Navy awards $25.6M for MK-41 Vertical Launching System components, with Lockheed Martin as the sole provider

Contract Overview

Contract Amount: $25,603,328 ($25.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2024-11-22

End Date: 2025-03-18

Contract Duration: 116 days

Daily Burn Rate: $220.7K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MK-41 VLS

Place of Performance

Location: LYNN, ESSEX County, MASSACHUSETTS, 01905

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $25.6 million to LOCKHEED MARTIN CORPORATION for work described as: MK-41 VLS Key points: 1. The contract value represents a significant investment in critical naval defense infrastructure. 2. Sole-source award suggests limited market alternatives or specialized requirements for the MK-41 VLS. 3. The short performance period indicates a focus on immediate supply chain needs or specific project milestones. 4. Fixed-price contract type aims to control costs, but the absence of competition may limit price negotiation. 5. The award falls under the 'All Other Miscellaneous Electrical Equipment and Component Manufacturing' NAICS code, highlighting the specialized nature of the components. 6. This spending supports the operational readiness and technological advancement of the U.S. Navy's fleet.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and specific component focus. Without competitive bids, it's difficult to ascertain if the $25.6 million price reflects optimal market value. However, the firm fixed-price structure provides cost certainty for the government. The contract's duration of 116 days suggests a focused procurement for immediate needs, which can sometimes command a premium compared to longer-term, more competitively bid contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Lockheed Martin Corporation, was solicited. This approach is typically used when a product or service is unique, or when only one responsible source is available. The lack of competition means the Navy did not benefit from a bidding process that could drive down prices through market forces. This raises questions about whether alternative suppliers or more cost-effective solutions were explored.

Taxpayer Impact: Taxpayers may be paying a premium for this component due to the absence of competitive bidding. The government's ability to negotiate favorable terms is reduced when only one supplier is considered.

Public Impact

The U.S. Navy benefits directly through the acquisition of essential components for the MK-41 Vertical Launching System. This contract ensures the continued operational capability and modernization of naval vessels. The services delivered are critical for missile deployment and defense systems aboard warships. The primary geographic impact is on naval bases and operations where these systems are deployed and maintained. Workforce implications are likely concentrated within Lockheed Martin's manufacturing and supply chain operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential cost savings.
Lack of competition may reduce incentives for innovation or efficiency improvements from the contractor.
Dependence on a single supplier for critical components poses a supply chain risk.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to a known, established defense contractor like Lockheed Martin suggests a focus on reliability and proven performance.
Short performance period indicates a targeted procurement for immediate operational needs.

Sector Analysis

The defense industrial base relies heavily on specialized component manufacturers for complex systems like the MK-41 Vertical Launching System (VLS). This contract falls within the broader 'Miscellaneous Electrical Equipment and Component Manufacturing' sector, but is highly specific to defense applications. The MK-41 VLS is a cornerstone of modern naval warfare, equipping a wide range of U.S. Navy and allied vessels. Spending in this area is crucial for maintaining fleet readiness and technological superiority, often involving high-value, low-volume production runs with significant R&D investment.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, Lockheed Martin Corporation, is a large defense conglomerate. While there may be subcontracting opportunities for small businesses within Lockheed Martin's supply chain, this specific award does not directly benefit small businesses through a set-aside. The impact on the small business ecosystem is indirect, depending on Lockheed Martin's subcontracting practices.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a delivery order under an existing contract (likely a Basic Ordering Agreement or Indefinite Delivery/Indefinite Quantity contract, though not explicitly stated), it would be subject to the terms and conditions of that parent agreement. Transparency is generally maintained through contract award databases, but detailed performance oversight and inspector general jurisdiction would depend on the specific terms and any potential issues that arise during performance.

Related Government Programs

MK-41 Vertical Launching System
Naval Ship Systems
Defense Manufacturing
Missile Systems Components

Risk Flags

Sole-source award
Potential for cost overruns due to lack of competition
Supply chain dependency on a single contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.6 million to LOCKHEED MARTIN CORPORATION. MK-41 VLS

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 $25.6 million.

