DoD's $48.9M contract for CASS logistics awarded to Lockheed Martin, highlighting a firm-fixed-price structure

Contract Overview

Contract Amount: $48,912,325 ($48.9M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2024-04-01

End Date: 2025-03-31

Contract Duration: 364 days

Daily Burn Rate: $134.4K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CONSOLIDATED AUTOMATED SUPPORT SYSTEM PERFORMANCE-BASED LOGISTICS

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32825

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $48.9 million to LOCKHEED MARTIN CORPORATION for work described as: CONSOLIDATED AUTOMATED SUPPORT SYSTEM PERFORMANCE-BASED LOGISTICS Key points: 1. The contract utilizes a firm-fixed-price model, which shifts performance risk to the contractor. 2. Awarded under full and open competition, suggesting a competitive bidding process. 3. The contract duration is one year, indicating a short-term operational need. 4. The primary contractor, Lockheed Martin, is a major defense industry player. 5. The contract is for performance-based logistics, focusing on outcomes rather than specific tasks. 6. The North American Industry Classification System (NAICS) code 334519 points to specialized manufacturing. 7. The contract is a delivery order, suggesting it's part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract.

Value Assessment

Rating: good

Benchmarking the value of this specific delivery order is challenging without knowing the parent IDIQ contract's scope and pricing. However, the firm-fixed-price structure is generally favorable for the government as it caps costs. The value of $48.9 million for a year of performance-based logistics for a complex system like CASS appears within a reasonable range for a major defense contractor, assuming the scope of services is comprehensive. Further analysis would require comparing the unit costs of services or the overall price against similar logistics support contracts for comparable systems.

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 a bid. This typically leads to a more robust price discovery process and potentially better pricing for the government. The number of bidders is not specified, but the open competition suggests that multiple companies likely vied for this award, fostering a competitive environment.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down prices through market forces and ensuring the government receives the best value available. It reduces the risk of inflated costs associated with sole-source or limited competition awards.

Public Impact

The Department of the Navy benefits from the reliable performance and maintenance of the Consolidated Automated Support System (CASS). This contract ensures the operational readiness of critical systems used by naval aviation. The services delivered are performance-based logistics, focusing on maintaining system availability and performance. The geographic impact is primarily within Florida, where the contract is being performed. The contract supports the technical workforce involved in maintaining and supporting advanced aviation systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if the scope of performance-based logistics is not tightly defined and managed.
Dependence on a single large contractor (Lockheed Martin) for critical system support.
Risk of vendor lock-in if the CASS system is highly proprietary and requires specialized support.
The effectiveness of performance metrics in truly driving desired outcomes needs continuous monitoring.

Positive Signals

Firm-fixed-price contract structure transfers cost risk to the contractor.
Performance-based logistics incentivizes the contractor to focus on outcomes and system availability.
Awarded through full and open competition, suggesting competitive pricing and value.
Lockheed Martin's established presence in defense contracting implies experience and capability.
The contract duration of one year allows for periodic reassessment of needs and performance.

Sector Analysis

The defense logistics and support sector is a significant component of the overall defense industrial base. Contracts like this, focused on performance-based logistics for complex electronic systems, are crucial for maintaining the operational readiness of military assets. The market is dominated by large defense contractors with specialized capabilities. Spending in this area is driven by the need to support aging platforms and new technological advancements, ensuring systems remain functional and effective throughout their lifecycle. Comparable spending benchmarks would involve analyzing other performance-based logistics contracts for similar avionics or electronic warfare systems across different military branches.

Small Business Impact

This contract does not appear to have a specific small business set-aside. Given the prime contractor is Lockheed Martin, a large corporation, the potential for small business participation would likely be through subcontracting opportunities. The extent to which small businesses are involved will depend on Lockheed Martin's subcontracting plan and the specific needs for specialized components or services. Without explicit set-aside provisions, the direct impact on the small business ecosystem is limited unless significant subcontracting occurs.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy contracting officers and program managers. Performance-based logistics contracts typically have defined metrics and key performance indicators (KPIs) that are monitored to ensure the contractor is meeting its obligations. Transparency is generally maintained through contract reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse related to the contract.

