DoD awards $42.9M for missile components, with limited competition and a focus on Florida production

Contract Overview

Contract Amount: $42,886,153 ($42.9M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2023-06-30

End Date: 2027-03-31

Contract Duration: 1,370 days

Daily Burn Rate: $31.3K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: JOINT AIR-TO-SURFACE STANDOFF MISSILE ITIK BUY 4/LI-ION PROD 2/NIMH PROD 3

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $42.9 million to LOCKHEED MARTIN CORPORATION for work described as: JOINT AIR-TO-SURFACE STANDOFF MISSILE ITIK BUY 4/LI-ION PROD 2/NIMH PROD 3 Key points: 1. Contract awarded for critical missile components, indicating ongoing defense needs. 2. Sole-source award suggests potential lack of market alternatives or strategic sourcing. 3. Production concentrated in Florida, potentially impacting regional economic development and supply chains. 4. Firm-fixed-price contract shifts risk to the contractor, aiming for cost certainty. 5. Long-term contract duration (over 3 years) suggests sustained demand for these components. 6. No small business set-aside indicates the primary contractor is not a small business, and subcontracting opportunities are not mandated by this award.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging without comparable sole-source awards for these exact missile components. However, the firm-fixed-price structure aims to provide cost certainty. The total value of $42.9 million over approximately three years suggests a significant investment in specialized defense manufacturing. Further analysis would require access to historical pricing data for similar components or detailed cost breakdowns from the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, Lockheed Martin Corporation, was solicited. This approach is typically used when a unique capability or product is required, or when competition is not feasible due to proprietary technology or limited suppliers. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs than if multiple bidders had competed.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive bidding. Without competing offers, there is less pressure on the contractor to offer the lowest possible price.

Public Impact

The U.S. Department of the Air Force benefits from the acquisition of essential missile components. This contract supports the production of Joint Air-to-Surface Standoff Missiles, enhancing national defense capabilities. The primary impact is concentrated in Florida, where the production is slated to occur, potentially creating or sustaining jobs in the aerospace and defense manufacturing sector. The defense industrial base benefits from sustained demand for specialized manufacturing capabilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs for taxpayers.
Concentration of production in one state could create single points of failure in the supply chain.
Lack of transparency in sole-source justification requires careful review to ensure necessity.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Long-term award signals stable demand, supporting contractor investment and workforce stability.
Award to a major defense contractor like Lockheed Martin suggests access to established expertise and production capacity.

Sector Analysis

This contract falls within the 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' sector. This is a highly specialized segment of the aerospace and defense industry, characterized by high barriers to entry, significant R&D investment, and stringent quality control requirements. Spending in this sector is heavily influenced by government defense budgets and geopolitical factors. Comparable spending benchmarks are difficult to establish due to the proprietary nature of many defense components, but this award represents a significant investment in a critical defense capability.

Small Business Impact

This contract was not set aside for small businesses, and the primary awardee is Lockheed Martin Corporation, a large defense contractor. There is no explicit mention of subcontracting requirements for small businesses within the provided data. This means that opportunities for small businesses to participate in this specific contract are likely limited to those that may be part of Lockheed Martin's broader supply chain, rather than direct set-aside awards.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. The firm-fixed-price nature of the contract provides a degree of cost control. Transparency regarding the justification for the sole-source award would be crucial for accountability. Inspector General investigations could be initiated if any fraud, waste, or abuse is suspected.

Related Government Programs

Joint Air-to-Surface Standoff Missile (JASSM) Program
Guided Missile Manufacturing
Aerospace Defense Contracts
Lockheed Martin Defense Contracts
Department of Defense Procurement

Risk Flags

Sole-source justification requires scrutiny.
Potential for cost overruns due to lack of competition.
Supply chain concentration risk.
Long-term contract duration requires ongoing performance monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $42.9 million to LOCKHEED MARTIN CORPORATION. JOINT AIR-TO-SURFACE STANDOFF MISSILE ITIK BUY 4/LI-ION PROD 2/NIMH PROD 3

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 $42.9 million.

