DoD awards $20.4M for THAAD transporters, a sole-source acquisition for Lockheed Martin

Contract Overview

Contract Amount: $20,362,216 ($20.4M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2024-10-28

End Date: 2026-11-15

Contract Duration: 748 days

Daily Burn Rate: $27.2K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THIS IS A TASK ORDER FOR THE ACQUISITION OF THREE THAAD TRANSPORTERS (WHICH INCLUDE THE CEM CABINETS).

Place of Performance

Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $20.4 million to LOCKHEED MARTIN CORPORATION for work described as: THIS IS A TASK ORDER FOR THE ACQUISITION OF THREE THAAD TRANSPORTERS (WHICH INCLUDE THE CEM CABINETS). Key points: 1. This contract represents a significant investment in specialized missile defense logistics. 2. The sole-source nature raises questions about potential price premiums and limited market exploration. 3. Performance risk is moderate, given the specialized nature of the equipment and contractor's experience. 4. The acquisition aligns with broader U.S. missile defense strategy and readiness objectives. 5. Logistics and distribution consulting services are key to ensuring operational readiness of critical assets. 6. The contract duration suggests a phased delivery and integration process.

Value Assessment

Rating: fair

The awarded amount of $20.4 million for three THAAD transporters is difficult to benchmark without specific cost breakdowns for the transporters and associated cabinets. As a sole-source acquisition from Lockheed Martin, a direct comparison to competitive bids is not possible. The value proposition hinges on the unique capabilities and necessity of these specialized assets for the Missile Defense Agency's mission. Further analysis would require understanding the cost drivers for such highly specialized military equipment and comparing them to industry standards for similar complex systems, if available.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to Lockheed Martin Corporation. This indicates that the Missile Defense Agency determined that only Lockheed Martin could provide the required THAAD transporters. The lack of competition means that taxpayers did not benefit from a price discovery process that typically occurs in a competitive bidding environment. This approach is often used for highly specialized or proprietary systems where only one vendor possesses the necessary technology or expertise.

Taxpayer Impact: The sole-source award limits the government's ability to negotiate the best possible price, potentially leading to higher costs for taxpayers. It also bypasses opportunities for innovation and cost savings that could arise from a competitive procurement process.

Public Impact

The primary beneficiaries are the U.S. Army and the Missile Defense Agency, who will receive critical logistical assets for the Terminal High Altitude Area Defense (THAAD) system. The services delivered include the acquisition of three specialized transporters essential for the deployment and operation of THAAD batteries. The geographic impact is national, supporting U.S. missile defense capabilities, with potential deployment locations globally. Workforce implications include specialized logistics and maintenance personnel required to operate and support the new transporters.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price negotiation and potential cost savings for taxpayers.
Lack of competition may reduce incentives for contractor efficiency and innovation.
High specialization of equipment could lead to vendor lock-in and future sole-source procurements.
Contract duration and value warrant close monitoring for scope creep or cost overruns.

Positive Signals

Acquisition directly supports a critical national security asset (THAAD system).
Contractor (Lockheed Martin) has extensive experience with defense systems, including THAAD.
Fixed-price contract type provides some cost certainty for the government.
Clear delivery schedule (through November 2026) allows for planning and integration.

Sector Analysis

The defense sector, particularly within missile defense, is characterized by high barriers to entry due to technological complexity and significant R&D investment. Contracts like this are crucial for maintaining and enhancing national security capabilities. Spending in this area is often driven by geopolitical threats and strategic defense postures. Comparable spending benchmarks are difficult to establish due to the unique nature of THAAD system components, but overall U.S. defense spending on strategic systems runs into billions annually.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the sole-source nature and the specialized equipment involved, it is unlikely that small businesses would be primary contractors. However, Lockheed Martin may engage small businesses as subcontractors for specific components or services, though this is not explicitly detailed in the provided data. The impact on the small business ecosystem is likely minimal for this specific award.

Oversight & Accountability

Oversight for this contract will likely fall under the Department of Defense's established procurement regulations and the Missile Defense Agency's internal review processes. Accountability measures are typically managed through contract performance reviews, milestone tracking, and payment verification. Transparency may be limited due to the sole-source nature, but contract award details are generally made public. The Inspector General of the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse.