What is the period of performance?

Start: 2024-11-22. End: 2025-03-18.

What is the historical spending trend for MK-41 VLS components from Lockheed Martin?

Analyzing historical spending for MK-41 VLS components from Lockheed Martin requires access to detailed contract databases beyond this single award. However, the MK-41 VLS has been a standard system for the U.S. Navy for decades, implying consistent, albeit potentially fluctuating, spending on its components and sustainment. Factors influencing spending include new ship construction, modernization programs, and replacement of aging parts. Without specific historical data, it's difficult to establish a precise trend, but the ongoing reliance on this system suggests sustained investment. The current $25.6 million award represents a snapshot of this continuous procurement cycle, likely driven by specific fleet readiness needs or scheduled maintenance.

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

Directly comparing the pricing of this $25.6 million sole-source award for MK-41 VLS components to similar sole-source defense contracts is challenging without specific data on the exact components, quantities, and complexity. Sole-source awards inherently lack the price discovery mechanism of competition, meaning prices can be higher than if multiple bidders were involved. However, the firm fixed-price nature of this contract provides cost certainty. The value of the contract is also influenced by factors such as the specialized nature of the components, the contractor's established expertise, and the urgency of the requirement. A comprehensive benchmark would require analyzing a portfolio of sole-source awards for comparable defense systems, considering their technical specifications and delivery timelines.

What are the primary risks associated with this sole-source contract for the Department of the Navy?

The primary risk associated with this sole-source contract is the potential for inflated pricing due to the absence of competitive bidding. Without market pressure, Lockheed Martin may not have the same incentive to offer the most cost-effective solution. Another significant risk is supply chain vulnerability; relying on a single source for critical components can lead to delays or disruptions if the contractor faces production issues, labor shortages, or other unforeseen problems. This dependence also limits the Navy's flexibility to switch suppliers if performance or quality issues arise. Furthermore, the lack of competition can stifle innovation, as the contractor may face less pressure to invest in process improvements or alternative technologies.

What is the expected impact of this contract on the operational readiness of the Navy's fleet?

This contract is expected to have a positive impact on the operational readiness of the Navy's fleet by ensuring the availability of critical components for the MK-41 Vertical Launching System (VLS). The MK-41 VLS is a vital system for deploying various missiles, including defensive and offensive munitions, aboard numerous classes of warships. By procuring these components, the Navy is likely addressing maintenance requirements, supporting ongoing operations, or preparing for future deployments. The timely delivery of these parts, as indicated by the relatively short performance period, is crucial for maintaining the combat effectiveness and overall readiness of naval vessels equipped with this system.

Are there any known performance issues with Lockheed Martin's supply of MK-41 VLS components?

Information regarding specific performance issues with Lockheed Martin's supply of MK-41 VLS components is not publicly detailed in this award notice. Generally, Lockheed Martin is a long-standing and experienced defense contractor with a significant track record in producing and supplying complex systems like the MK-41 VLS. However, like any large-scale manufacturing and supply chain operation, occasional challenges related to production timelines, quality control, or material availability can occur. Without access to detailed performance reports or past performance evaluations, it is difficult to definitively assess any specific issues. The sole-source nature of this award suggests that the Navy has confidence in Lockheed Martin's ability to meet its requirements.

Industry Classification

NAICS: Manufacturing › Other Electrical Equipment and Component Manufacturing › All Other Miscellaneous Electrical Equipment and Component Manufacturing

Product/Service Code: ELECTRICAL/ELECTRONIC EQPT COMPNTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 199 BORTON LANDING RD, MOORESTOWN, NJ, 08057

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

Financial Breakdown

Contract Ceiling: $25,603,328

Exercised Options: $25,603,328

Current Obligation: $25,603,328

Subaward Activity

Number of Subawards: 20

Total Subaward Amount: $7,279,858

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0038325DNJ01

IDV Type: IDC

Timeline