What is the period of performance?

Start: 2023-06-30. End: 2027-03-31.

What is the historical spending trend for this specific type of missile component with Lockheed Martin?

Analyzing historical spending trends for this specific component requires access to detailed procurement databases beyond the provided summary data. Typically, one would look at previous delivery orders or contracts awarded to Lockheed Martin for the 'JOINT AIR-TO-SURFACE STANDOFF MISSILE ITIK BUY 4/LI-ION PROD 2/NIMH PROD 3' or similar designations. A review of past contract awards would reveal the volume, frequency, and total value of components procured over time. Significant year-over-year increases or decreases could indicate shifts in production rates, program maturity, or changes in demand. Without this granular historical data, it's difficult to assess if the current $42.9 million award represents a typical, increased, or decreased level of investment for these components.

How does the per-unit cost of these components compare to industry benchmarks or previous contracts?

Determining the per-unit cost and comparing it to benchmarks is challenging with the provided data, as 'per-unit cost' is not explicitly stated, nor is the quantity of units being procured. The total award is $42.9 million. To establish a per-unit cost, we would need to know the exact number of 'LI-ION PROD 2' and 'NIMH PROD 3' units being purchased. Once a per-unit cost is calculated (Total Award / Total Units), it could be benchmarked against publicly available data for similar missile components, if such data exists and is not classified. Given the sole-source nature and the specialized defense application, direct comparisons might be difficult, and the government relies on negotiation and cost analysis to ensure fair pricing, though competitive benchmarking is absent.

What are the specific risks associated with a sole-source award for critical defense components?

Sole-source awards for critical defense components carry several inherent risks. Firstly, the lack of competition can lead to inflated prices, as the contractor faces no market pressure to reduce costs. Secondly, it can foster complacency in the contractor, potentially leading to reduced innovation or less rigorous quality control over time, as there's no competitor to outperform. Thirdly, it creates a dependency on a single supplier, making the supply chain vulnerable to disruptions caused by the contractor's financial instability, production issues, or geopolitical factors affecting that specific company. Finally, it reduces transparency and makes it harder for the government to independently verify the fairness of the price and the necessity of the sole-source justification.

What is Lockheed Martin's track record with producing components for the Joint Air-to-Surface Standoff Missile?

Lockheed Martin Corporation is the prime contractor for the Joint Air-to-Surface Standoff Missile (JASSM) family of weapons. Their track record in producing these missiles and their components is extensive and spans many years. They are responsible for the design, development, integration, and production of the JASSM, AGM-158B JASSM-ER (Extended Range), and the Long Range Anti-Ship Missile (LRASM). Historically, the JASSM program has faced challenges related to cost and schedule, as is common with complex defense systems. However, Lockheed Martin has consistently delivered these munitions to the U.S. Air Force and Navy, indicating a capability to meet production requirements, albeit sometimes with program adjustments. Their long-standing role suggests a deep understanding of the system's requirements and production processes.

How does this contract align with the Department of Defense's overall spending on missile systems?

This $42.9 million contract for missile components aligns with the Department of Defense's (DoD) consistent and substantial investment in missile systems, which are a critical element of national defense strategy. The DoD's budget typically allocates tens of billions of dollars annually towards research, development, procurement, and sustainment of various missile platforms, including air-to-surface, surface-to-air, and ballistic missiles. Awards like this, even for specific components, contribute to the overall readiness and modernization of the U.S. arsenal. The specific focus on the JASSM program indicates continued prioritization of standoff strike capabilities, which are essential for engaging targets from protected ranges.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA868223RB014

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: $43,009,987

Exercised Options: $42,886,153

Current Obligation: $42,886,153

Subaward Activity

Number of Subawards: 36

Total Subaward Amount: $18,968,044

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA868222DB001

IDV Type: IDC

Timeline