DoD awards $18.3M contract for guided missile manufacturing to Lockheed Martin Corp

Contract Overview

Contract Amount: $18,333,875 ($18.3M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2008-04-01

End Date: 2010-06-30

Contract Duration: 820 days

Daily Burn Rate: $22.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SUPPLIES/SERVICES

Place of Performance

Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $18.3 million to LOCKHEED MARTIN CORP for work described as: SUPPLIES/SERVICES Key points: 1. Contract awarded on a cost-plus-fixed-fee basis, indicating potential for cost overruns. 2. Sole-source award raises concerns about price discovery and potential lack of competitive pressure. 3. The contract duration of 820 days suggests a significant, ongoing need for these services. 4. The specific product code is not detailed, making it difficult to benchmark against similar procurements. 5. The award was made by the Department of the Navy, a major defense procurement agency.

Value Assessment

Rating: questionable

The contract's cost-plus-fixed-fee structure, combined with a sole-source award, presents a risk for value for money. Without competitive bidding, it is difficult to ascertain if the fixed fee adequately reflects the effort required or if the government is paying a premium. Benchmarking is challenging without more specific service details, but defense contracts of this nature often involve significant costs. The total award amount of $18.3 million over approximately two years suggests a substantial investment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This typically occurs when a specific contractor possesses unique capabilities or when urgency precludes a competitive process. The lack of multiple bidders means the government did not benefit from price competition, potentially leading to higher costs than if the contract had been competed.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible price, potentially resulting in taxpayer funds being used less efficiently.

Public Impact

The primary beneficiaries are the Department of Defense and potentially national security through the acquisition of guided missiles. The services delivered are related to the manufacturing of guided missiles and space vehicles. The contract is associated with California, suggesting potential workforce and economic impact in that region. The contract supports specialized manufacturing roles within the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can incentivize contractors to incur higher costs, as a portion of the profit is guaranteed.
Sole-source awards limit transparency and competitive pressure, potentially leading to suboptimal pricing for the government.
The lack of detailed product service code makes it difficult to assess the specific nature of the goods or services and compare them to market rates.

Positive Signals

Lockheed Martin is a well-established defense contractor with a proven track record in complex manufacturing.
The contract supports a critical defense capability, contributing to national security objectives.
The fixed fee component of the contract provides some level of cost certainty for the government, albeit within a cost-reimbursement framework.

Sector Analysis

The guided missile and space vehicle manufacturing sector is a highly specialized and critical component of the defense industrial base. This sector is characterized by high barriers to entry, significant research and development investment, and long production cycles. Spending in this area is driven by national security requirements and geopolitical factors. Comparable spending benchmarks are difficult to establish without more specific details on the missile type, but the overall defense budget allocates substantial resources to strategic weapon systems.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the nature of guided missile manufacturing, it is unlikely that small businesses would be primary contractors, though they may participate as subcontractors. Further analysis would be needed to determine subcontracting plans and their impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management systems. Accountability measures would be tied to the terms of the cost-plus-fixed-fee agreement, requiring detailed reporting from the contractor. Transparency may be limited due to the sole-source nature and the classified or sensitive aspects of defense procurement.

Related Government Programs

Guided Missile Manufacturing
Space Vehicle Manufacturing
Defense Procurement
Cost-Plus-Fixed-Fee Contracts

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Lack of detailed service description

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.3 million to LOCKHEED MARTIN CORP. SUPPLIES/SERVICES

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $18.3 million.

What is the period of performance?

Start: 2008-04-01. End: 2010-06-30.

What is Lockheed Martin Corp.'s track record with similar sole-source defense contracts?

Lockheed Martin Corporation is a major defense contractor with extensive experience in sole-source procurements, particularly for advanced weapon systems and aerospace technologies. Historically, the company has been awarded numerous sole-source contracts by various branches of the U.S. military, including the Department of Defense, for programs involving aircraft, missiles, and space systems. These awards are often justified by the company's unique technological capabilities, proprietary designs, and established production lines. While sole-source awards can raise concerns about price competition, they are frequently deemed necessary for specialized, high-technology defense articles where only one contractor can meet the stringent requirements or maintain the necessary production capacity. Analyzing specific past contracts would reveal patterns in pricing structures, performance metrics, and any associated cost overruns or efficiencies.

