DoD's $19.77M medical warehouse services contract awarded to Lockheed Martin, spanning 4 years

Contract Overview

Contract Amount: $19,769,900 ($19.8M)

Contractor: Lockheed Martin Services, LLC

Awarding Agency: Department of Defense

Start Date: 2008-05-16

End Date: 2012-05-15

Contract Duration: 1,460 days

Daily Burn Rate: $13.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: MEDICAL WAREHOUSE SERVICES

Plain-Language Summary

Department of Defense obligated $19.8 million to LOCKHEED MARTIN SERVICES, LLC for work described as: MEDICAL WAREHOUSE SERVICES Key points: 1. The contract's value appears reasonable given the scope of medical warehouse services required by the Department of the Army. 2. Full and open competition suggests a healthy market for these services, potentially leading to competitive pricing. 3. The firm-fixed-price structure shifts performance risk to the contractor, Lockheed Martin. 4. This contract supports critical logistical functions for the Department of Defense's medical supply chain. 5. The duration of the contract allows for stable service provision and potential for economies of scale. 6. The absence of small business set-asides warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: good

The $19.77 million contract for medical warehouse services is a significant investment. While direct comparisons are difficult without more granular data on the specific services and locations covered, the firm-fixed-price nature of the award suggests a defined cost structure. Benchmarking against similar large-scale logistics and warehousing contracts within the federal government would provide a clearer picture of value for money. The award to a large, established contractor like Lockheed Martin indicates a focus on reliability and capability, which can sometimes come at a premium.

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 bids. The presence of multiple bidders (3 indicated) suggests a competitive environment for these specialized services. A competitive process generally leads to better price discovery and ensures that the government receives offers from a range of qualified providers, fostering innovation and efficiency.

Taxpayer Impact: Taxpayers benefit from full and open competition through potentially lower prices and a wider selection of qualified contractors, ensuring that public funds are used efficiently.

Public Impact

Military personnel and healthcare providers benefit from the reliable supply of medical materiel. The contract ensures the efficient storage, management, and distribution of essential medical supplies. Geographic impact is likely concentrated around military installations served by the contracted warehouse facilities. Workforce implications include employment opportunities within Lockheed Martin's logistics and warehousing operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of explicit small business participation could limit opportunities for smaller, specialized firms.
The scale of the contract may present barriers to entry for new or smaller competitors in future solicitations.

Positive Signals

Award to a large, experienced contractor like Lockheed Martin suggests a high likelihood of successful performance.
Firm-fixed-price contract aligns incentives for efficient service delivery.
Long-term contract provides stability for critical medical supply chain operations.

Sector Analysis

The federal government's spending on logistics and facilities support services is substantial, encompassing a wide range of activities from warehousing to transportation. This contract falls within the broader 'Facilities Support Services' NAICS code (561210), which includes establishments primarily engaged in operating and maintaining buildings and other facilities. The market for these services is competitive, with both large defense contractors and specialized logistics firms vying for government contracts. Comparable spending benchmarks would typically be found within the Department of Defense's overall logistics and supply chain management expenditures.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, and there is no explicit mention of small business subcontracting goals. This suggests that the primary award went to a large business. Further analysis would be needed to determine if Lockheed Martin has established subcontracting plans with small businesses to fulfill parts of this contract, which would be crucial for fostering a diverse small business ecosystem within federal contracting.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and the relevant program management office within the Department of the Army. Performance monitoring, quality assurance, and compliance with contract terms are standard oversight mechanisms. Transparency is generally facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Medical Materiel Management
Defense Logistics Agency (DLA) Services
Military Health System Logistics
Federal Supply Chain Management
Facilities Operations and Maintenance

Risk Flags

Potential for supply chain disruption
Contractor performance risk
Cybersecurity vulnerabilities
Regulatory compliance for medical supplies
Limited small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.8 million to LOCKHEED MARTIN SERVICES, LLC. MEDICAL WAREHOUSE SERVICES

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN SERVICES, LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $19.8 million.

What is the period of performance?

Start: 2008-05-16. End: 2012-05-15.

What is Lockheed Martin's track record with similar federal logistics and warehousing contracts?

Lockheed Martin Services, LLC, as a subsidiary of Lockheed Martin Corporation, has a long and extensive history of performing complex logistics, supply chain management, and facilities support services for the U.S. military and other government agencies. They are a major defense contractor with significant experience in managing large-scale operations, including warehousing, inventory control, and distribution of critical supplies. Their track record typically involves managing vast inventories, ensuring timely delivery, and adhering to stringent regulatory and security requirements. While specific performance metrics for this particular contract are not detailed here, Lockheed Martin's overall reputation is built on successfully executing such demanding contracts, often involving high-value and sensitive materials like medical supplies.

How does the per-unit cost of this contract compare to industry benchmarks for medical warehouse services?

Determining a precise per-unit cost benchmark for this contract is challenging without more granular data on the specific services rendered (e.g., cost per cubic foot stored, cost per item handled, cost per delivery). The contract is a firm-fixed-price award for comprehensive medical warehouse services, encompassing a broad scope. However, given the scale and the involvement of a major contractor like Lockheed Martin, the per-unit costs are likely to be within a range expected for large-scale, mission-critical federal logistics operations. Industry benchmarks for warehousing and logistics can vary significantly based on location, type of goods, and service level agreements. A detailed cost-benefit analysis comparing this contract's implied unit costs against market rates for similar government or commercial contracts would be necessary for a definitive value assessment.

What are the primary risks associated with this medical warehouse services contract?

Key risks for this contract include potential disruptions to the medical supply chain due to unforeseen events (e.g., natural disasters, pandemics affecting operations), contractor performance issues leading to stockouts or delays in critical medical supplies, and cybersecurity threats to the inventory management systems. There's also a risk of cost overruns if the firm-fixed-price contract doesn't adequately account for unforeseen operational complexities or inflation over its duration, although the risk is primarily on the contractor. Ensuring compliance with strict medical storage regulations (e.g., temperature control, handling of sensitive materials) and maintaining the integrity of sensitive medical data are also critical risk areas. The reliance on a single large contractor could also pose a risk if their operational capacity is stretched thin by other commitments.

How effective has this contract been in ensuring the availability of medical supplies for the Department of the Army?

The effectiveness of this contract in ensuring the availability of medical supplies for the Department of the Army is not directly quantifiable from the provided data. However, the contract's objective is to provide essential logistical support for the medical supply chain, which is critical for military readiness and healthcare operations. Its duration and the award to a major contractor suggest an intent to ensure consistent and reliable service. Effectiveness would typically be measured by metrics such as fill rates for medical supply requisitions, on-time delivery performance, inventory accuracy, and the absence of critical stockouts. Without access to performance reports or specific outcome data, a definitive assessment of effectiveness cannot be made, but the contract's existence points to a recognized need for robust warehousing support.

What are the historical spending patterns for medical warehouse services by the Department of the Army?

Historical spending patterns for medical warehouse services by the Department of the Army, prior to or following this specific $19.77 million contract (2008-2012), would likely show a consistent and significant investment in logistics and supply chain management. The Army, like other branches of the DoD, relies heavily on contracted services for the efficient storage and distribution of vast quantities of medical supplies to support global operations and domestic healthcare facilities. Spending in this area is often influenced by operational tempo, force structure, and evolving healthcare needs. Analyzing multi-year spending trends would reveal whether this contract represented a typical investment, an increase, or a decrease in resource allocation for these critical support functions, potentially indicating shifts in strategic priorities or contracting approaches.

What is the potential impact of this contract on the broader defense logistics market?

This contract, awarded to Lockheed Martin Services, LLC for $19.77 million, contributes to the significant overall spending within the defense logistics and facilities support sector. Its award through full and open competition indicates a healthy market where large contractors can compete for substantial service contracts. The existence of such contracts shapes the market by demonstrating the types of services required and the scale of operations expected. It also influences the competitive landscape, potentially encouraging other large firms to develop similar capabilities or partnerships. Furthermore, the contract's duration and scope can set precedents for future solicitations, influencing pricing strategies and service level expectations across the defense logistics industry.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Facilities Support Services › Facilities Support Services

Product/Service Code: UTILITIES AND HOUSEKEEPING › HOUSEKEEPING SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W52P1J08R0010

Offers Received: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 700 N FREDERICK AVE, GAITHERSBURG, MD, 90

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $19,769,900

Exercised Options: $19,769,900

Current Obligation: $19,769,900

Contract Characteristics

Cost or Pricing Data: NO

Timeline