DoD's $27M Lockheed Martin contract for international logistics support shows limited competition

Contract Overview

Contract Amount: $26,995,366 ($27.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2019-12-01

End Date: 2024-03-30

Contract Duration: 1,581 days

Daily Burn Rate: $17.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: INTERNATIONAL CONTRACTOR LOGISTICS SUPPLY (ICLS). PROVIDE LOGISTIC SUPPORT FOR INTERNATIONAL CUSTOMER WITH VARYING DEGREES OF SERVICES TO INCLUDE REPAIR AND RETURN AND PERIODS OF PERFORMANCE UNDER ONE CONTRACT MECHANISM.

Place of Performance

Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $27.0 million to LOCKHEED MARTIN CORPORATION for work described as: INTERNATIONAL CONTRACTOR LOGISTICS SUPPLY (ICLS). PROVIDE LOGISTIC SUPPORT FOR INTERNATIONAL CUSTOMER WITH VARYING DEGREES OF SERVICES TO INCLUDE REPAIR AND RETURN AND PERIODS OF PERFORMANCE UNDER ONE CONTRACT MECHANISM. Key points: 1. Contract awarded to a single, large defense contractor, raising questions about competitive pricing. 2. The contract's broad scope for varying logistic services could lead to cost overruns if not managed tightly. 3. Performance periods extend over several years, increasing exposure to potential contractor performance issues. 4. The 'Guided Missile and Space Vehicle Manufacturing' NAICS code suggests a specialized, high-value sector. 5. Limited competition may hinder opportunities for smaller, innovative firms to enter the defense logistics market.

Value Assessment

Rating: fair

The contract value of approximately $27 million over its period of performance is substantial. However, without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The Cost Plus Fixed Fee (CPFF) structure means the government pays the contractor's costs plus a fixed fee, which can incentivize cost control but also carries risks if initial cost estimates are inaccurate or if scope creep occurs. Further analysis would be needed to compare the fixed fee percentage to industry standards for similar CPFF contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This approach bypasses the standard competitive process, which typically involves soliciting bids from multiple vendors. The lack of competition means there was no direct price comparison or opportunity for multiple companies to vie for the contract based on technical merit and cost. This can limit the government's ability to secure the best possible pricing and value.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing offers, the government lacks a benchmark to ensure the price reflects fair market value.

Public Impact

International customers requiring logistic support for guided missiles and space vehicles benefit from these services. The contract ensures the availability of repair and return services, crucial for maintaining operational readiness of sensitive equipment. Services are delivered under a single contract mechanism, streamlining support for international partners. The contract supports specialized technical roles within the defense industry, potentially impacting a skilled workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced value for taxpayer funds.
The sole-source nature limits opportunities for small businesses to participate in this significant defense contract.
Long performance periods increase the risk of contractor performance degradation or unforeseen cost increases.
The CPFF contract type requires diligent oversight to prevent cost overruns and ensure efficient resource utilization.

Positive Signals

Consolidates complex international logistics under a single contract, potentially improving management efficiency.
Addresses critical support needs for high-value defense assets, ensuring operational readiness for international allies.
Awarded to a major defense contractor with established capabilities in complex logistics.

Sector Analysis

The defense logistics sector is a critical component of national security, involving the procurement and management of complex supply chains for military equipment. This contract falls within the Guided Missile and Space Vehicle Manufacturing NAICS code, indicating a focus on highly specialized and technologically advanced defense systems. The market for such services is dominated by a few large, established defense contractors due to the high barriers to entry, including security clearances, specialized infrastructure, and extensive experience. Comparable spending benchmarks are difficult to establish without competitive data, but contracts of this nature typically represent significant investments in maintaining the readiness and operational capability of allied forces.

Small Business Impact

This contract was not competed and does not appear to have a small business set-aside component. The award to Lockheed Martin Corporation, a large prime contractor, suggests that small businesses are unlikely to be direct recipients of this prime contract. However, there may be subcontracting opportunities for small businesses within Lockheed Martin's supply chain, though the extent of this is not detailed in the provided data. The lack of a set-aside means that opportunities for small businesses to compete directly for this significant portion of defense spending are missed.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army and the Department of Defense. As a Cost Plus Fixed Fee contract, rigorous financial oversight is crucial to monitor costs and ensure the fixed fee remains appropriate. Accountability measures would involve performance reviews, milestone tracking, and adherence to contract terms. Transparency is often limited in sole-source defense contracts, but reporting requirements mandated by the contract and federal acquisition regulations would apply. Inspector General jurisdiction would likely extend to investigating fraud, waste, and abuse related to this contract.

