DoD awards $70.3M to Lockheed Martin for Saudi Arabia's sniper system spares, raising value-for-money questions

Contract Overview

Contract Amount: $70,313,163 ($70.3M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2016-11-30

End Date: 2022-05-31

Contract Duration: 2,008 days

Daily Burn Rate: $35.0K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: REPLENISHMENT SPARES (SNIPER ATP/LANTIRN/IRST SYSTEMS) FOR SAUDI ARABIA

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $70.3 million to LOCKHEED MARTIN CORPORATION for work described as: REPLENISHMENT SPARES (SNIPER ATP/LANTIRN/IRST SYSTEMS) FOR SAUDI ARABIA Key points: 1. Contract awarded to a single, large defense contractor suggests limited competition. 2. Firm Fixed Price contract type may offer cost certainty but could limit savings. 3. Long contract duration (2008-2022) spans significant technological and geopolitical shifts. 4. Focus on replenishment spares indicates ongoing operational needs for the specified systems. 5. Geographic location of awardee (Florida) may have implications for domestic job creation. 6. Lack of competition data necessitates deeper analysis of pricing and value. 7. The contract's value, while substantial, needs benchmarking against similar foreign military sales.

Value Assessment

Rating: questionable

The contract value of $70.3 million for replenishment spares for sniper systems is substantial. However, without clear competition data or a breakdown of specific parts and quantities, it is difficult to definitively assess value for money. The firm fixed-price nature provides cost certainty for the government, but it's crucial to understand if the pricing reflects competitive market rates or if there's potential for overpayment due to the lack of competitive bidding. Benchmarking against similar foreign military sales for comparable defense systems would be necessary for a more robust assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as 'NOT AVAILABLE FOR COMPETITION,' indicating a sole-source or limited competition scenario. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the sole provider of necessary parts or services. The lack of open competition means that the government did not solicit bids from multiple vendors, potentially limiting price discovery and negotiation leverage.

Taxpayer Impact: Sole-source awards can lead to higher prices for taxpayers as the government may not benefit from the cost reductions typically driven by competitive bidding processes.

Public Impact

The primary beneficiaries are the Saudi Arabian armed forces, receiving critical spare parts for their defense systems. This contract ensures the operational readiness and sustainment of advanced targeting and navigation systems. The contract supports the U.S. foreign military sales program, strengthening alliances and interoperability. Workforce implications are likely concentrated within Lockheed Martin's facilities, particularly in Florida, supporting skilled manufacturing and logistics jobs.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and suboptimal value for taxpayer funds.
The long duration of the contract (2008-2022) may mean that pricing and technology are outdated.
Sole-source nature limits transparency in the procurement process.
Dependence on a single contractor for critical spares can create supply chain risks.

Positive Signals

Firm Fixed Price contract provides cost certainty for the government.
Award to a major defense contractor like Lockheed Martin suggests access to established supply chains and expertise.
Ensures continued operational capability for a key U.S. ally's defense systems.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on military aircraft systems and components. The market for such specialized spares is often dominated by a few large prime contractors who developed the original systems. Spending in this area is driven by foreign military sales requirements and the need to maintain the operational readiness of sophisticated defense equipment. Comparable spending benchmarks would typically involve other foreign military sales of similar weapon systems or sustainment contracts for advanced aircraft.

Small Business Impact

The contract data indicates that small business participation was not a primary consideration, as the award was made directly to Lockheed Martin Corporation. There is no explicit mention of small business set-asides or subcontracting plans. This suggests that the primary focus was on fulfilling the specific needs of the foreign military sale, rather than leveraging small business capabilities. The impact on the small business ecosystem is likely minimal for this specific award, though large prime contractors do often engage small businesses in their broader supply chains.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, particularly within the Air Force. As a foreign military sale, oversight also involves coordination with the Defense Security Cooperation Agency. Accountability measures are embedded in the contract terms, including performance requirements and payment schedules. Transparency may be limited due to the sole-source nature and the classification often associated with defense systems, though contract award data is publicly available. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Foreign Military Sales (FMS)
Aircraft Component Manufacturing
Defense System Sustainment
Targeting and Navigation Systems
Lockheed Martin Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Long contract duration
Foreign Military Sale complexity

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $70.3 million to LOCKHEED MARTIN CORPORATION. REPLENISHMENT SPARES (SNIPER ATP/LANTIRN/IRST SYSTEMS) FOR SAUDI ARABIA

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 $70.3 million.

