DoD awards $798M for Long Lead Material to Lockheed Martin, a sole-source contract
Contract Overview
Contract Amount: $797,961,090 ($798.0M)
Contractor: Lockheed Martin Corp
Awarding Agency: Department of Defense
Start Date: 2014-07-07
End Date: 2019-09-30
Contract Duration: 1,911 days
Daily Burn Rate: $417.6K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: FY15 LONG LEAD MATERIAL
Place of Performance
Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089
Plain-Language Summary
Department of Defense obligated $798.0 million to LOCKHEED MARTIN CORP for work described as: FY15 LONG LEAD MATERIAL Key points: 1. Significant investment in guided missile manufacturing. 2. Sole-source award raises questions about price discovery. 3. Long contract duration (5 years) may impact cost control. 4. No small business participation noted.
Value Assessment
Rating: questionable
The contract value of $798 million for long lead material is substantial. Without competitive bidding, it's difficult to assess if this price is optimal compared to potential market alternatives.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers as there is no market pressure to reduce prices.
Taxpayer Impact: The lack of competition for a nearly $800 million contract suggests potential for overspending, impacting taxpayer funds.
Public Impact
Taxpayers may be paying a premium due to the absence of competition. Long-term commitment to a single supplier could stifle innovation in the supply chain. Ensuring effective oversight is crucial for managing costs and performance over the contract's lifespan.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Lack of competition
- Long contract duration
- No small business involvement
Positive Signals
- Definitive contract awarded
- Long lead material secured
Sector Analysis
This contract falls within the Guided Missile and Space Vehicle Manufacturing sector. Spending in this defense-related area is typically high, but competitive sourcing is key to efficiency.
Small Business Impact
The contract data indicates no small business participation. This represents a missed opportunity to support small businesses within the defense supply chain.
Oversight & Accountability
Given the sole-source nature and significant value, robust oversight is essential to ensure cost reasonableness and contractor performance throughout the contract's duration.
Related Government Programs
- Guided Missile and Space Vehicle Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Sole-source award lacks competitive pricing.
- Potential for inflated costs due to no market pressure.
- Long contract duration increases long-term financial exposure.
- No small business participation noted.
- Limited transparency on price justification.
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 $798.0 million to LOCKHEED MARTIN CORP. FY15 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 $798.0 million.
What is the period of performance?
Start: 2014-07-07. End: 2019-09-30.
What is the justification for the sole-source award, and what steps were taken to ensure fair and reasonable pricing?
The justification for a sole-source award typically involves unique capabilities or urgent needs. For this contract, the Department of Defense would need to document why Lockheed Martin was the only viable source and provide evidence that pricing was negotiated to be fair and reasonable, likely through cost analysis and benchmarking against historical data or similar procurements.
What are the risks associated with a long-duration, sole-source contract for long lead material in the defense sector?
Risks include potential cost overruns due to lack of competitive pressure, reduced incentive for innovation from the supplier, and vulnerability to supply chain disruptions if the sole source faces issues. The extended duration also means taxpayers are committed to a potentially suboptimal price for an extended period.
How will the effectiveness of this long lead material procurement be measured, especially given the fixed-price incentive structure?
Effectiveness will be measured by the timely delivery of quality long lead material that meets specifications, enabling subsequent production phases. The fixed-price incentive structure aims to align contractor and government interests by providing incentives for cost savings or performance targets, but its success depends on well-defined metrics and diligent monitoring.
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: FIXED PRICE INCENTIVE (L)
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: $810,796,495
Exercised Options: $806,631,157
Current Obligation: $797,961,090
Subaward Activity
Number of Subawards: 203
Total Subaward Amount: $900,410,057
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2014-07-07
Current End Date: 2019-09-30
Potential End Date: 2019-09-30 00:00:00
Last Modified: 2025-09-18
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