Related Government Programs

Foreign Military Sales (FMS)
Defense Logistics Agency (DLA) Contracts
Missile Defense Agency (MDA) Programs
International Armaments Cooperation

Risk Flags

Sole-source award
Lack of competitive pricing
Potential for cost overruns (CPFF)
Limited small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.0 million to LOCKHEED MARTIN CORPORATION. INTERNATIONAL CONTRACTOR LOGISTICS SUPPLY (ICLS). PROVIDE LOGISTIC SUPPORT FOR INTERNATIONAL CUSTOMER WITH VARYING DEGREES OF SERVICES TO INCLUDE REPAIR AND RETURN AND PERIODS OF PERFORMANCE UNDER ONE CONTRACT MECHANISM.

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 Army).

What is the total obligated amount?

The obligated amount is $27.0 million.

What is the period of performance?

Start: 2019-12-01. End: 2024-03-30.

What is Lockheed Martin Corporation's track record with similar international logistics support contracts awarded by the Department of Defense?

Lockheed Martin Corporation is a major defense contractor with extensive experience in providing logistics, sustainment, and support services for a wide range of defense systems, including missiles and aircraft, both domestically and internationally. Their track record includes numerous contracts for foreign military sales and international cooperative programs. While specific details on past performance for identical 'repair and return' and 'varying degrees of services' under a single mechanism are not provided here, the company generally possesses the infrastructure, security clearances, and expertise required for such complex operations. Performance metrics and past issues, if any, would typically be available through government contract databases and performance assessment reports (e.g., Contractor Performance Assessment Reporting System - CPARS), which are not publicly accessible in full detail.

How does the pricing structure (Cost Plus Fixed Fee) for this contract compare to industry benchmarks for similar international logistics services?

The Cost Plus Fixed Fee (CPFF) pricing structure is common in defense contracts where the scope of work may be uncertain or evolve, or for services requiring specialized expertise. Under CPFF, the contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. Benchmarking this specific contract's value is challenging without knowing the details of the fixed fee percentage relative to the estimated costs and comparing it to similar CPFF contracts for international logistics. Industry standards for the fixed fee can range from 5% to 15% of the estimated cost, depending on the contract's complexity, risk, and the contractor's role. A thorough analysis would require access to the contract's fee details and comparison with aggregated data on similar contracts awarded by the DoD or other agencies.

What are the primary risks associated with a sole-source award for international defense logistics support, and how are they mitigated?

The primary risks of a sole-source award include potential overpricing due to lack of competition, reduced incentive for innovation, and a lack of market validation for the chosen contractor's proposed costs and services. For international defense logistics, risks also encompass geopolitical factors, differing regulatory environments, and the critical nature of timely and effective support for sensitive military assets. Mitigation strategies typically involve robust government oversight, detailed contract performance metrics, clear deliverables, and strong negotiation of terms and conditions. The government may also conduct independent cost analyses and market research to ensure fair pricing, even in a sole-source scenario. The fixed fee in a CPFF contract also provides some incentive for the contractor to control costs, as their profit is capped.

What is the historical spending pattern for international logistics support services provided by the Department of Defense, and how does this contract fit within that trend?

Historical spending on international logistics support by the Department of Defense is substantial and fluctuates based on global security needs, military operations, and foreign policy objectives. The DoD consistently allocates significant resources to sustain military equipment and provide operational support to allies through various mechanisms, including Foreign Military Sales (FMS) and direct support contracts. This $27 million contract, while significant for a single award, represents a portion of the broader DoD budget dedicated to international support. Trends often show increased spending during periods of heightened geopolitical tension or active military engagements abroad. Analyzing this contract's value in isolation is difficult without comparing it to the overall annual spending on similar international logistics services, which can run into billions of dollars annually across the entire department.

What are the implications of awarding this contract to Lockheed Martin Corporation, a large defense prime, for the broader small business defense contracting ecosystem?

Awarding a contract of this magnitude to a large prime contractor like Lockheed Martin Corporation has mixed implications for the small business defense contracting ecosystem. On one hand, it consolidates a significant service requirement under a single entity, potentially streamlining management for the government. However, it also means that small businesses are largely excluded from direct prime contract opportunities for this specific award. Their involvement would primarily be limited to subcontracting opportunities, which are often less lucrative and offer less direct relationship with the government client. This can limit the growth and development of small businesses in specialized areas like international defense logistics, potentially concentrating market share among larger firms and reducing overall competition in the long run.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W31P4Q19R0009

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 1701 W MARSHALL DR, GRAND PRAIRIE, TX, 75051

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: $27,614,087

Exercised Options: $26,995,366

Current Obligation: $26,995,366

Subaward Activity

Number of Subawards: 64

Total Subaward Amount: $6,398,899

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline