DoD awards $130M to Lockheed Martin for guided missile production, with no competition

Contract Overview

Contract Amount: $129,898,739 ($129.9M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2007-01-31

End Date: 2012-10-31

Contract Duration: 2,100 days

Daily Burn Rate: $61.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LOT 6 PRODUCTION ORDER

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $129.9 million to LOCKHEED MARTIN CORPORATION for work described as: LOT 6 PRODUCTION ORDER Key points: 1. Contract awarded on a firm-fixed-price basis, indicating clear cost expectations. 2. The contract spans over five years, suggesting a long-term production need. 3. Awarded to a single, large defense contractor, raising questions about competition. 4. The contract is for guided missile and space vehicle manufacturing. 5. No small business set-aside was utilized for this procurement. 6. The contract was awarded as a 'Not Competed' action.

Value Assessment

Rating: questionable

The contract value of $129.9 million for guided missile production over five years requires careful benchmarking against similar sole-source procurements. Without competitive bids, it is difficult to definitively assess if the pricing represents optimal value for the government. The firm-fixed-price structure provides cost certainty but does not inherently guarantee the best possible price. Further analysis would involve comparing unit costs and overall program costs to industry benchmarks for comparable systems, which are not readily available in the provided data.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a 'Not Competed' justification, meaning there was no open competition among potential bidders. This approach is typically reserved for situations where only one source can fulfill the requirement, such as when a specific technology or proprietary system is involved. The lack of competition means that the government did not benefit from the price discovery and innovation that typically arises from a competitive bidding process.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure, as the contractor faced no direct incentive to offer the lowest possible price.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Air Force, which receives critical missile systems. The contract supports the production of guided missiles and space vehicles essential for national defense. The contract is geographically located in Florida, potentially impacting the local economy and workforce. This contract likely sustains jobs within Lockheed Martin's facilities in Florida, contributing to the aerospace and defense sector workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced innovation.
Sole-source awards can limit opportunities for emerging or smaller defense contractors.
The long duration of the contract may reduce flexibility in adapting to evolving technological needs.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to a major defense contractor suggests access to established production capabilities.
The contract addresses a specific need for guided missile and space vehicle manufacturing.

Sector Analysis

The guided missile and space vehicle manufacturing sector is a critical component of the broader aerospace and defense industry. This sector is characterized by high barriers to entry, significant research and development investment, and long production cycles. Major defense contractors like Lockheed Martin dominate this space, often holding sole-source or limited-competition contracts for specialized systems. Spending in this area is driven by national security requirements and geopolitical factors, with government contracts forming the bulk of the market.

Small Business Impact

This contract was not set aside for small businesses, nor does the data indicate any subcontracting requirements for small businesses. The award to a large prime contractor suggests that the primary manufacturing and assembly will be handled by the prime, potentially limiting direct opportunities for small businesses in this specific procurement. Further investigation into subcontracting plans would be needed to fully assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management and inspection processes. Given it's a sole-source award, oversight would focus on ensuring adherence to the firm-fixed-price terms, quality control, and timely delivery of the specified guided missiles and space vehicles. Transparency might be limited due to the non-competitive nature, but contract performance reviews and audits by the Defense Contract Management Agency (DCMA) would be standard oversight mechanisms.

Related Government Programs

Guided Missile Production Contracts
Space Vehicle Manufacturing Contracts
Department of Defense Procurement
Lockheed Martin Defense Contracts
Air Force Weapon Systems Procurement

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns without competitive pressure
Limited transparency due to non-competitive nature

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $129.9 million to LOCKHEED MARTIN CORPORATION. LOT 6 PRODUCTION ORDER

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 Air Force).

What is the total obligated amount?

The obligated amount is $129.9 million.

What is the period of performance?

Start: 2007-01-31. End: 2012-10-31.

What is the historical spending trend for guided missile and space vehicle manufacturing by the Department of the Air Force?

Analyzing historical spending for guided missile and space vehicle manufacturing by the Department of the Air Force requires access to detailed procurement databases over multiple fiscal years. Typically, such spending can fluctuate based on geopolitical events, modernization programs, and specific platform requirements. Without specific historical data for this contract line item (NAICS 336414) or for Lockheed Martin's specific missile programs, it's challenging to provide precise figures. However, it's generally understood that the DoD allocates substantial budgets to missile defense and offensive capabilities, with significant portions often going to established prime contractors like Lockheed Martin for long-term production runs and upgrades.

How does the firm-fixed-price (FFP) contract type impact cost control and risk for this specific procurement?

A firm-fixed-price (FFP) contract, as used in this $130 million award to Lockheed Martin, places the primary cost risk on the contractor. This means Lockheed Martin is obligated to complete the work for the agreed-upon price, regardless of their actual costs. For the government, this provides significant cost certainty and predictability, making budgeting easier. However, if the contractor significantly underestimates costs, they may face reduced profit margins or even losses. Conversely, if they accurately estimate or find efficiencies, their profit margin increases. The FFP structure incentivizes the contractor to manage costs efficiently, but the lack of competition in this sole-source award means the government may not have secured the lowest possible FFP.

What are the potential risks associated with awarding a large, multi-year contract on a sole-source basis?

Awarding a large, multi-year contract on a sole-source basis carries several risks. Firstly, the absence of competition can lead to inflated prices, as the contractor faces no pressure to offer the most competitive bid. Secondly, it can stifle innovation, as there's less incentive for the contractor to develop more cost-effective or technologically advanced solutions if their position is guaranteed. Thirdly, it can create vendor lock-in, making it difficult and costly to switch to alternative suppliers in the future. Finally, it raises concerns about accountability and performance, as the government has fewer options if the contractor underperforms or fails to meet expectations.

What is Lockheed Martin's track record in producing guided missiles and space vehicles for the U.S. military?

Lockheed Martin Corporation has a long and extensive track record as a major prime contractor for the U.S. military, including significant involvement in the production of guided missiles and space vehicles. They are known for developing and manufacturing a wide array of systems, such as the Patriot missile defense system, various air-to-ground missiles, and strategic missile systems. Their history includes numerous large-scale production contracts with the Department of Defense and its branches. While specific performance metrics for every contract are not publicly detailed, their continued selection for major programs indicates a perceived capability and reliability in delivering complex defense systems.

Are there any specific performance metrics or milestones associated with this contract that are publicly available?

The provided data does not include specific performance metrics, milestones, or delivery schedules associated with this particular contract (Lot 6 Production Order). Typically, such details are outlined in the contract's statement of work (SOW) and are considered sensitive program information. While the contract has a defined start and end date (January 31, 2007, to October 31, 2012), the specific deliverables, quality standards, and acceptance criteria are not publicly disclosed in this summary. Government contract awards often include clauses for performance monitoring, but the granular details are usually proprietary.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 5600 W SAND LAKE RD MP125, ORLANDO, FL, 90

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $129,898,739

Exercised Options: $129,898,739

Current Obligation: $129,898,739

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA868207D0117

IDV Type: IDC

Timeline