Department of the Army awards $62.9M for Stinger missile components, with no competition

Contract Overview

Contract Amount: $62,926,111 ($62.9M)

Contractor: Lockheed Martin Sippican, Inc.

Awarding Agency: Department of Defense

Start Date: 2021-04-09

End Date: 2025-10-31

Contract Duration: 1,666 days

Daily Burn Rate: $37.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: STINGER M934E6 FUZE, WARHEAD BODY ASSEMBLY (WBA), STINGER M934E7 PROXIMITY FUZE, AND WARHEAD BODY ASSEMBLY WITH CONFORMAL ANTENNA (WBA/A).

Place of Performance

Location: LIVERPOOL, ONONDAGA County, NEW YORK, 13088

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $62.9 million to LOCKHEED MARTIN SIPPICAN, INC. for work described as: STINGER M934E6 FUZE, WARHEAD BODY ASSEMBLY (WBA), STINGER M934E7 PROXIMITY FUZE, AND WARHEAD BODY ASSEMBLY WITH CONFORMAL ANTENNA (WBA/A). Key points: 1. Contract awarded to Lockheed Martin Sippican, Inc. for critical missile components. 2. The award represents a significant investment in air defense capabilities. 3. Lack of competition raises questions about potential price overruns and value for money. 4. Contract duration extends over four years, indicating a long-term need. 5. The specific components are essential for the Stinger missile system's operational readiness. 6. This contract falls under the Ammunition (except Small Arms) Manufacturing sector.

Value Assessment

Rating: questionable

Benchmarking the value for this contract is challenging due to the sole-source nature of the award. Without competitive bids, it's difficult to ascertain if the $62.9 million price reflects a fair market value for the Stinger missile components. The absence of competition limits the government's ability to negotiate the best possible price. Further analysis would require access to historical pricing data for similar components or independent cost estimates.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Lockheed Martin Sippican, Inc., was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified in specific circumstances (e.g., unique capabilities, urgent needs), they generally lead to less price discovery and potentially higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium for these components due to the lack of competitive pressure to drive down prices. The government's negotiating position is weakened when only one supplier is considered.

Public Impact

The U.S. Army benefits from the procurement of essential components for the Stinger missile system. This contract ensures the continued availability of critical parts for air defense munitions. The geographic impact is primarily within New York, where the contractor is located. Workforce implications may include continued employment at Lockheed Martin Sippican, Inc. and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs.
Lack of transparency in the procurement process due to no-bid award.
Potential for cost overruns without competitive benchmarking.
Dependence on a single supplier for critical missile components.

Positive Signals

Ensures supply of critical components for a key defense system.
Supports a known contractor with existing expertise in missile components.
Long-term contract provides supply chain stability for the Army.

Sector Analysis

The defense industry, particularly the ammunition manufacturing sector, relies on specialized suppliers for critical components. This contract for Stinger missile parts fits within the broader landscape of military hardware procurement. The market for such specialized components is often characterized by limited suppliers due to high technical barriers and stringent quality requirements. Comparable spending benchmarks are difficult to establish publicly for sole-source defense contracts.

Small Business Impact

This contract does not appear to involve a small business set-aside, as the awardee is Lockheed Martin Sippican, Inc., a large corporation. There is no explicit information provided regarding subcontracting plans for small businesses. The absence of a set-aside or clear subcontracting goals may limit opportunities for small businesses within the defense supply chain for this specific procurement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and auditing functions. The Inspector General's office may conduct audits to ensure compliance with contract terms and identify any potential waste, fraud, or abuse. Transparency is limited due to the sole-source nature of the award, making public scrutiny of the pricing and justification more challenging.

Related Government Programs

Stinger Missile System Procurement
Air Defense Munitions
Department of the Army Ammunition Contracts
Lockheed Martin Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for price inflation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $62.9 million to LOCKHEED MARTIN SIPPICAN, INC.. STINGER M934E6 FUZE, WARHEAD BODY ASSEMBLY (WBA), STINGER M934E7 PROXIMITY FUZE, AND WARHEAD BODY ASSEMBLY WITH CONFORMAL ANTENNA (WBA/A).

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN SIPPICAN, INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $62.9 million.

What is the period of performance?

Start: 2021-04-09. End: 2025-10-31.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are justified when only one responsible source can provide the required supplies or services, such as when there is a unique capability, a critical need that cannot be met through competition, or when the cost of competition would outweigh the benefits. For defense articles like Stinger missile components, justifications often relate to proprietary technology, existing production lines, or urgent operational requirements where switching suppliers would be impractical or detrimental to national security. Further investigation into the Federal Procurement Data System (FPDS) or agency justifications would be needed to confirm the exact reasoning.

How does the awarded price of $62.9 million compare to historical spending on similar Stinger missile components?

Direct comparison of the $62.9 million award to historical spending on similar Stinger missile components is difficult without access to detailed historical contract data for these specific parts (M934E6 FUZE, WARHEAD BODY ASSEMBLY, etc.). As this is a sole-source award, historical competitive pricing data for these exact items from other vendors is unlikely to exist. To assess value, one would need to compare this award to previous sole-source awards for the same or highly similar components, or to independent government cost estimates if available. The duration of the contract (over 4 years) suggests a sustained need, but the price per unit or total value relative to quantity is not detailed in the provided summary.

What are the potential risks associated with a sole-source contract for critical defense components?

Sole-source contracts for critical defense components carry several risks. Primarily, the lack of competition can lead to inflated prices, as the contractor faces no pressure to offer the most cost-effective solution. This can result in taxpayers paying more than necessary. Secondly, it creates a dependency on a single supplier, which can be a vulnerability if that supplier experiences production issues, financial instability, or decides to discontinue the product line. There's also a reduced incentive for the contractor to innovate or improve efficiency. Finally, the absence of a competitive process can limit transparency and make it harder to ensure the government is receiving the best possible value and quality.

What is the significance of the 'Ammunition (except Small Arms) Manufacturing' NAICS code for this contract?

The North American Industry Classification System (NAICS) code 332993, 'Ammunition (except Small Arms) Manufacturing,' signifies that the contract is for the production of military ordnance, excluding items like small firearms ammunition. This classification places the contract within a specialized segment of the defense industrial base. Companies operating under this code are involved in manufacturing items such as artillery shells, missiles, bombs, grenades, and related components. This indicates that the Stinger missile components being procured are considered part of the broader category of heavy ordnance and are subject to the specific manufacturing standards, regulations, and supply chain dynamics pertinent to this critical defense sector.

What is the expected performance period and delivery schedule for these components?

The contract has a start date of April 9, 2021, and an end date of October 31, 2025. This indicates an expected performance period of approximately 4 years and 7 months. The contract type is 'DELIVERY ORDER,' which suggests that while the overall contract is established, specific quantities and delivery schedules for the Stinger M934E6 FUZE, WARHEAD BODY ASSEMBLY (WBA), etc., will be managed through individual delivery orders issued within this period. The total duration is 1666 days. This phased approach allows the Army flexibility in managing inventory and delivery based on evolving operational needs and funding availability.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 497 ELECTRONICS PARKWAY, LIVERPOOL, NY, 13088

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: $62,926,111

Exercised Options: $62,926,111

Current Obligation: $62,926,111

Actual Outlays: $1,480,404

Subaward Activity

Number of Subawards: 86

Total Subaward Amount: $52,045,810

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W15QKN21D0008

IDV Type: IDC

Timeline