Lockheed Martin awarded $30.5M for Paveway II computer control and air foil groups by the Air Force

Contract Overview

Contract Amount: $30,456,965 ($30.5M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2020-09-03

End Date: 2022-09-02

Contract Duration: 729 days

Daily Burn Rate: $41.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PRODUCTION OF PAVEWAY II COMPUTER CONTROL GROUPR AND AIR FOIL GROUPS.

Place of Performance

Location: ARCHBALD, LACKAWANNA County, PENNSYLVANIA, 18403

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $30.5 million to LOCKHEED MARTIN CORP for work described as: PRODUCTION OF PAVEWAY II COMPUTER CONTROL GROUPR AND AIR FOIL GROUPS. Key points: 1. Contract value represents a significant investment in munitions manufacturing capabilities. 2. The award was made under full and open competition, suggesting a competitive bidding process. 3. The fixed-price contract type aims to control costs and provide predictability. 4. The duration of the contract (729 days) indicates a medium-term production requirement. 5. The specific product line (Paveway II) suggests a focus on established and potentially critical munitions components. 6. The contract is managed by the Department of the Air Force, aligning with defense procurement priorities.

Value Assessment

Rating: good

The contract value of $30.5 million for Paveway II components appears reasonable given the nature of defense manufacturing. Benchmarking against similar contracts for specialized munitions components is challenging without more granular data on specific sub-assemblies and their complexity. However, the firm fixed-price structure suggests that the contractor, Lockheed Martin, has assumed the primary cost risk. The award amount is within the expected range for production of such specialized military hardware.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely solicited and allowed to submit proposals. The presence of two bids suggests a degree of competition, which is generally favorable for price discovery and achieving a fair market price. The specific number of bidders (2) is on the lower side for full and open competition, which could warrant further investigation into potential barriers to entry or market concentration.

Taxpayer Impact: Full and open competition, even with a limited number of bidders, generally benefits taxpayers by encouraging competitive pricing and potentially leading to lower overall costs compared to sole-source or limited competition awards.

Public Impact

The primary beneficiaries are the U.S. Air Force and potentially other branches of the military requiring Paveway II munitions. The contract delivers essential components for Paveway II guidance kits, crucial for precision-guided munitions. The geographic impact is primarily centered around Lockheed Martin's production facilities, likely in Pennsylvania given the 'ST' code. Workforce implications include skilled manufacturing and engineering jobs at the contractor's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited number of bidders (2) in a full and open competition could indicate potential market concentration or barriers to entry for other qualified manufacturers.
Reliance on a single prime contractor for critical munitions components may pose supply chain risks if not adequately managed.
The specific nature of the components (computer control and air foil groups) requires specialized manufacturing expertise, potentially limiting the pool of capable subcontractors.

Positive Signals

Award under full and open competition suggests a structured procurement process designed to achieve best value.
The firm fixed-price contract type provides cost certainty for the government.
Lockheed Martin is a well-established defense contractor with a proven track record in aerospace and defense manufacturing.
The contract duration of 729 days allows for sustained production and delivery of critical components.

Sector Analysis

This contract falls within the defense manufacturing sector, specifically focusing on the production of components for precision-guided munitions. The market for such specialized components is characterized by high technical barriers to entry, stringent quality control requirements, and significant government oversight. Comparable spending benchmarks are difficult to ascertain without detailed cost breakdowns, but the overall defense budget for munitions and related systems runs into billions of dollars annually, with contracts for specific components representing a fraction of this total.

Small Business Impact

The data indicates that small business participation was not a primary focus for this specific contract, as the 'SB' (small business set-aside) flag is false. There is no explicit mention of subcontracting goals for small businesses within the provided data. This suggests that the prime contractor, Lockheed Martin, is expected to fulfill the contract requirements primarily through its own capabilities or through larger, established suppliers, rather than through a dedicated effort to engage the small business ecosystem for this particular award.

