Over $46.7 million awarded to Lockheed Martin for MK 41 Vertical Launch System products to Turkey and Australia

Contract Overview

Contract Amount: $46,764,053 ($46.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2009-03-20

End Date: 2012-10-31

Contract Duration: 1,321 days

Daily Burn Rate: $35.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FMS REQUIREMENT FOR MK 41 VLS PRODUCTS TO TURKEY - TK-P-SDA AND AUSTRALIA AT-P-LCQ

Place of Performance

Location: MIDDLE RIVER, BALTIMORE County, MARYLAND, 21220

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $46.8 million to LOCKHEED MARTIN CORPORATION for work described as: FMS REQUIREMENT FOR MK 41 VLS PRODUCTS TO TURKEY - TK-P-SDA AND AUSTRALIA AT-P-LCQ Key points: 1. Contract awarded on a firm-fixed-price basis, indicating a defined cost for the specified deliverables. 2. Sole-source award suggests limited competition, potentially impacting price negotiation and value for money. 3. The contract duration of over three years implies a significant, long-term requirement for these defense systems. 4. Awarded by the Department of the Navy, aligning with naval defense procurement strategies. 5. The products are for foreign military sales to Turkey and Australia, indicating international defense cooperation. 6. The specific product line, MK 41 VLS, is a critical component for modern naval vessels. 7. The contract value of $46.7 million represents a substantial investment in defense capabilities.

Value Assessment

Rating: fair

This contract was awarded on a sole-source basis, which limits the ability to benchmark pricing against competitive bids. Without multiple offers, it is difficult to definitively assess if the price paid represents the best value for the government. The firm-fixed-price structure provides cost certainty but does not inherently guarantee optimal pricing in a non-competitive environment. Further analysis would require access to historical pricing for similar sole-source awards or internal cost estimates.

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. This typically occurs when only one responsible source is available or when a compelling justification for other than full and open competition exists. The lack of competition means that the government did not benefit from the price discovery and innovation that typically arises from multiple bidders vying for a contract.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This limits the government's ability to secure the most economical solution.

Public Impact

The primary beneficiaries are the defense forces of Turkey and Australia, enhancing their naval capabilities. The services delivered involve the provision of MK 41 Vertical Launch System products, a key component for missile deployment on naval ships. The geographic impact is international, supporting allied nations' defense modernization efforts. The contract supports the defense industrial base, specifically the manufacturing of advanced ordnance and accessories.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential value for money.
Lack of transparency in pricing due to non-competitive nature.
Potential for cost overruns if not closely managed due to lack of market pressure.

Positive Signals

Supports critical foreign military sales objectives for allied nations.
Ensures delivery of advanced defense technology to key partners.
Firm-fixed-price contract provides cost certainty for the defined scope.

Sector Analysis

The defense sector, specifically ordnance and accessories manufacturing, is characterized by high technological barriers to entry and significant government procurement. Lockheed Martin is a major player in this market. The MK 41 Vertical Launch System is a widely adopted naval weapons platform, indicating a mature but specialized market. Spending in this area is driven by national security needs and international alliances, often involving complex, high-value contracts.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the specialized nature of the MK 41 VLS products and the sole-source award to a large prime contractor, subcontracting opportunities for small businesses may be limited to specific components or services that are not directly controlled by the prime. Further investigation into Lockheed Martin's subcontracting plan would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a foreign military sale, there are also oversight mechanisms involving the Defense Security Cooperation Agency (DSCA) and potentially congressional notification. Transparency is generally limited for sole-source awards, but contract performance and financial reporting would be subject to standard government oversight procedures. Inspector General jurisdiction would apply to allegations of fraud, waste, or abuse.

Related Government Programs

Foreign Military Sales Program
Naval Weapons Systems Procurement
Ordnance and Accessories Manufacturing
Defense Security Cooperation Agency Contracts

Risk Flags

Sole-source award
Potential for limited competition impacting price
Foreign Military Sale oversight requirements

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $46.8 million to LOCKHEED MARTIN CORPORATION. FMS REQUIREMENT FOR MK 41 VLS PRODUCTS TO TURKEY - TK-P-SDA AND AUSTRALIA AT-P-LCQ

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 Navy).

What is the total obligated amount?

The obligated amount is $46.8 million.

What is the period of performance?