Related Government Programs

THAAD Missile Defense System
Ground Support Equipment
Missile Defense Agency Logistics Support
Strategic Defense Acquisitions
Lockheed Martin Defense Contracts

Risk Flags

Sole-source award
Lack of competition
High dollar value for specialized equipment

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.4 million to LOCKHEED MARTIN CORPORATION. THIS IS A TASK ORDER FOR THE ACQUISITION OF THREE THAAD TRANSPORTERS (WHICH INCLUDE THE CEM CABINETS).

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 $20.4 million.

What is the period of performance?

Start: 2024-10-28. End: 2026-11-15.

What is Lockheed Martin Corporation's track record with THAAD system components and specialized logistics vehicles?

Lockheed Martin Corporation is the prime contractor for the THAAD system, responsible for its development, production, and sustainment. Their track record with THAAD is extensive, encompassing the missile, fire control, and associated ground support equipment. This includes experience in manufacturing and integrating complex logistical elements required for the system's deployment. Given their role as the original equipment manufacturer and system integrator, their expertise in producing specialized transporters for THAAD is well-established. The company has a long history of delivering large, complex defense systems to the U.S. military and international partners, often involving intricate logistical requirements.

How does the $20.4 million cost for three THAAD transporters compare to similar specialized military vehicle acquisitions?

Direct cost comparisons for highly specialized military assets like THAAD transporters are challenging due to their unique design, limited production runs, and proprietary technology. The $20.4 million award, averaging approximately $6.8 million per transporter, reflects the complexity and critical nature of these vehicles. Without access to detailed cost breakdowns or data on comparable sole-source procurements of similar scale and technological sophistication, a precise value-for-money assessment against market rates is difficult. However, considering the specialized defense context and the sole-source nature, this price point is likely within the expected range for such unique military hardware, though competitive bidding could potentially yield lower costs.

What are the primary risks associated with this sole-source acquisition of THAAD transporters?

The primary risks associated with this sole-source acquisition include potential price inflation due to the lack of competition, leading to reduced value for taxpayer dollars. There is also a risk of vendor lock-in, where the government becomes overly reliant on Lockheed Martin for future sustainment, upgrades, and related equipment, potentially limiting future procurement options. Furthermore, without competitive pressure, there might be less incentive for the contractor to optimize production efficiency or introduce cost-saving innovations. The specialized nature of the equipment also means that if performance issues arise, remedies might be more complex and costly to address.

How effective is the Missile Defense Agency in managing sole-source procurements for critical defense assets like THAAD transporters?

The effectiveness of the Missile Defense Agency (MDA) in managing sole-source procurements is typically assessed by its ability to secure necessary capabilities at reasonable costs and within schedule, while mitigating associated risks. For critical assets like THAAD transporters, sole-source awards are often justified by unique technological requirements or existing system integration. The MDA's success would be measured by the timely delivery of functional transporters that meet stringent performance specifications, thereby enhancing the THAAD system's operational readiness. While sole-sourcing bypasses competitive price discovery, effective management involves rigorous negotiation, oversight of contractor performance, and justification of the sole-source decision based on mission criticality and contractor capability.

What are the historical spending patterns for THAAD system logistics and support equipment within the Department of Defense?

Historical spending patterns for the THAAD system, including its logistics and support equipment, have been substantial, reflecting the system's strategic importance and complexity. The Department of Defense, primarily through the Missile Defense Agency, has consistently allocated significant funding towards the procurement, deployment, and sustainment of THAAD batteries. This includes expenditures on launchers, command and control systems, radar, and crucially, the specialized ground support and transportation equipment. While specific figures for logistics equipment procurement vary year to year based on deployment schedules and modernization efforts, overall THAAD program costs have run into the tens of billions of dollars over its lifecycle. This particular $20.4 million award for transporters fits within the broader context of ongoing investments in maintaining and expanding THAAD's operational capabilities.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Management, Scientific, and Technical Consulting Services › Process, Physical Distribution, and Logistics Consulting Services

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: HQ085320R0028

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 1701 W MARSHALL DR, GRAND PRAIRIE, TX, 75051

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: $20,362,216

Exercised Options: $20,362,216

Current Obligation: $20,362,216

Actual Outlays: $984,034

Subaward Activity

Number of Subawards: 11

Total Subaward Amount: $435,362

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HQ085320D0001

IDV Type: IDC

Timeline