Oversight & Accountability

Oversight for this contract is likely managed by the Department of the Air Force's contracting and program management offices. Accountability measures are embedded within the firm fixed-price contract terms, requiring delivery of specified components meeting quality standards. Transparency is facilitated through contract award databases, though detailed cost breakdowns and performance metrics may be considered sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Paveway II Bomb Guidance Kits
Munitions Production
Air Force Weapon Systems
Defense Industrial Base
Aerospace Manufacturing

Risk Flags

Limited competition (2 bidders)
Potential supply chain concentration
Reliance on established defense contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.5 million to LOCKHEED MARTIN CORP. PRODUCTION OF PAVEWAY II COMPUTER CONTROL GROUPR AND AIR FOIL GROUPS.

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORP.

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 $30.5 million.

What is the period of performance?

Start: 2020-09-03. End: 2022-09-02.

What is Lockheed Martin's track record with similar Paveway II component contracts?

Lockheed Martin has a long-standing history as a prime contractor for various U.S. military programs, including munitions. While specific contract details for Paveway II component production prior to this award are not detailed in the provided data, the company's extensive experience in aerospace and defense manufacturing suggests a strong capability to produce complex systems. Their track record typically involves meeting stringent military specifications and delivery schedules. Further analysis would require examining historical contract awards to Lockheed Martin for Paveway systems or comparable guidance components to assess consistency in performance, pricing, and adherence to contract terms.

How does the $30.5 million award compare to historical spending on Paveway II components?

Direct historical spending comparisons for this specific contract are limited by the provided data. The $30.5 million award covers a 729-day period for production of Paveway II computer control and air foil groups. To establish a benchmark, one would need to analyze prior contracts awarded for the same or similar components, considering factors like inflation, technological updates, and changes in production volume. Without access to a comprehensive database of historical Paveway II component procurements, it is difficult to definitively state whether this award represents an increase, decrease, or stable level of spending. However, the firm fixed-price nature suggests an effort to contain costs within this award.

What are the primary risks associated with this contract for the government?

The primary risks for the government in this contract include potential supply chain disruptions if Lockheed Martin faces manufacturing or material sourcing issues, and the risk of cost overruns if the firm fixed-price contract does not adequately account for unforeseen production challenges. Another risk is the potential for obsolescence if the Paveway II system is superseded by newer technologies during the contract's performance period. Furthermore, the limited number of bidders (two) in a full and open competition could indicate a concentration of manufacturing capability, potentially limiting future competitive options and increasing reliance on a few key suppliers.

How effective is the firm fixed-price contract type in managing costs for this specific procurement?

The firm fixed-price (FFP) contract type is generally considered effective in managing costs for procurements where the scope of work is well-defined and the risks of production are understood. For the Paveway II components, where the design and manufacturing processes are likely established, FFP places the primary cost risk on the contractor, Lockheed Martin. This incentivizes the contractor to control its own costs efficiently to maximize profit. The government benefits from cost certainty, as the final price is fixed. However, if unforeseen technical difficulties or material cost increases arise, the contractor may seek to mitigate losses by reducing quality, which necessitates robust government oversight and quality assurance measures.

What is the significance of the 'Ammunition (except Small Arms) Manufacturing' North American Industry Classification System (NAICS) code?

The NAICS code '332993 - Ammunition (except Small Arms) Manufacturing' signifies that the primary business activity of the contractor, or the specific facility involved in this contract, is the production of ammunition and related components, excluding small arms ammunition. This code places the contract within a specialized segment of the defense industrial base focused on ordnance. It indicates that the work involves manufacturing processes, materials, and quality control standards specific to this industry, such as explosives handling, precision machining, and adherence to strict military specifications for reliability and safety.

What does the 'PA' System for Award Management (SAM) State Code indicate?

The 'PA' System for Award Management (SAM) State Code indicates that the primary place of performance or the contractor's registration location associated with this contract is in Pennsylvania. This suggests that the manufacturing or delivery of the Paveway II components will likely occur within Pennsylvania. This information is relevant for understanding the geographic distribution of federal spending, potential economic impacts on the state, and for identifying regional industrial capabilities within the defense sector.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 459 KENNEDY DR, ARCHBALD, PA, 18403

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

Financial Breakdown

Contract Ceiling: $30,456,965

Exercised Options: $30,456,965

Current Obligation: $30,456,965

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA821311D0007

IDV Type: IDC

Timeline