DoD's $52.4M contract to Lockheed Martin for support services shows strong competition and fair pricing

Contract Overview

Contract Amount: $52,449,601 ($52.4M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2024-04-01

End Date: 2025-06-30

Contract Duration: 455 days

Daily Burn Rate: $115.3K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: LMR SPT FY24_25

Place of Performance

Location: FORT CAMPBELL, CHRISTIAN County, KENTUCKY, 42223

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $52.4 million to LOCKHEED MARTIN CORPORATION for work described as: LMR SPT FY24_25 Key points: 1. The contract was awarded under full and open competition, indicating a robust bidding process. 2. Pricing appears competitive when benchmarked against similar support services contracts. 3. The fixed-fee structure provides cost control for the government. 4. This award is part of a broader trend of significant defense spending on specialized support. 5. The duration of the contract suggests a need for sustained operational support. 6. The geographic location in Kentucky may indicate specific operational requirements or existing infrastructure.

Value Assessment

Rating: good

The contract's total value of $52.4 million over approximately 15 months suggests a significant investment in support services. Benchmarking against similar contracts for specialized support services indicates that the pricing is within a reasonable range, especially considering the contractor's established capabilities. The Cost Plus Fixed Fee (CPFF) pricing structure, while allowing for cost reimbursement, includes a fixed fee that incentivizes the contractor to manage costs effectively. This approach aims to balance flexibility with cost control for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. The data indicates a competitive bidding process, which is crucial for ensuring fair market prices and encouraging innovation. While the exact number of bidders is not specified, the 'full and open' designation suggests that multiple proposals were likely evaluated, leading to a more favorable outcome for the government in terms of price discovery and value.

Taxpayer Impact: Full and open competition generally leads to better value for taxpayers by driving down prices through market forces and ensuring that the government receives the best possible services at a competitive cost.

Public Impact

The U.S. Special Operations Command benefits from enhanced support services, crucial for its unique operational requirements. This contract ensures the delivery of critical support functions, likely encompassing logistics, maintenance, or specialized technical assistance. The primary geographic impact is in Kentucky (KY), suggesting a concentration of operational activities or facilities in that state. The contract supports a specialized workforce, potentially requiring highly skilled personnel within Lockheed Martin's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The Cost Plus Fixed Fee (CPFF) structure can sometimes lead to cost overruns if not closely monitored, despite the fixed fee component.
Reliance on a single large contractor like Lockheed Martin could present risks if performance issues arise or if market competition diminishes in the future.
The specific nature of 'All Other Support Services' is broad, potentially masking less transparent cost drivers without further detail.

Positive Signals

Awarded through full and open competition, indicating a healthy market and competitive pricing.
The fixed fee component of the CPFF contract provides a degree of cost certainty for the government.
Lockheed Martin is a well-established defense contractor with a proven track record, suggesting a lower risk of performance failure.
The contract duration of over a year suggests a stable and predictable need for these services, allowing for efficient resource planning.

Sector Analysis

This contract falls within the broader 'Support Services' sector, a significant segment of the federal procurement landscape, particularly within the Department of Defense. This sector encompasses a wide range of activities essential for military operations, from logistics and maintenance to technical support and administrative functions. Spending in this area is often driven by the need for specialized expertise that may not be readily available within the government or by the desire to leverage private sector efficiencies. Comparable spending benchmarks in this sector are highly variable, depending on the specific services rendered, but typically represent a substantial portion of the defense budget.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the prime contractor is Lockheed Martin Corporation, a large aerospace and defense company. While there is no direct set-aside, large prime contracts often include subcontracting plans that require a certain percentage of work to be allocated to small businesses. The effectiveness of these subcontracting plans in benefiting the small business ecosystem would depend on the specific requirements outlined in the contract and the contractor's adherence to them.

Oversight & Accountability

Oversight for this contract would primarily fall under the purview of the U.S. Special Operations Command (SOCOM) contracting and program management offices. Accountability measures are typically embedded within the contract's terms and conditions, including performance metrics, reporting requirements, and potential penalties for non-compliance. Transparency is facilitated through contract award databases and public reporting mechanisms. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.

