DoD's $12.2M Lockheed Martin contract for 75TH RR Enterprise Sustainment shows strong competition and firm fixed pricing

Contract Overview

Contract Amount: $12,221,068 ($12.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2023-08-23

End Date: 2026-08-22

Contract Duration: 1,095 days

Daily Burn Rate: $11.2K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 75TH RR ENTERPRISE SUSTAINMENT - BASE PERIOD

Place of Performance

Location: LEXINGTON, FAYETTE County, KENTUCKY, 40516

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $12.2 million to LOCKHEED MARTIN CORPORATION for work described as: 75TH RR ENTERPRISE SUSTAINMENT - BASE PERIOD Key points: 1. The contract utilizes a firm fixed-price structure, which shifts cost risk to the contractor. 2. Full and open competition was employed, suggesting a robust bidding process. 3. The contract duration of 1095 days (3 years) provides a stable period for sustainment services. 4. The awardee, Lockheed Martin Corporation, is a major defense contractor with extensive experience. 5. The contract is a delivery order under a larger contract vehicle, indicating a phased approach to procurement. 6. The North American Industry Classification System (NAICS) code 561990 points to 'All Other Support Services', a broad category.

Value Assessment

Rating: good

The contract's firm fixed-price (FFP) nature is a positive indicator for value, as it caps costs for the government. Benchmarking against similar sustainment contracts for complex enterprise systems is challenging without more specific service details. However, the competitive award process suggests that the pricing achieved is likely within a reasonable range for the services rendered. The total value of $12.2 million over three years indicates a moderate investment for enterprise sustainment.

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. This approach generally fosters a competitive environment, encouraging multiple bidders to offer their best pricing and technical solutions. The specific number of bidders is not provided, but the designation implies a healthy level of interest and potential for price discovery.

Taxpayer Impact: Full and open competition maximizes the opportunity for taxpayers to receive the best possible value by ensuring a wide range of potential contractors can compete, driving down prices through market forces.

Public Impact

The primary beneficiaries are U.S. Special Operations Command (SOCOM) personnel who rely on the sustained operation of the 75TH RR Enterprise. The services delivered are critical for the ongoing operational readiness and effectiveness of special operations forces. The geographic impact is primarily within Kentucky (ST, SN), where the contract is managed or services are potentially delivered. The contract supports a highly specialized segment of the defense industrial workforce, likely involving skilled technicians and support personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific performance metrics makes it difficult to assess the effectiveness and efficiency of the sustainment services.
The broad NAICS code (561990) for 'All Other Support Services' could mask a wide range of activities, making detailed analysis challenging.
Reliance on a single large contractor (Lockheed Martin) for critical sustainment may pose long-term risks if not managed carefully.

Positive Signals

Firm fixed-price contract structure transfers cost overrun risk to the contractor.
Full and open competition suggests a competitive pricing environment and potential for value.
The contract is a delivery order, implying it's part of a larger, potentially pre-vetted framework, which can streamline procurement.
The awardee, Lockheed Martin, has a significant track record in defense contracting, suggesting a high likelihood of capability.

Sector Analysis

This contract falls within the broader defense sector, specifically focusing on enterprise sustainment services. The market for defense sustainment is substantial, driven by the need to maintain complex weapon systems and operational infrastructure. Contracts like this are crucial for ensuring the readiness of military assets. Comparable spending benchmarks would typically involve analyzing other sustainment contracts for similar enterprise-level systems within the Department of Defense, considering factors like system complexity and service scope.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses stemming from a small business set-aside. However, as Lockheed Martin is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors, depending on Lockheed Martin's subcontracting plan and the specific nature of the services required.

Oversight & Accountability

Oversight for this contract would primarily reside with the U.S. Special Operations Command (SOCOM) contracting and program management offices. As a Department of Defense contract, it is also subject to oversight by the DoD Inspector General. Transparency is facilitated through contract award databases like FPDS. Accountability measures would be embedded in the contract's performance work statement and delivery terms, with potential for penalties or remedies for non-performance.

