DoD awards $12.7M for OP Readiness Support to Lockheed Martin, highlighting potential value concerns

Contract Overview

Contract Amount: $12,743,306 ($12.7M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2025-01-28

End Date: 2026-01-27

Contract Duration: 364 days

Daily Burn Rate: $35.0K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: OP READINESS SUPPORT 612A AWARD

Place of Performance

Location: LEXINGTON, FAYETTE County, KENTUCKY, 40516

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $12.7 million to LOCKHEED MARTIN CORPORATION for work described as: OP READINESS SUPPORT 612A AWARD Key points: 1. Contract awarded via full and open competition, suggesting a competitive process. 2. Cost-plus-fixed-fee contract type may incentivize cost overruns. 3. Limited duration of 364 days suggests a focused, short-term need. 4. Awarded to a single large contractor, potentially limiting broader market engagement. 5. Geographic location in Kentucky may indicate specific operational needs. 6. No small business set-aside, indicating a focus on large prime contractors.

Value Assessment

Rating: fair

The contract's value of $12.7 million for a one-year period of performance requires careful benchmarking against similar readiness support services. The cost-plus-fixed-fee (CPFF) structure, while common for complex or uncertain scope work, carries inherent risks of cost escalation. Without detailed performance metrics and cost breakdowns, it is difficult to definitively assess value for money. However, the fixed fee component provides some incentive for the contractor to manage costs efficiently to maximize their profit margin.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely solicited and considered. This approach is generally favorable for price discovery and ensuring the government receives competitive offers. The number of bidders and the specific evaluation criteria would provide further insight into the robustness of the competition.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down prices through market forces and encouraging a wider range of potential suppliers to bid, leading to potentially better value.

Public Impact

Provides critical operational readiness support services to U.S. Special Operations Command (SOCOM). Enhances the capabilities and preparedness of special operations forces. Services are delivered within Kentucky, potentially impacting the local workforce and economy. Supports the national security mission by ensuring the readiness of elite military units.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contract type can lead to higher costs if not managed closely.
Award to a single large contractor may limit opportunities for smaller, specialized firms.
Limited contract duration might indicate a need for future re-competition or contract modifications.

Positive Signals

Full and open competition suggests a robust bidding process.
Fixed fee component provides some cost control incentive for the contractor.
Award to a reputable contractor like Lockheed Martin may indicate a focus on proven capabilities.

Sector Analysis

This contract falls within the broader 'Support Services' sector, specifically related to defense readiness and operational support. The market for such services is substantial, driven by the continuous need for military preparedness and specialized operational capabilities. Comparable spending benchmarks would typically involve analyzing other SOCOM contracts or similar readiness support awards across the Department of Defense to gauge pricing and scope.

Small Business Impact

The absence of a small business set-aside for this contract indicates that the primary focus was on large prime contractors capable of fulfilling the extensive requirements. While this award does not directly benefit small businesses through a set-aside, Lockheed Martin may engage small businesses as subcontractors. The extent of subcontracting to small businesses will be a key factor in assessing the broader impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract will likely be managed by the U.S. Special Operations Command contracting and program management offices. Accountability measures are embedded within the CPFF contract structure, requiring detailed reporting and justification of costs against the fixed fee. Transparency is typically facilitated through contract award databases and reporting requirements, though specific performance details may be sensitive.

Related Government Programs

Department of Defense Readiness Support Contracts
U.S. Special Operations Command (SOCOM) Service Contracts
Operational Support Services
Defense Contractor Support Services

Risk Flags

Cost-plus contract type
Limited contract duration
Award to single large contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $12.7 million to LOCKHEED MARTIN CORPORATION. OP READINESS SUPPORT 612A AWARD

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 $12.7 million.

What is the period of performance?

Start: 2025-01-28. End: 2026-01-27.

What is Lockheed Martin's track record with similar operational readiness support contracts for SOCOM or other defense agencies?

Lockheed Martin has a long and extensive history of supporting defense agencies, including SOCOM, with a wide array of services, encompassing readiness, logistics, training, and advanced technology solutions. Their track record includes numerous large-scale contracts for complex defense programs. For operational readiness support specifically, they have been involved in providing services that ensure military units are prepared for deployment and mission execution. Analyzing their past performance on similar CPFF contracts would reveal their ability to manage costs effectively and deliver required outcomes within budget constraints. Past performance reviews and contract close-out data would be crucial for a comprehensive assessment of their reliability and efficiency in this domain.

How does the $12.7 million cost compare to similar readiness support contracts awarded by SOCOM or other branches of the DoD?

Benchmarking the $12.7 million award requires comparing it against contracts of similar scope, duration, and complexity. Readiness support can encompass a wide range of activities, from training and simulation to equipment maintenance and logistical planning. If this contract is for specialized, high-intensity support for elite units, the cost might be within a reasonable range. However, if it involves more routine support services, it could be on the higher end. A detailed analysis would involve identifying comparable contracts awarded over the past 2-3 years, considering factors like the number of personnel supported, the specific services rendered, and the contract type (e.g., CPFF vs. FFP). Without this granular data, a definitive value comparison is challenging, but the award amount for a one-year contract warrants scrutiny.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for operational readiness support?

The primary risk with a CPFF contract is the potential for cost overruns. While the contractor is reimbursed for all allowable costs, the fixed fee is predetermined. This structure incentivizes the contractor to control costs to maximize their profit (the fixed fee). However, if unforeseen issues arise or the scope expands significantly, the government bears the risk of increased costs. For operational readiness support, unpredictable operational tempo, emergent threats, or unforeseen logistical challenges could drive up costs. Effective oversight, clear scope definition, and robust cost tracking are crucial to mitigate these risks and ensure the government does not overpay for the services rendered.

What specific operational readiness support services are being procured under this contract?

The contract data indicates the award is for 'OP READINESS SUPPORT 612A'. While the specific details of '612A' are not provided in the summary data, 'Operational Readiness Support' generally encompasses a broad range of services designed to ensure military units are prepared for their missions. This could include training exercises, simulation support, equipment maintenance and sustainment, logistical planning, personnel readiness assessments, and potentially advisory services. The exact nature of these services is critical for understanding the value proposition and assessing performance. Without a detailed Statement of Work (SOW), it's difficult to ascertain the precise nature and criticality of the support being provided.

What is the historical spending trend for operational readiness support by SOCOM or the Department of Defense?

Historical spending on operational readiness support by SOCOM and the broader Department of Defense has generally been substantial and often increasing, driven by evolving geopolitical landscapes and the continuous need to maintain a high state of military preparedness. SOCOM, in particular, requires specialized and often costly support due to the nature of its missions. Trends often show a consistent demand for services related to training, modernization, intelligence, and specialized operational capabilities. Analyzing multi-year spending patterns for similar contract categories can reveal whether this $12.7 million award aligns with historical investment levels or represents a significant deviation, potentially indicating a new initiative or a shift in strategic priorities.

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: $12,743,306

Exercised Options: $12,743,306

Current Obligation: $12,743,306

Subaward Activity

Number of Subawards: 2

Total Subaward Amount: $254,570

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