Related Government Programs

Defense Logistics Agency (DLA) Support Contracts
Naval Air Systems Command (NAVAIR) Maintenance Contracts
Avionics Support Services
Aerospace Logistics and Sustainment
Weapon System Support Contracts

Risk Flags

Potential for scope creep if performance metrics are not clearly defined.
Contractor performance risk if unforeseen technical issues arise.
Dependence on a single large prime contractor.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $48.9 million to LOCKHEED MARTIN CORPORATION. CONSOLIDATED AUTOMATED SUPPORT SYSTEM PERFORMANCE-BASED LOGISTICS

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $48.9 million.

What is the period of performance?

Start: 2024-04-01. End: 2025-03-31.

What is the historical spending pattern for the Consolidated Automated Support System (CASS) logistics support?

Analyzing historical spending for CASS logistics support requires access to historical contract data beyond this single delivery order. Typically, such systems have multi-year support contracts. If this $48.9 million represents a significant portion of annual spending, it suggests a substantial investment in maintaining CASS. Past contracts might reveal trends in cost escalation, changes in contract type (e.g., from cost-plus to fixed-price), or shifts in contractor incumbency. Understanding the total lifecycle cost of CASS, including previous support expenditures, would provide a clearer picture of the long-term financial commitment and whether current spending aligns with historical trends or represents an increase/decrease due to system upgrades, operational tempo, or competitive pressures.

How does the performance-based nature of this contract influence contractor accountability and government oversight?

A performance-based logistics (PBL) contract, like this one, shifts the focus from the contractor performing specific tasks to achieving defined outcomes, such as system availability, reliability, or response times. This inherently enhances contractor accountability because payment is tied to meeting these performance metrics. The government's oversight role then becomes centered on monitoring these KPIs, validating performance data, and ensuring the metrics accurately reflect mission needs. This requires robust data collection and analysis capabilities within the government. While PBL can drive efficiency and effectiveness, it necessitates clear, measurable, achievable, relevant, and time-bound (SMART) objectives and a strong government team capable of managing the performance-based relationship.

What is Lockheed Martin's track record with similar performance-based logistics contracts in the defense sector?

Lockheed Martin has an extensive track record with performance-based logistics (PBL) contracts across various defense platforms. They are a major provider of sustainment and logistics services for numerous aircraft, missile, and other defense systems. Their experience often involves managing complex supply chains, maintenance operations, and ensuring high levels of system readiness for the Department of Defense and international allies. While specific details of their performance on past PBL contracts vary, their long-standing presence and significant market share indicate a high degree of capability and familiarity with the PBL model. Government agencies often evaluate a contractor's past performance on similar contracts as a key factor in award decisions, suggesting Lockheed Martin's history in this area is a positive signal.

What are the potential risks associated with the firm-fixed-price (FFP) contract type for this logistics support?

The primary risk associated with a firm-fixed-price (FFP) contract, especially for performance-based logistics (PBL), is that the contractor may cut corners on service quality or scope to maximize profit if the initial price is set too low or if unforeseen challenges arise. While FFP shifts cost risk to the contractor, it places a greater burden on the government to meticulously define the required performance standards and outcomes. If the SOW (Statement of Work) or performance metrics are ambiguous or incomplete, the contractor might fulfill the contract terms technically but not meet the government's underlying operational needs. Effective oversight and robust performance metrics are crucial to mitigate these risks and ensure the government receives the intended value.

How does the NAICS code 334519 relate to the services provided under this contract?

The North American Industry Classification System (NAICS) code 334519, 'Other Measuring and Controlling Device Manufacturing,' might seem unusual for a logistics support contract. However, it likely relates to the manufacturing or specialized support of the CASS (Consolidated Automated Support System) itself, which is a complex piece of test equipment used for avionics diagnostics. Performance-based logistics for such a system could encompass not only maintenance and repair but also the management of spare parts, calibration, and potentially minor modifications or upgrades to the control devices within the CASS. The contractor may be responsible for ensuring the manufacturing-related aspects of the system's supportability, including the availability of critical components or the maintenance of manufacturing-related technical data.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Other Measuring and Controlling Device Manufacturing

Product/Service Code: INSTRUMENTS AND LABORATORY EQPT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N6833522R0140

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 100 GLOBAL INNOVATION CIR, ORLANDO, FL, 32825

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: $48,912,325

Exercised Options: $48,912,325

Current Obligation: $48,912,325

Subaward Activity

Number of Subawards: 4

Total Subaward Amount: $1,535,572

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N6833524D0010

IDV Type: IDC

Timeline