Related Government Programs

DoD Enterprise IT Sustainment
Special Operations Forces Equipment Maintenance
Defense Logistics Agency Support Services
Government-Wide Acquisition Contracts (GWACs) for IT Services
Major Weapon System Sustainment Programs

Risk Flags

Potential for vendor lock-in due to single large contractor.
Lack of detailed performance metrics in public data.
Broad NAICS code limits specificity of services analysis.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.2 million to LOCKHEED MARTIN CORPORATION. 75TH RR ENTERPRISE SUSTAINMENT - BASE PERIOD

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 $12.2 million.

What is the period of performance?

Start: 2023-08-23. End: 2026-08-22.

What is the specific nature of the '75TH RR Enterprise' and the sustainment services provided under this contract?

The '75TH RR Enterprise' likely refers to a specific operational system or set of systems utilized by U.S. Special Operations Command (SOCOM). The sustainment services, categorized under NAICS code 561990 ('All Other Support Services'), are broad but typically encompass maintenance, repair, logistical support, and potentially software updates or lifecycle management for complex equipment or IT infrastructure. Without further details from SOCOM or the contract's performance work statement, the exact scope remains general. However, given the awardee and agency, it is reasonable to infer these services are critical for maintaining the operational readiness and effectiveness of specialized SOCOM assets.

How does the firm fixed-price (FFP) contract type benefit the government in this scenario?

The firm fixed-price (FFP) contract type is advantageous for the government as it shifts the majority of the cost risk to the contractor, Lockheed Martin Corporation. Under an FFP agreement, the price is set and not subject to adjustment based on the contractor's actual costs. This provides budget certainty for the U.S. Special Operations Command (SOCOM). If Lockheed Martin incurs higher-than-expected costs to provide the sustainment services for the 75TH RR Enterprise, their profit margin will decrease, but the government's expenditure remains fixed at the agreed-upon amount. This structure incentivizes the contractor to manage costs efficiently and effectively.

What are the potential risks associated with awarding a sustainment contract to a single large contractor like Lockheed Martin?

Awarding a sustainment contract to a single large contractor like Lockheed Martin, while often indicative of capability, carries potential risks. One primary risk is vendor lock-in, where the government becomes heavily reliant on one provider, potentially limiting future flexibility and negotiation leverage. If the contractor underperforms or significantly increases prices in subsequent contract periods, switching providers can be costly and disruptive. Furthermore, a sole reliance on one entity for critical sustainment could create vulnerabilities if the contractor faces financial instability, operational disruptions, or strategic shifts that impact their ability to deliver. Robust oversight and performance management are crucial to mitigate these risks.

Can the $12.2 million contract value be considered high or low for enterprise sustainment services?

The $12.2 million contract value for three years of enterprise sustainment services is moderate. To definitively label it as high or low, a detailed comparison with similar contracts for comparable systems within the Department of Defense and specifically U.S. Special Operations Command (SOCOM) would be necessary. Factors influencing this value include the complexity of the '75TH RR Enterprise,' the criticality of its function, the scope of services (maintenance, repair, software, logistics), and the required service levels. Given that Lockheed Martin is a major defense contractor and the services are for SOCOM, the value appears reasonable for specialized, high-stakes sustainment, but benchmarking against peer contracts is essential for a precise assessment.

What does the 'delivery order' designation imply about this contract?

The designation of this award as a 'delivery order' (aw: DELIVERY ORDER) implies that it is a task order issued under a previously awarded indefinite-delivery, indefinite-quantity (IDIQ) contract or a similar type of multiple-award contract. This means that the underlying contract vehicle, which likely underwent its own competitive process, establishes the terms and conditions for services, and this delivery order specifies the quantity, delivery schedule, and price for a particular segment of work. This procurement method allows agencies to acquire goods or services incrementally as needed, often streamlining the process compared to awarding a new, standalone contract for each requirement.

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: FIRM FIXED PRICE (J)

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: $12,669,662

Exercised Options: $12,669,662

Current Obligation: $12,221,068

Actual Outlays: $282,664

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $3,353,909

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