DoD's $25.5M contract for missile parts awarded to Lockheed Martin, raising questions about competition

Contract Overview

Contract Amount: $25,503,744 ($25.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2025-02-27

End Date: 2028-01-31

Contract Duration: 1,068 days

Daily Burn Rate: $23.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ITIK BUY 5

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $25.5 million to LOCKHEED MARTIN CORPORATION for work described as: ITIK BUY 5 Key points: 1. The contract's value of $25.5 million warrants scrutiny for its alignment with market rates for specialized aerospace components. 2. The sole-source nature of this award limits opportunities for competitive bidding, potentially impacting overall cost-effectiveness. 3. A lack of competition increases the risk of inflated pricing and reduced incentive for contractor efficiency. 4. The contract duration of approximately 3 years provides a substantial period for performance, requiring close monitoring. 5. This award falls within the defense sector, specifically supporting guided missile and space vehicle manufacturing. 6. The absence of small business set-aside provisions means opportunities for smaller firms in the supply chain may be limited.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without specific details on the missile parts procured. However, given the sole-source nature and the prime contractor's established position, there's a risk that the pricing may not reflect the most competitive market rates. Further analysis would require comparing the unit costs or total price against similar sole-source procurements for comparable components or against historical pricing for the same or similar items from Lockheed Martin.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Lockheed Martin Corporation, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. The lack of competition means that price discovery through market forces was not utilized, and the government did not benefit from the potential cost savings that can arise from a competitive environment.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure. Without multiple bids, there is less assurance that the price paid is the lowest achievable for these specialized missile parts.

Public Impact

The primary beneficiaries are the Department of Defense and potentially national security through the acquisition of critical missile components. The contract supports the manufacturing and supply of specialized parts for guided missiles and space vehicles. The geographic impact is primarily within Florida, where the contractor is located, potentially supporting local jobs and the aerospace industry in that state. This contract likely sustains jobs within Lockheed Martin's existing workforce and its supply chain partners in the aerospace and defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in the sole-source justification could obscure potential alternatives or better pricing.
Long contract duration requires sustained oversight to ensure performance and value.
Absence of small business participation may limit broader economic impact and innovation.

Positive Signals

Award to a major defense contractor like Lockheed Martin suggests access to specialized expertise and established supply chains.
Firm Fixed Price contract type shifts cost risk to the contractor, providing budget certainty.
Contract is for essential defense components, aligning with national security objectives.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on guided missile and space vehicle components. This is a highly specialized and often consolidated market dominated by a few large prime contractors. Spending in this area is driven by defense budgets and national security priorities. Comparable spending benchmarks would typically involve analyzing other sole-source or limited-competition contracts for similar high-value, technologically advanced defense systems.

Small Business Impact

This contract does not appear to include a small business set-aside. The sole-source nature of the award to a large prime contractor like Lockheed Martin suggests that subcontracting opportunities for small businesses may be limited or dependent on Lockheed Martin's internal subcontracting plans. Without specific set-aside goals, the direct impact on the small business ecosystem for this particular procurement is likely minimal, though large primes often engage small businesses in their broader supply chains.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Air Force contracting and program management offices. Accountability measures will be tied to the terms of the Firm Fixed Price contract, including delivery schedules and specifications. Transparency is limited due to the sole-source nature, but contract award data is publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Guided Missile Manufacturing
Space Vehicle Manufacturing
Defense Procurement
Aerospace Components
Lockheed Martin Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Limited small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.5 million to LOCKHEED MARTIN CORPORATION. ITIK BUY 5

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 $25.5 million.

What is the period of performance?

Start: 2025-02-27. End: 2028-01-31.

What is the specific justification for awarding this contract on a sole-source basis to Lockheed Martin?

The provided data indicates the contract was 'NOT COMPETED,' implying a sole-source justification was used. Common reasons for sole-source awards in defense include unique capabilities, proprietary technology, urgent needs where competition is impractical, or when only one responsible source can fulfill the requirement. Without access to the specific justification document (e.g., a Justification and Approval document), the precise rationale remains unknown. This lack of competition means taxpayers did not benefit from potential cost savings that could have been achieved through a competitive bidding process, and it raises questions about whether alternative solutions or suppliers were adequately considered.

How does the $25.5 million contract value compare to similar procurements for missile parts?

Direct comparison of the $25.5 million contract value is difficult without knowing the exact specifications and quantities of the 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment' being procured. However, for specialized, high-technology components within the defense sector, this value can range from moderate to significant depending on the complexity and criticality of the parts. Benchmarking would ideally involve analyzing historical data for similar sole-source awards to Lockheed Martin or other prime contractors for comparable components, or examining data from competitively awarded contracts for similar items to establish a market price range. The absence of competitive bidding makes it harder to ascertain if this price represents optimal value for money.

What are the primary risks associated with a sole-source contract of this magnitude?

The primary risks associated with a sole-source contract of this magnitude ($25.5 million) include potential overpricing due to the lack of competitive pressure, reduced incentive for the contractor to innovate or improve efficiency, and a lack of transparency in the procurement process. Taxpayers may end up paying more than necessary for the goods or services. Furthermore, reliance on a single source can create supply chain vulnerabilities if that contractor faces production issues or financial instability. Effective oversight and robust negotiation by the government are crucial to mitigate these risks.

What is Lockheed Martin's track record with the Department of Defense for similar contracts?

Lockheed Martin Corporation is a major defense contractor with an extensive history of contracts with the Department of Defense across various platforms, including missiles, aircraft, and space systems. Their track record generally involves delivering complex systems and components, often under large, multi-year contracts. While they possess significant expertise and capability, like any large contractor, they have also been subject to scrutiny regarding contract costs, performance, and schedule adherence on specific programs. For this particular contract, the sole-source nature suggests a pre-existing relationship or a specific capability that the DoD deemed essential and unique to Lockheed Martin.

What are the implications of the contract duration (approx. 3 years) for performance and oversight?

A contract duration of approximately 3 years (1068 days) for specialized missile parts provides a substantial timeframe for both the contractor to perform and the government to oversee. For Lockheed Martin, this duration allows for production planning, supply chain management, and consistent delivery. For the Department of the Air Force, it necessitates sustained program management and oversight to ensure adherence to specifications, quality standards, and delivery schedules. Regular performance reviews, milestone tracking, and quality assurance checks are critical throughout this period to ensure the contract remains on track and delivers the expected value. The Firm Fixed Price nature means cost overruns are the contractor's responsibility, but performance failures still require government intervention.

How does the absence of small business participation impact the broader defense industrial base?

The absence of a specific small business set-aside in this sole-source contract means that opportunities for small businesses to directly compete for this portion of work are non-existent. While Lockheed Martin, as a prime contractor, may engage small businesses as subcontractors, this is not mandated by the contract's structure. This can limit the growth and development of innovative small businesses within the defense industrial base, potentially concentrating work among larger firms. It also means that the economic benefits, such as job creation and technological advancement spurred by small business participation, may not be fully realized from this specific procurement.

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

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: $25,503,744

Exercised Options: $25,503,744

Current Obligation: $25,503,744

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