DoD awards $226M+ to Lockheed Martin for missile defense services, with 5+ years remaining

Contract Overview

Contract Amount: $226,249,511 ($226.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2013-12-09

End Date: 2027-09-30

Contract Duration: 5,043 days

Daily Burn Rate: $44.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: HIGHLY SPECIALIZED SERVICES IN SUPPORT OF

Place of Performance

Location: HUNTSVILLE, MADISON County, ALABAMA, 35805

State: Alabama Government Spending

Plain-Language Summary

Department of Defense obligated $226.2 million to LOCKHEED MARTIN CORPORATION for work described as: HIGHLY SPECIALIZED SERVICES IN SUPPORT OF Key points: 1. Contract value exceeds $226 million, indicating significant investment in specialized missile defense capabilities. 2. Sole-source award to Lockheed Martin suggests a lack of readily available alternatives or unique expertise required. 3. Long contract duration (over 13 years) implies a sustained need for these services and potential for long-term contractor reliance. 4. The contract is for guided missile and space vehicle manufacturing, a critical component of national defense. 5. Firm Fixed Price contract type aims to control costs, but the long duration may still present budget risks. 6. The contract is managed by the Missile Defense Agency, highlighting its strategic importance within the DoD. 7. The contract is located in Alabama, potentially impacting the regional economy and workforce.

Value Assessment

Rating: fair

The contract value of over $226 million is substantial, but without specific performance metrics or comparable contract data, a precise value-for-money assessment is challenging. The firm fixed price structure is a positive indicator for cost control. However, the extended duration and sole-source nature warrant scrutiny to ensure continued fair pricing and prevent potential cost overruns over the contract's lifespan. Benchmarking against similar specialized defense manufacturing contracts would be necessary for a more definitive evaluation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. While this can ensure access to specialized expertise, it limits price discovery and potentially leads to higher costs for the government compared to a competitive procurement.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings typically achieved through competitive bidding. The government relies on negotiation and oversight to ensure a fair price, which can be less effective than market competition.

Public Impact

The primary beneficiaries are the Department of Defense and national security, through the provision of advanced missile defense capabilities. Services delivered include the manufacturing of guided missiles and space vehicles, crucial for protecting against ballistic missile threats. The geographic impact is concentrated in Alabama, where the contractor is located, potentially supporting local jobs and the regional defense industrial base. Workforce implications include the employment of skilled engineers, technicians, and manufacturing personnel within Lockheed Martin's facilities in Alabama.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competition, potentially leading to higher prices and reduced innovation.
Long contract duration increases the risk of cost escalation and contractor lock-in.
Lack of transparency in the sole-source justification requires careful review to ensure necessity.
Potential for scope creep over the contract's extended period.
Dependence on a single contractor for critical defense components.

Positive Signals

Firm Fixed Price contract type helps to establish cost certainty.
Award to a major defense contractor like Lockheed Martin suggests access to established expertise and technology.
Contract supports a critical national security function (missile defense).
Long-term nature indicates a sustained and recognized need for these services.
Contract is managed by a specialized agency (Missile Defense Agency).

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a highly specialized and critical segment of the aerospace and defense industry. This sector is characterized by high barriers to entry due to complex technology, stringent quality requirements, and significant R&D investment. Spending in this area is driven by national security priorities and geopolitical threats. Comparable spending benchmarks would likely be found within other major defense procurement programs for advanced weapon systems.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the contractor is Lockheed Martin Corporation, a large prime contractor. While there may be subcontracting opportunities for small businesses within this large contract, the primary award is not directed towards them. The lack of a specific set-aside means direct opportunities for small businesses to compete for the prime contract are limited.

Oversight & Accountability

Oversight for this contract is likely managed by the Missile Defense Agency (MDA) within the Department of Defense. As a sole-source award, there is a heightened need for robust oversight to ensure fair pricing, adherence to specifications, and effective performance. Accountability measures would include contract milestones, performance reviews, and financial audits. Transparency may be limited due to the sole-source nature, but contract modifications and performance reports should be accessible through official channels.

Related Government Programs

Missile Defense Systems
Ballistic Missile Defense
Space Vehicle Manufacturing
Guided Missile Production
Department of Defense Procurement
Aerospace and Defense Contracts

Risk Flags

Sole Source Justification
Long Contract Duration
Potential for Cost Overruns
Limited Competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $226.2 million to LOCKHEED MARTIN CORPORATION. HIGHLY SPECIALIZED SERVICES IN SUPPORT OF

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Missile Defense Agency).

What is the total obligated amount?

The obligated amount is $226.2 million.

What is the period of performance?

