DoD's $19.17M Lockheed Martin contract for site support in Kentucky shows fair value with a 2.6% cost overrun

Contract Overview

Contract Amount: $19,170,631 ($19.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2023-12-01

End Date: 2025-11-30

Contract Duration: 730 days

Daily Burn Rate: $26.3K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: BASE - SITE SUPPORT A 205A

Place of Performance

Location: LEXINGTON, FAYETTE County, KENTUCKY, 40516

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $19.2 million to LOCKHEED MARTIN CORPORATION for work described as: BASE - SITE SUPPORT A 205A Key points: 1. The contract's base value of $19.17M for site support services appears reasonable given the duration and scope. 2. Competition was robust, indicating potential for competitive pricing, though specific bid data is not provided. 3. A 2.6% cost overrun on the base value suggests minor deviations from initial cost estimates. 4. The contract is positioned within the broader defense support services sector, a critical area for military operations. 5. Performance context is limited without specific metrics on service delivery quality or efficiency. 6. The use of a Cost Plus Fixed Fee (CPFF) contract type can incentivize cost control but requires careful oversight.

Value Assessment

Rating: fair

The base value of $19.17M for a 2-year site support contract is within a reasonable range for similar services. However, the reported 2.6% cost overrun (approximately $497K) on the base value warrants attention. Without specific details on the services provided and the reasons for the overrun, a definitive value-for-money assessment is challenging. Benchmarking against other DoD site support contracts of similar scope and duration would provide a clearer picture of whether this pricing is competitive.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. This level of competition is generally favorable for price discovery and achieving competitive pricing. However, the number of bids received is not specified, which would offer further insight into the actual competitiveness of the bidding process. A high number of bidders typically leads to better pricing for the government.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down costs through market forces, ensuring the government receives the best possible value for its investment.

Public Impact

The U.S. Special Operations Command benefits from essential site support services, ensuring operational readiness. Services delivered likely include base maintenance, logistics, and potentially administrative support critical for mission success. The geographic impact is concentrated in Kentucky, supporting military installations and personnel in the region. Workforce implications include employment opportunities for individuals in Kentucky, supporting the local economy.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 2.6% cost overrun on the base value indicates potential for budget deviations.
Lack of specific performance metrics makes it difficult to fully assess service quality and efficiency.
The CPFF contract type, while common, can lead to cost escalations if not managed tightly.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process.
The contractor, Lockheed Martin Corporation, is a large, established defense contractor with significant experience.
The contract duration of 730 days provides stability for service delivery and planning.

Sector Analysis

This contract falls within the broader defense support services sector, which encompasses a wide range of activities essential for military operations. This sector is characterized by long-term relationships between government agencies and large defense contractors. Spending in this area is substantial, driven by the need for specialized support at military installations globally. Comparable spending benchmarks would involve analyzing other contracts for base operations, facilities management, and logistical support awarded by the Department of Defense and other federal agencies.

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 set-aside provision. However, as a large prime contractor, Lockheed Martin may engage small businesses as subcontractors for specific components or services, though this is not explicitly detailed in the provided data.

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 adherence to the terms of the Cost Plus Fixed Fee agreement. Transparency is generally maintained through contract databases and reporting requirements, though specific operational details may be classified. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Department of Defense Base Operations Support
U.S. Special Operations Command Support Services
Federal Facilities Maintenance Contracts
Logistics and Support Services Contracts

Risk Flags

Cost Overrun
Limited Performance Data
CPFF Contract Type Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.2 million to LOCKHEED MARTIN CORPORATION. BASE - SITE SUPPORT A 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 $19.2 million.

What is the period of performance?

Start: 2023-12-01. End: 2025-11-30.

What specific site support services are included under this contract?

The provided data classifies the contract under NAICS code 561990, 'All Other Support Services,' and indicates it's for 'BASE - SITE SUPPORT A'. While specific line items are not detailed, this typically encompasses a broad range of services essential for the functioning of a military installation. These can include facilities maintenance and repair, groundskeeping, waste management, transportation support, security services (non-guard), logistical support, and potentially administrative functions. The exact scope would be detailed in the contract's Statement of Work (SOW), which is not publicly available in this data snippet. The 'A' designation might refer to a specific site or a phase of support.

How does the 2.6% cost overrun compare to typical overruns for similar DoD contracts?

A 2.6% cost overrun on a base value of approximately $19.17 million translates to roughly $497,000. For large, complex defense contracts, particularly those with longer durations or involving evolving requirements, overruns of this magnitude can be considered relatively minor. However, the acceptability of this overrun depends heavily on the contract type (Cost Plus Fixed Fee in this case), the reasons cited for the overrun, and the overall performance against the contract's objectives. Some Cost Plus contracts are structured to allow for a fixed fee that is adjusted based on cost savings or overruns, while others have stricter controls. Without more context on the specific drivers of the overrun and the contract's fee structure, it's difficult to definitively benchmark it against industry norms, but it does not immediately signal systemic mismanagement.

What is the significance of Lockheed Martin Corporation being the contractor for this service?

Lockheed Martin Corporation is one of the largest defense contractors globally, with extensive experience in providing a wide array of services to the U.S. military, including base support, logistics, and complex systems integration. Their selection suggests the government sought a contractor with proven capabilities, established infrastructure, and the capacity to manage large-scale operations. While their size and experience can be advantageous for ensuring service continuity and quality, it also means the contract value represents a small fraction of their overall revenue. The government likely relied on Lockheed Martin's track record and existing presence to fulfill these critical site support functions efficiently, potentially leveraging existing resources and expertise.

What are the potential risks associated with a Cost Plus Fixed Fee (CPFF) contract for site support?

The Cost Plus Fixed Fee (CPFF) contract type, used here, presents specific risks. While the fixed fee provides the contractor with a defined profit margin, the government bears the risk of cost overruns beyond the estimated cost. This structure can incentivize the contractor to control costs to protect their fee, but it can also lead to scope creep or less aggressive cost management if the government's oversight is insufficient. For site support services, risks include potential inefficiencies in service delivery if the contractor prioritizes fee protection over optimal operational performance, or if unforeseen operational challenges lead to significant cost increases that are passed on to the government. Robust government oversight, clear performance metrics, and diligent cost tracking are crucial to mitigate these risks.

How does the contract's duration (730 days) impact its overall value and risk profile?

A duration of 730 days (two years) for a site support contract provides a reasonable period for the contractor to establish efficient operations and for the government to assess performance. This duration strikes a balance: it's long enough to avoid the inefficiencies and higher per-unit costs often associated with very short-term contracts, while not being so long as to lock the government into potentially outdated services or pricing without review. For the contractor, it offers a degree of stability and predictability. From a risk perspective, a two-year term allows for performance monitoring and the opportunity to address issues before they become entrenched, but it also means that significant cost overruns or performance failures could persist for an extended period if not managed proactively.

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: $30,687,829

Exercised Options: $19,702,727

Current Obligation: $19,170,631

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $104,813

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