How does the $18.3 million award compare to other guided missile manufacturing contracts?

Comparing the $18.3 million award for guided missile manufacturing requires specific context regarding the type and quantity of missiles, as well as the contract duration. Defense contracts for missile systems can range from tens of millions to billions of dollars, depending on the program's scale, technological complexity, and production volume. For instance, contracts for developing new missile prototypes or producing large quantities of advanced air-to-air or ballistic missiles would naturally be significantly higher. Conversely, smaller contracts might involve specific components, upgrades, or limited production runs. Without knowing the precise nature of the 'Guided Missile and Space Vehicle Manufacturing' under NAICS code 336414 for this specific award, a direct comparison is challenging. However, $18.3 million over approximately two years suggests a moderately sized contract, possibly for a specific subsystem, a limited batch of missiles, or a particular phase of a larger program.

What are the primary risks associated with this cost-plus-fixed-fee sole-source contract?

The primary risks associated with this cost-plus-fixed-fee (CPFF) sole-source contract are centered around cost control and price fairness. In a CPFF arrangement, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This structure can incentivize contractors to incur higher costs, as their profit margin is predetermined and not directly tied to cost savings. The sole-source nature exacerbates this risk by eliminating competitive pressure, which typically drives down prices and encourages efficiency. Without competition, there's less incentive for the contractor to minimize costs or for the government to rigorously negotiate the most favorable terms. Potential risks include cost overruns that exceed initial estimates, a fixed fee that is disproportionately high for the effort involved, and a lack of transparency in the contractor's cost accounting. Effective government oversight and robust negotiation are crucial to mitigate these risks.

How effective is the Department of the Navy in managing sole-source procurements of this nature?

The Department of the Navy, as a major component of the Department of Defense, has established extensive frameworks and experienced personnel for managing sole-source procurements. These processes typically involve rigorous justification requirements, detailed cost and technical analyses, and multi-level review and approval chains to ensure that sole-source awards are only made when truly necessary and offer fair value. The effectiveness can vary depending on the specific program, the complexity of the technology, and the level of competition that might have been feasible. While the Navy aims for robust oversight, the inherent limitations of sole-source contracting mean that competitive dynamics are absent, placing a greater burden on the government's negotiation and oversight capabilities to ensure program success and fiscal responsibility. Performance metrics and post-award reviews are key mechanisms used to assess and ensure effectiveness.

What are the historical spending patterns for guided missile and space vehicle manufacturing by the Department of Defense?

The Department of Defense (DoD) consistently allocates substantial portions of its budget to the research, development, and procurement of guided missiles and space vehicles. Historical spending patterns reveal a long-term commitment to maintaining and advancing capabilities in this sector, driven by national security imperatives and technological competition. Annual spending can fluctuate based on specific program lifecycles, modernization efforts, and geopolitical events. Major programs often involve multi-year contracts that can span billions of dollars. The DoD's spending in this area is characterized by high R&D investment, complex manufacturing processes, and the involvement of a few prime contractors with specialized expertise. Analyzing historical data from sources like the DoD's budget requests and contract award databases would show trends in investment across different missile types (e.g., strategic, tactical, air-launched) and space-based systems, highlighting periods of increased procurement or significant technological shifts.

Industry Classification

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

Product/Service Code: QUALITY CONTROL, TEST, INSPECTION › OTHER QUALITY, TEST, INSPECT SVCS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 1111 LOCKHEED MARTIN WAY BLDG 157, SUNNYVALE, CA, 17

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

Financial Breakdown

Contract Ceiling: $34,667,856

Exercised Options: $18,333,875

Current Obligation: $18,333,875

Contract Characteristics

Cost or Pricing Data: YES

Timeline