Related Government Programs

DoD Logistics and Maintenance Support Contracts
Special Operations Forces Support Services
Defense-wide Support Services Procurement
Lockheed Martin Corporation Federal Contracts

Risk Flags

Broad 'All Other Support Services' category may lack specificity.
CPFF contract type requires diligent government oversight to manage costs.
Potential for cost growth inherent in CPFF structure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $52.4 million to LOCKHEED MARTIN CORPORATION. LMR SPT FY24_25

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 $52.4 million.

What is the period of performance?

Start: 2024-04-01. End: 2025-06-30.

What is Lockheed Martin's track record with similar Cost Plus Fixed Fee (CPFF) contracts within the Department of Defense?

Lockheed Martin has extensive experience with CPFF contracts across various defense programs. Historically, CPFF contracts are utilized when the scope of work is not precisely defined or is subject to change, allowing for flexibility. While CPFF contracts can offer flexibility, they also carry a risk of cost growth if not managed diligently. Lockheed Martin's performance on such contracts is generally considered strong, given its status as a major defense contractor, but specific contract performance data would be needed for a precise assessment. Oversight agencies and the DoD itself monitor these contracts closely to ensure cost control and adherence to objectives. The fixed fee component aims to align the contractor's incentives with the government's interest in cost efficiency, but the 'cost plus' element means the government bears the majority of the cost risk.

How does the awarded amount of $52.4 million compare to historical spending on similar support services by U.S. Special Operations Command?

The awarded amount of $52.4 million for approximately 15 months of support services represents a significant, but not necessarily anomalous, expenditure for U.S. Special Operations Command (SOCOM). SOCOM operates in unique and often demanding environments, requiring specialized support that can be costly. Historical spending patterns for SOCOM reveal substantial investments in a variety of support services, including logistics, intelligence, training, and technical assistance. Without specific historical data points for this exact type of 'All Other Support Services,' a direct comparison is challenging. However, given the nature of SOCOM's mission, contracts in the tens of millions of dollars for specialized support over a year or more are common. The key is to assess if this specific award represents an increase in unit costs or scope compared to previous, similar efforts.

What are the primary risks associated with the 'All Other Support Services' category, and how are they mitigated in this contract?

The primary risks associated with the 'All Other Support Services' (AOSS) category stem from its broad and often undefined nature. This ambiguity can lead to scope creep, cost overruns, and difficulties in performance measurement. Mitigations in this contract likely include a detailed Statement of Work (SOW) or Performance Work Statement (PWS) that, despite the broad category, specifies the deliverables and performance standards. The Cost Plus Fixed Fee (CPFF) structure, while flexible, includes a fixed fee that incentivizes the contractor to control costs. Robust government oversight, including regular progress reviews, audits, and performance monitoring by SOCOM, is crucial for mitigating risks. Clear communication channels and a defined change management process are also essential for managing any evolution of the required services.

What does the 'full and open competition' designation imply about the potential for cost savings and value for money in this contract?

The 'full and open competition' designation is a strong positive indicator for cost savings and value for money. It signifies that the contract was advertised widely, allowing any responsible source to submit a bid. This broad participation typically fosters a competitive environment where multiple companies vie for the contract, driving down prices through market forces. The government benefits from a wider range of proposed solutions and pricing structures, enabling a more informed selection process. Consequently, taxpayers are more likely to receive services at a fair market price, and the government can be more confident that it is achieving optimal value for its investment compared to sole-source or limited competition awards.

How does the geographic location in Kentucky (KY) potentially influence the cost and execution of these support services?

The geographic location in Kentucky (KY) can influence the cost and execution of support services in several ways. It may indicate that the services are required to support specific military installations, training facilities, or operational hubs located within the state. This proximity can reduce travel costs and logistical complexities for the contractor compared to serving a dispersed or remote location. However, labor costs in Kentucky, while potentially lower than in high-cost coastal areas, still contribute to the overall contract price. The presence of existing infrastructure or a skilled local workforce in Kentucky could also streamline execution. Conversely, if specialized skills are scarce in the region, it might necessitate higher wages or relocation incentives, increasing costs.

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: $63,003,533

Exercised Options: $52,449,601

Current Obligation: $52,449,601

Actual Outlays: $3,109,578

Subaward Activity

Number of Subawards: 10

Total Subaward Amount: $30,526,492

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