DoD's $579M Lockheed Martin Contract for Guided Missiles: A 2001 Award with No Competition
Contract Overview
Contract Amount: $579,037,917 ($579.0M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2001-12-14
End Date: 2009-09-30
Contract Duration: 2,847 days
Daily Burn Rate: $203.4K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Place of Performance
Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94088
Plain-Language Summary
Department of Defense obligated $579.0 million to LOCKHEED MARTIN CORPORATION for work described as: Key points: 1. Significant spending on guided missile and space vehicle manufacturing. 2. Sole-source award to Lockheed Martin Corporation raises competition concerns. 3. Long contract duration (2001-2009) may indicate evolving needs or lack of market shifts. 4. Cost-plus-fixed-fee structure can incentivize cost increases. 5. No small business participation noted.
Value Assessment
Rating: questionable
The contract's value of $579 million over eight years is substantial. Without competitive bidding, it's difficult to assess if this represents fair market value compared to similar contracts.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to Lockheed Martin. This limits price discovery and potentially leads to higher costs for taxpayers.
Taxpayer Impact: The lack of competition likely resulted in a higher price than a competed contract would have achieved, impacting taxpayer funds.
Public Impact
Taxpayers funded a large sum for defense technology without competitive pricing. The long-term nature of the contract suggests a sustained need for these specific defense assets. The absence of small business involvement limits opportunities for smaller, potentially innovative companies in the defense sector.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost-plus-fixed-fee contract type
- No small business participation
- Long contract duration
Positive Signals
- Essential defense procurement
- Established contractor with relevant expertise
Sector Analysis
This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a critical component of national defense. Spending in this area is often characterized by high R&D costs and specialized production, making competition challenging but not always impossible.
Small Business Impact
The contract explicitly states no small business participation. This suggests that the prime contractor, Lockheed Martin, handled all aspects of the work, potentially missing opportunities for subcontracting to smaller, specialized firms.
Oversight & Accountability
The 'NOT COMPETED' status and sole-source nature warrant further oversight to ensure the pricing was justified and that future procurements explore competitive avenues where feasible.
Related Government Programs
- Guided Missile and Space Vehicle Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Lack of competition
- Cost-plus-fixed-fee contract type
- No small business participation
- Long contract duration
- Potential for cost overruns
Tags
guided-missile-and-space-vehicle-manufac, department-of-defense, ca, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $579.0 million to LOCKHEED MARTIN CORPORATION. See the official description on USAspending.
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 $579.0 million.
What is the period of performance?
Start: 2001-12-14. End: 2009-09-30.
What specific factors justified the sole-source award for this critical defense system, and were alternatives explored?
The justification for a sole-source award typically involves unique capabilities, proprietary technology, or urgent national security needs that only one contractor can meet. For this contract, the Department of Defense would have had to document why Lockheed Martin was the only viable option. Exploring alternatives might have included market research to identify potential competitors or phased procurements to break down the requirement. Without access to the specific justification documentation, it's difficult to ascertain the depth of this exploration.
How did the cost-plus-fixed-fee structure impact the final expenditure compared to a fixed-price contract?
Cost-plus-fixed-fee (CPFF) contracts reimburse the contractor for allowable costs plus a fixed fee representing profit. This structure shifts cost risk to the government, as the final price can exceed initial estimates if costs escalate. In contrast, a fixed-price contract sets a ceiling on the total cost, incentivizing the contractor to control expenses. For this $579 million contract, the CPFF structure likely allowed for flexibility in addressing unforeseen technical challenges but also potentially led to higher overall spending than a fixed-price approach might have.
What is the long-term strategic value and effectiveness of the guided missiles and space vehicles procured under this contract?
The long-term strategic value and effectiveness depend on the specific capabilities of the missiles and vehicles acquired. These systems are crucial for national defense, deterrence, and power projection. Their effectiveness is measured by mission success rates, reliability, and contribution to overall military objectives. Given the substantial investment and the contractor's expertise, it's presumed these assets met critical defense requirements during their operational lifespan, though specific performance metrics would require classified operational data.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing
Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT
Competition & Pricing
Extent Competed: NOT COMPETED
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Contractor Details
Address: 1111 LOCKHEED WAY MARINE, SUNNYVALE, CA, 94089
Business Categories: Category Business, Not Designated a Small Business
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2001-12-14
Current End Date: 2009-09-30
Potential End Date: 2009-09-30 00:00:00
Last Modified: 2016-06-29
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