DoD's $1.12B Long Lead Material Contract Awarded to Lockheed Martin Faces Scrutiny
Contract Overview
Contract Amount: $1,119,221,474 ($1.1B)
Contractor: Lockheed Martin Corp
Awarding Agency: Department of Defense
Start Date: 2011-10-01
End Date: 2017-07-31
Contract Duration: 2,130 days
Daily Burn Rate: $525.5K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: FY12 LONG LEAD MATERIAL
Place of Performance
Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94088
Plain-Language Summary
Department of Defense obligated $1.12 billion to LOCKHEED MARTIN CORP for work described as: FY12 LONG LEAD MATERIAL Key points: 1. Significant contract value of over $1.1 billion for long lead material. 2. Sole-source award to Lockheed Martin raises questions about competition. 3. Potential risks associated with a Cost Plus Fixed Fee contract type. 4. Spending falls within the Guided Missile and Space Vehicle Manufacturing sector.
Value Assessment
Rating: questionable
The contract's value of $1.12 billion for long lead material is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to similar contracts for specialized components.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, indicating a lack of competition. This method limits price discovery and may result in higher costs for taxpayers.
Taxpayer Impact: The absence of competition for a contract of this magnitude could lead to inflated prices, impacting taxpayer funds negatively.
Public Impact
Taxpayers may be overpaying due to the lack of competitive bidding. The long duration of the contract (over 5 years) means sustained potential for cost overruns. Dependence on a single supplier for critical components could pose supply chain risks.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost Plus Fixed Fee contract type
- Long contract duration
Positive Signals
- Awarded to a major defense contractor with established capabilities
Sector Analysis
This contract falls under the Guided Missile and Space Vehicle Manufacturing sector, a specialized area within defense spending. Benchmarks for similar long lead material procurements in this niche are often difficult to establish due to unique requirements and limited suppliers.
Small Business Impact
There is no indication that small businesses were involved in this sole-source award, suggesting a missed opportunity for small business participation.
Oversight & Accountability
The sole-source nature of this award warrants close oversight to ensure the government is receiving the best possible value and that costs are justified throughout the contract's life.
Related Government Programs
- Guided Missile and Space Vehicle Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Lack of competition may lead to inflated prices.
- Cost Plus Fixed Fee structure carries inherent risk of cost overruns.
- Long contract duration increases exposure to changing requirements and economic factors.
- Sole-source award limits opportunities for small business participation.
Tags
guided-missile-and-space-vehicle-manufac, department-of-defense, ca, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $1.12 billion to LOCKHEED MARTIN CORP. FY12 LONG LEAD MATERIAL
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 $1.12 billion.
What is the period of performance?
Start: 2011-10-01. End: 2017-07-31.
What justification was provided for the sole-source award, and were alternative acquisition strategies considered?
The provided data indicates the contract was 'NOT COMPETED.' A thorough review of the justification for this sole-source decision is crucial. Agencies typically require detailed documentation explaining why full and open competition was not feasible, such as unique capabilities, urgent needs, or specific government property requirements. Without this justification, it's impossible to assess the validity of bypassing competitive processes.
How will the Cost Plus Fixed Fee structure be managed to prevent cost overruns and ensure contractor efficiency?
Cost Plus Fixed Fee (CPFF) contracts can incentivize contractors to increase costs to maximize their fee, which is a percentage of the total cost. Robust government oversight, detailed cost tracking, and clear performance metrics are essential to manage this contract effectively. Regular audits and reviews of incurred costs are necessary to ensure the fixed fee remains appropriate and that the contractor is operating efficiently.
What is the projected total cost of ownership, considering the contract's duration and potential for modifications?
The initial award is for $1.12 billion, with a duration extending to July 2017 from October 2011. However, 'long lead material' contracts often serve as precursors to larger production efforts. The total cost of ownership could significantly exceed the initial award if follow-on production contracts are awarded. Understanding the full program lifecycle and potential for contract modifications is vital for a complete cost assessment.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing
Product/Service Code: GUIDED MISSLES
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, 94089
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $1,145,525,622
Exercised Options: $1,145,403,804
Current Obligation: $1,119,221,474
Subaward Activity
Number of Subawards: 54
Total Subaward Amount: $322,874,147
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2011-10-01
Current End Date: 2017-07-31
Potential End Date: 2024-09-30 00:00:00
Last Modified: 2024-09-27
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