What is the period of performance?

Start: 2016-11-30. End: 2022-05-31.

What is the specific breakdown of spare parts included in this $70.3 million contract, and what are their unit costs?

The provided data does not include a specific breakdown of the spare parts or their individual unit costs. The contract value of $70.3 million covers 'REPLENISHMENT SPARES (SNIPER ATP/LANTIRN/IRST SYSTEMS) FOR SAUDI ARABIA.' Without access to the detailed contract line item numbers (CLINs) or the contract's statement of work, it is impossible to determine the exact quantity and type of spares. This level of detail is typically found in the contract award documentation, which is not fully available in the provided summary. Understanding the specific components is crucial for assessing value for money and identifying potential areas of high cost.

How does the pricing of these spares compare to similar systems procured domestically or for other allies?

Benchmarking the pricing of these spares against similar systems is challenging without specific part identification and quantity data. However, given the sole-source nature of the award to Lockheed Martin, there is a heightened risk that the pricing may not reflect competitive market rates. Foreign Military Sales (FMS) pricing can sometimes be higher than domestic procurement due to factors like program management surcharges, specific country requirements, and the lack of competitive bidding. A detailed analysis would require comparing the unit costs of specific comparable components procured by the U.S. military or other allies for similar targeting pods (like Sniper ATP, LANTIRN, or IRST systems) under competitive or transparently priced contracts.

What are the specific risks associated with procuring replenishment spares for defense systems under a sole-source contract?

Procuring replenishment spares under a sole-source contract presents several risks. Firstly, there is a significant risk of overpayment, as the government lacks the leverage that competition provides to negotiate lower prices. Secondly, it can lead to a lack of innovation or efficiency improvements from the supplier, as there is no competitive pressure to reduce costs or enhance product quality. Thirdly, it creates a dependency on a single supplier, which can lead to supply chain vulnerabilities, especially if the supplier faces production issues or decides to discontinue parts. Finally, the lack of transparency inherent in sole-source awards can obscure potential inefficiencies or inflated costs, making it harder for oversight bodies to ensure optimal use of funds.

What is Lockheed Martin's track record in fulfilling similar foreign military sales contracts for aircraft systems?

Lockheed Martin has an extensive and long-standing track record in fulfilling foreign military sales (FMS) contracts for a wide array of aircraft systems, including fighter jets, transport aircraft, and associated components. They are a primary contractor for many advanced U.S. military platforms, often including international sales. While their experience is vast, the performance on specific contracts can vary. Historically, large defense contractors like Lockheed Martin are generally capable of delivering complex systems and support, but they also face scrutiny regarding cost overruns, schedule delays, and pricing on sole-source or complex FMS deals. Specific performance metrics for this particular contract (replenishment spares for Saudi Arabia) would require deeper access to contract performance reports and FMS case files.

How has spending on replenishment spares for similar defense systems evolved over the contract's duration (2016-2022)?

The provided data summarizes a single award of $70.3 million made on November 30, 2016, with an end date of May 31, 2022. It does not provide historical spending data for replenishment spares for these specific systems (Sniper ATP/LANTIRN/IRST) prior to this award or detailed spending patterns within this contract's period of performance. To analyze spending evolution, one would need access to historical FMS case files for Saudi Arabia related to these systems, or broader DoD spending data on sustainment and spares for similar platforms. Factors influencing spending evolution could include changes in operational tempo, system upgrades, component obsolescence, and geopolitical shifts affecting defense needs.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 5600 W SAND LAKE RD # MP-265, ORLANDO, FL, 32819

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: $70,313,163

Exercised Options: $70,313,163

Current Obligation: $70,313,163

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline