DoD awards $5.3M contract for support services to Lockheed Martin, highlighting potential value concerns

Contract Overview

Contract Amount: $5,276,250 ($5.3M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2025-04-21

End Date: 2026-04-20

Contract Duration: 364 days

Daily Burn Rate: $14.5K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 2921 UAF DODES SUPPORT 205A

Place of Performance

Location: LEXINGTON, FAYETTE County, KENTUCKY, 40516

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $5.3 million to LOCKHEED MARTIN CORPORATION for work described as: 2921 UAF DODES SUPPORT 205A Key points: 1. The contract's cost-plus-fixed-fee structure warrants scrutiny for potential cost overruns. 2. Full and open competition was utilized, suggesting a potentially competitive pricing environment. 3. The relatively short duration of one year may limit long-term performance assessment. 4. The specific nature of 'support services' requires further definition to gauge true value. 5. Contractor's extensive experience may justify the award, but value for money needs verification. 6. Geographic location in Kentucky is noted, but its impact on service delivery is unclear.

Value Assessment

Rating: fair

The contract value of $5.3 million for a one-year period is moderate. Without specific performance metrics or a detailed breakdown of services, it is difficult to benchmark against similar contracts. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex services, can sometimes lead to higher costs if not managed tightly, as the contractor is reimbursed for allowable costs plus a fixed fee. This contrasts with fixed-price contracts which offer more cost certainty to the government. Further analysis of the contractor's historical performance on similar CPFF contracts would be beneficial.

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. This method generally promotes a competitive environment, which can lead to better pricing and value for the government. The number of bids received and the range of proposed prices would provide further insight into the effectiveness of the competition. A robust competition typically results in a more favorable outcome for taxpayers.

Taxpayer Impact: Full and open competition suggests that the government sought the best possible value by allowing all responsible sources to submit offers, potentially leading to cost savings for taxpayers compared to less competitive procurement methods.

Public Impact

This contract will provide essential support services to the U.S. Special Operations Command (SOCOM). The services delivered are critical for the operational readiness and effectiveness of SOCOM. The primary beneficiaries are the personnel and missions supported by SOCOM. The contract's impact on the workforce is likely related to specialized support roles, potentially creating or sustaining jobs within the defense support sector. The geographic impact is centered in Kentucky, where the services will be performed.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The CPFF contract type introduces inherent risk of cost overruns if not meticulously managed.
The broad category of 'All Other Support Services' lacks specificity, making it challenging to assess the true scope and necessity of the work.
The relatively short contract duration may not allow for full realization of long-term efficiencies or performance improvements.
Lack of detailed performance metrics in the provided data makes it difficult to evaluate contractor efficiency and effectiveness.
The contractor's significant size and existing relationship with the government could potentially influence future competition dynamics.

Positive Signals

Awarded under full and open competition, suggesting a competitive process that should yield fair pricing.
The contractor, Lockheed Martin Corporation, is a well-established entity with extensive experience in defense contracting.
The contract supports a critical national security agency (U.S. Special Operations Command), indicating alignment with strategic priorities.
The fixed fee component of the CPFF contract provides some level of cost predictability for the government.
The contract is for a defined period, allowing for reassessment and potential re-competition upon expiration.

Sector Analysis

The defense support services sector is a significant component of the broader federal contracting landscape. This contract falls under 'All Other Support Services,' a broad category that can encompass a wide range of activities from administrative support to specialized technical assistance. The market for such services is competitive, with numerous large and small businesses vying for contracts. Spending in this area is often driven by the operational tempo and specific needs of defense agencies like SOCOM. Benchmarking requires detailed service descriptions, but overall federal spending on support services runs into billions annually.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb: false) and the prime contractor is not a small business (ss: false). Therefore, there are no direct small business set-aside benefits associated with this specific award. However, the prime contractor, Lockheed Martin, may engage small businesses as subcontractors to fulfill portions of the contract requirements. The extent of subcontracting to small businesses would need to be assessed through the contract's subcontracting plan, if applicable, to understand its broader impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily reside with the U.S. Special Operations Command (SOCOM) contracting and program management offices. The contract's performance will likely be monitored through regular reporting requirements, site visits, and performance reviews. Transparency is generally facilitated through contract databases like FPDS, which provide award details. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.

Related Government Programs

Department of Defense Support Services
U.S. Special Operations Command Contracts
Lockheed Martin Defense Contracts
Cost-Plus-Fixed-Fee Contracts
Federal Support Services Spending

Risk Flags

Cost-Plus-Fixed-Fee contract type can lead to cost overruns.
Broad service description ('All Other Support Services') lacks specificity.
Potential for contractor to prioritize larger contracts over this one.
Limited duration may not allow for full value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $5.3 million to LOCKHEED MARTIN CORPORATION. 2921 UAF DODES SUPPORT 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 $5.3 million.

What is the period of performance?

Start: 2025-04-21. End: 2026-04-20.

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

Lockheed Martin Corporation has a long and extensive history of performing on CPFF contracts across various branches of the Department of Defense. These contracts often involve complex research, development, and support services where the final costs are not easily predictable at the outset. While CPFF contracts provide flexibility, they also carry a higher risk of cost growth compared to fixed-price arrangements. Analyzing Lockheed Martin's historical performance on similar CPFF contracts would involve reviewing data on cost variances, schedule adherence, and the quality of deliverables. Agencies typically assess a contractor's past performance, including their management of CPFF contracts, during the source selection process. Without access to specific performance reports or audit findings for Lockheed Martin's prior CPFF work, a definitive assessment of their track record is challenging, but their continued success in winning such contracts suggests a generally satisfactory performance history.

How does the $5.3 million value for one year of 'All Other Support Services' compare to market rates or similar government contracts?

Benchmarking the $5.3 million value for one year of 'All Other Support Services' is challenging without a precise definition of these services. The category 'All Other Support Services' (NAICS 561990) is very broad and can include anything from facilities support to specialized administrative functions. For comparison, similar government contracts for support services can range widely in price depending on the scope, complexity, and location. For instance, a contract for basic administrative support might be significantly less expensive than one involving highly specialized technical or operational support. Given that this contract is with U.S. Special Operations Command (SOCOM), the services are likely specialized and critical, potentially justifying a higher price point. However, the cost-plus-fixed-fee structure means the final cost could exceed $5.3 million. A more accurate comparison would require detailed service descriptions and performance metrics to identify comparable contracts within SOCOM or other defense agencies.

What are the primary risks associated with a Cost-Plus-Fixed-Fee (CPFF) contract structure for these support services?

The primary risk associated with a Cost-Plus-Fixed-Fee (CPFF) contract structure is the potential for cost overruns. In a CPFF contract, the government agrees to pay the contractor for all allowable costs incurred, plus a predetermined fixed fee representing the contractor's profit. If the contractor's costs exceed initial estimates, the government bears the financial burden. This structure can incentivize contractors to incur higher costs, as their fee remains fixed regardless of the actual expenses. Effective oversight, rigorous cost tracking, and clear definition of allowable costs are crucial to mitigate this risk. Without strong government management and auditing, the total contract cost could significantly exceed the initial $5.3 million estimate. Another risk is that the fixed fee might not adequately incentivize efficiency if the contractor is not motivated to control costs.

How effective is 'full and open competition' likely to be in ensuring value for money for this specific contract?

Full and open competition is generally the most effective method for ensuring value for money, as it allows the widest possible range of qualified contractors to bid, fostering a competitive environment that drives down prices and encourages innovation. For this contract, the use of full and open competition suggests that the government sought to obtain the best possible offer by soliciting bids from all interested sources. The effectiveness in ensuring value for money will depend on several factors: the clarity and completeness of the solicitation's requirements, the number and quality of the bids received, and the evaluation criteria used by the agency. If the competition was robust, with multiple capable bidders submitting competitive proposals, it is highly likely that the government secured a fair price and good value. However, if the requirements were poorly defined or the evaluation process was flawed, the benefits of full and open competition might be diminished.

What are the implications of awarding this contract to Lockheed Martin, a large, established defense contractor, versus a smaller, specialized firm?

Awarding this contract to Lockheed Martin, a large and established defense contractor, has several implications. On the positive side, large contractors typically possess extensive resources, established infrastructure, deep technical expertise, and a proven track record in managing complex programs, which can reduce performance risk. They often have robust compliance and quality control systems. However, large contractors may also have higher overhead costs, potentially leading to less competitive pricing compared to smaller, more agile firms. There's also a potential concern that large contractors might prioritize larger, more lucrative contracts, potentially leading to less dedicated focus on smaller or less critical support roles. For taxpayers, the implication is a trade-off between perceived lower performance risk and potentially higher costs. Smaller firms might offer more specialized skills or more competitive pricing but could present higher performance or financial stability risks.

What historical spending patterns exist for 'All Other Support Services' (NAICS 561990) within the U.S. Special Operations Command?

Historical spending patterns for 'All Other Support Services' (NAICS 561990) within the U.S. Special Operations Command (SOCOM) indicate a consistent need for a diverse range of support functions. SOCOM, by its nature, requires specialized and often unique support services that may not fit neatly into more defined categories. Data from federal procurement databases typically shows that SOCOM awards numerous contracts under this broad NAICS code annually, reflecting the varied operational and administrative requirements of special operations forces. Spending levels can fluctuate based on strategic priorities, operational tempo, and specific mission needs. While the total annual spending under this category for SOCOM can amount to tens or hundreds of millions of dollars, individual contract values like the $5.3 million award to Lockheed Martin represent specific task orders or requirements within that broader spending landscape. Analyzing historical data would reveal trends in the types of services procured and the dominant contractors in this space.

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: $5,500,488

Exercised Options: $5,500,488

Current Obligation: $5,276,250

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