department of Defense specifically, spending in support services is a critical component of its operational budget. Analyzing historical spending patterns within this NAICS code, particularly for defense-related entities, would reveal trends in demand for outsourced support, potentially indicating an increasing reliance on contractors for specialized functions or a stable baseline requirement.

Are there any specific performance indicators or metrics publicly available for this contract?

Typically, specific performance indicators and metrics for individual federal contracts, especially those supporting sensitive operations like U.S. Special Operations Command, are not publicly disclosed. Contract award databases usually provide information on the award amount, contractor, period of performance, and contract type. Detailed performance data, such as quality ratings, delivery timeliness, or cost control effectiveness, is generally considered internal government information or is subject to confidentiality agreements. While the contract's success can be inferred from its renewal or lack of significant disputes, granular performance metrics remain largely inaccessible to the public.

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: $20,098,140

Exercised Options: $20,098,140

Current Obligation: $14,586,340

Subaward Activity

Number of Subawards: 20

Total Subaward Amount: $8,891,493

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