Start: 2009-03-20. End: 2012-10-31.

What is the track record of Lockheed Martin in delivering MK 41 VLS products for foreign military sales?

Lockheed Martin Corporation is the original equipment manufacturer and primary provider of the MK 41 Vertical Launch System (VLS). They have a long and extensive track record of producing, integrating, and supporting these systems for the U.S. Navy and numerous international partners. Their experience spans decades, encompassing upgrades, new builds, and sustainment services. For foreign military sales specifically, Lockheed Martin has a well-established process for managing international deliveries, including compliance with export control regulations and tailoring systems to meet specific customer requirements. Their consistent delivery of these complex systems to various allied nations underscores their capability and reliability in this niche defense market.

How does the pricing of this sole-source contract compare to similar competitive awards for defense articles?

Direct comparison of pricing for this sole-source contract to similar competitive awards is challenging due to the inherent nature of non-competitive procurements. Competitive awards typically result in lower prices due to market forces and bidder innovation. Sole-source contracts, especially for highly specialized defense systems like the MK 41 VLS, often reflect the unique capabilities and established costs of the sole provider. Without access to the government's cost analysis or pricing data from comparable competitive bids for similar systems (which may not exist), it's difficult to definitively state if this contract represents optimal value. However, the firm-fixed-price structure does provide cost certainty for the defined scope.

What are the primary risks associated with a sole-source award for critical defense components like the MK 41 VLS?

The primary risks associated with a sole-source award for critical defense components like the MK 41 VLS include potential overpricing due to the lack of competitive pressure, reduced incentive for the contractor to innovate or improve efficiency, and a potential lack of transparency in the pricing structure. There's also a strategic risk if the sole-source provider faces production issues or financial instability, as there are no immediate alternative suppliers. For foreign military sales, ensuring continued support and availability of parts over the system's lifecycle can also be a concern if the sole provider's strategic focus shifts.

What is the program effectiveness context for the MK 41 VLS, and how does this contract contribute?

The MK 41 Vertical Launch System (VLS) is a highly effective and widely adopted naval weapons launch platform, serving as a cornerstone for modern surface combatants. Its modular design allows for the integration of a wide array of missiles, including surface-to-air, land-attack, and anti-submarine weapons. Program effectiveness is demonstrated by its widespread adoption by the U.S. Navy and over a dozen allied navies, signifying its reliability, versatility, and combat-proven performance. This contract directly contributes to the program's effectiveness by ensuring that key international partners, Turkey and Australia, receive these critical systems, thereby enhancing their naval defense capabilities and interoperability with U.S. forces.

What are the historical spending patterns for MK 41 VLS products, particularly for foreign military sales?

Historical spending on MK 41 VLS products, especially for foreign military sales (FMS), indicates a consistent and significant demand driven by naval modernization efforts among allied nations. Lockheed Martin, as the sole provider, has secured numerous FMS contracts over the years for these systems. Spending patterns are characterized by large, multi-year procurements for new ship construction and upgrades, as well as ongoing sustainment and modernization contracts. While specific aggregate FMS spending data for the MK 41 VLS is not publicly itemized in detail, the sheer number of allied nations utilizing the system suggests cumulative FMS expenditures likely run into the billions of dollars over the past few decades. This contract represents a continuation of that established spending trend.

What is the significance of the 'Other Ordnance and Accessories Manufacturing' NAICS code in relation to this contract?

The North American Industry Classification System (NAICS) code 332995, 'Other Ordnance and Accessories Manufacturing,' is highly relevant to this contract as it accurately categorizes the production of the MK 41 Vertical Launch System (VLS) products. This code encompasses establishments primarily engaged in manufacturing ammunition (except small arms), bombs, missiles, and related ordnance and accessories. The MK 41 VLS is a complex piece of ordnance delivery equipment, involving the manufacturing of launchers, canisters, and associated components that are integral to the deployment of various missiles. Therefore, this NAICS code correctly identifies the industrial sector and the nature of the products being procured under this contract.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Other Ordnance and Accessories Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002408R5373

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 2323 EASTERN BLVD, BALTIMORE, MD, 90

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Federally Funded Research and Development Corp, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $46,764,053

Exercised Options: $46,764,053

Current Obligation: $46,764,053

Contract Characteristics

Cost or Pricing Data: YES

Timeline