Start: 2013-12-09. End: 2027-09-30.

What is Lockheed Martin's track record with the Missile Defense Agency and similar contracts?

Lockheed Martin Corporation is a major defense contractor with extensive experience in missile systems, aerospace, and defense technologies. They have a long-standing relationship with the Department of Defense, including the Missile Defense Agency (MDA). Their track record typically involves the development and production of complex weapon systems, including integrated air and missile defense capabilities. While specific performance data for this particular contract is not detailed here, Lockheed Martin is generally considered a capable provider of such specialized services. Their history includes numerous large-scale contracts for missile programs, requiring significant technical expertise and program management capabilities. Evaluating their past performance on similar sole-source or complex manufacturing contracts would provide further insight into their reliability and efficiency.

How does the $226 million contract value compare to similar missile defense manufacturing contracts?

The $226 million contract value for guided missile and space vehicle manufacturing is substantial, reflecting the complexity and strategic importance of the systems involved. Direct comparisons are challenging without access to proprietary data or a comprehensive database of all defense contracts. However, major missile defense programs, such as those for interceptors, radar systems, or command and control, often involve multi-billion dollar investments over their lifecycles. This $226 million award, especially given its extended duration, represents a significant portion of the MDA's budget allocated to specific manufacturing capabilities. It is likely in line with, or potentially on the lower end of, major sole-source procurements for specialized defense manufacturing components, given the high costs associated with research, development, and production in this sector.

What are the primary risks associated with this sole-source, long-duration contract?

The primary risks associated with this sole-source, long-duration contract include potential cost overruns, reduced incentive for innovation, and contractor lock-in. Since the contract is not competed, there's less pressure on Lockheed Martin to offer the most competitive pricing, potentially leading to higher costs for the government over time. The extended duration (over 13 years) increases the likelihood of unforeseen cost increases due to inflation, material price fluctuations, or changes in technical requirements. Furthermore, the government becomes heavily reliant on a single supplier, making it difficult and costly to switch providers if performance issues arise or if better alternatives emerge. There's also a risk of scope creep, where the contract's objectives may expand beyond the original intent without adequate price adjustments.

How effective is the Firm Fixed Price (FFP) contract type in managing costs for this specific contract?

The Firm Fixed Price (FFP) contract type is generally considered effective in controlling costs because it shifts the risk of cost overruns to the contractor. Lockheed Martin is obligated to deliver the specified goods or services for the agreed-upon price, regardless of their actual costs. This incentivizes the contractor to manage their expenses efficiently. However, for a long-duration contract like this one, the effectiveness of FFP can be diminished if not carefully structured. Initial pricing must accurately reflect anticipated costs over many years, which is challenging. If unforeseen economic factors (like high inflation) or technical challenges arise, the contractor may seek modifications or claim hardship, potentially negating the fixed-price benefit. Robust oversight is still crucial to ensure the contractor is not cutting corners on quality to maintain profitability.

What are the historical spending patterns for missile defense manufacturing by the DoD?

Historical spending patterns by the DoD on missile defense manufacturing have been substantial and generally increasing, driven by evolving threats and technological advancements. The Missile Defense Agency (MDA) consistently receives significant budget allocations for research, development, testing, and procurement of missile defense systems. This includes funding for various components like interceptors, sensors, command and control systems, and the manufacturing of these complex assets. Over the past two decades, spending has fluctuated based on program priorities and geopolitical events, but the overall trend reflects a sustained commitment to maintaining and enhancing missile defense capabilities. Contracts for manufacturing specific components, like guided missiles and space vehicles, represent a critical part of this overall investment, often awarded to large, specialized defense contractors.

What are the implications of this contract being awarded in Alabama?

The award of this significant contract to Lockheed Martin in Alabama has several implications. Economically, it likely supports jobs within the state, particularly in skilled manufacturing, engineering, and technical fields. It contributes to the state's defense industrial base, potentially attracting further investment and related businesses. For the local community, it signifies a stable source of high-value employment. From a national perspective, concentrating critical defense manufacturing in specific geographic locations can create supply chain vulnerabilities, but it also allows for specialized infrastructure and workforce development within those regions. The presence of such a large contract can also influence state and local government priorities regarding workforce training and infrastructure support.

Industry Classification

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

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HQ014713R0007

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 4800 BRADFORD DR NW, HUNTSVILLE, AL, 35805

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

Financial Breakdown

Contract Ceiling: $277,240,995

Exercised Options: $264,088,568

Current Obligation: $226,249,511

Actual Outlays: $2,031,634

Subaward Activity

Number of Subawards: 82

Total Subaward Amount: $17,908,633

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline