DoD's $43.4M contract for missile parts awarded to Lockheed Martin, with no competition

Contract Overview

Contract Amount: $43,427,436 ($43.4M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2004-05-27

End Date: 2010-05-31

Contract Duration: 2,195 days

Daily Burn Rate: $19.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Place of Performance

Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $43.4 million to LOCKHEED MARTIN CORPORATION for work described as: Key points: 1. The contract value of $43.4 million represents a significant investment in specialized defense components. 2. Awarded to a single, large defense contractor, this suggests a potential lack of broad market competition. 3. The long duration of the contract (2195 days) indicates a sustained need for these specific parts. 4. The 'Other Guided Missile and Space Vehicle Parts' classification points to a niche but critical segment of the defense industrial base. 5. Fixed-price contract terms aim to control costs, but the absence of competition limits price discovery. 6. The contract's origin in 2004 and end in 2010 places it within a specific historical context of defense procurement.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging without detailed cost breakdowns or comparable sole-source awards. The $43.4 million over approximately six years suggests an average annual spend of around $7.2 million. Given the specialized nature of guided missile parts, this figure might be within a reasonable range for a sole-source procurement, but the lack of competition prevents a definitive assessment of value for money. Without more data on the specific parts and their market rates, it's difficult to ascertain if the pricing was optimal.

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, intellectual property, or when urgency dictates a direct award. The absence of multiple bidders means that the government did not benefit from the price reductions and innovation that can arise from a competitive bidding process. This approach can lead to higher costs for taxpayers compared to a competed contract.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible prices, potentially increasing the financial burden on taxpayers. The lack of competition means taxpayers may be paying a premium for these specialized missile parts.

Public Impact

The primary beneficiaries are the Department of Defense and its operational units requiring specific guided missile components. The contract ensures the supply of essential parts for maintaining and operating guided missile systems. The geographic impact is primarily within the defense supply chain, potentially involving manufacturing and logistics centers in Texas and beyond. Workforce implications include employment for engineers, technicians, and manufacturing personnel involved in producing these specialized parts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced innovation.
Sole-source awards can create vendor lock-in, making it difficult to switch suppliers or negotiate better terms in the future.
The long contract duration without re-competition might not reflect current market conditions or technological advancements.

Positive Signals

Award to a major defense contractor like Lockheed Martin suggests access to established manufacturing capabilities and quality control.
The firm fixed-price structure provides cost certainty for the government, assuming the price was negotiated effectively.
The contract's duration implies a stable and predictable supply chain for critical components.

Sector Analysis

The 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' sector is a highly specialized segment within the broader aerospace and defense industry. This industry is characterized by high barriers to entry, significant R&D investment, and stringent quality and performance requirements. Contracts in this area are often awarded to a limited number of established prime contractors due to the complexity and proprietary nature of the technologies involved. Spending in this sector is directly tied to national defense priorities and procurement cycles.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the award to a large prime contractor like Lockheed Martin suggests that small businesses would likely be involved as subcontractors. The extent of small business participation would depend on Lockheed Martin's subcontracting plan, which is not detailed here. Without specific subcontracting goals or reporting, the direct impact on the small business ecosystem is unclear, though large prime contracts often drive significant subcontracting opportunities.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. Given the sole-source nature and long duration, regular performance reviews and audits would be expected to ensure compliance with contract terms and quality standards. Transparency is limited due to the lack of public competition data. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Guided Missile Systems Procurement
Aerospace Parts Manufacturing
Defense Industrial Base Sustainment
Sole-Source Defense Contracts
Lockheed Martin Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $43.4 million to LOCKHEED MARTIN CORPORATION. See the official description on USAspending.

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 Army).

What is the total obligated amount?

The obligated amount is $43.4 million.

What is the period of performance?

Start: 2004-05-27. End: 2010-05-31.

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

Lockheed Martin Corporation is a major defense contractor with extensive experience in sole-source and competitively awarded contracts across various defense platforms, including guided missiles and space systems. Their track record often involves complex, high-value procurements where they possess unique technological expertise or are the incumbent supplier. While sole-source awards are common for specialized defense components due to proprietary technology or limited suppliers, they can also attract scrutiny regarding pricing and justification. Analyzing Lockheed Martin's specific performance on comparable sole-source contracts would require examining contract histories for similar parts or systems, focusing on delivery performance, cost overruns (if any), and any documented issues related to pricing or competition waivers.

How does the $43.4 million contract value compare to other spending on guided missile parts?

Comparing the $43.4 million contract value for 'Other Guided Missile and Space Vehicle Parts' requires context within the broader defense budget and specific program needs. The Department of Defense allocates billions annually to missile defense and offensive missile systems. This $43.4 million, spread over approximately six years (2004-2010), represents a moderate but sustained investment in component sustainment or production. Without knowing the exact nature and quantity of the parts, direct comparison is difficult. However, it is a fraction of the total cost of major missile programs, suggesting it covers critical, perhaps specialized, components rather than entire weapon systems. Benchmarking against other sole-source awards for similar niche components would provide a better sense of value.

What are the primary risks associated with this sole-source contract?

The primary risks associated with this sole-source contract include potential overpricing due to the lack of competitive pressure, reduced incentive for innovation from the contractor, and vendor lock-in. Without competition, the government has less leverage to negotiate the lowest possible price. The contractor may have less motivation to invest in process improvements or cost-saving measures if they are assured of the contract. Furthermore, the long-term reliance on a single supplier for critical components can create vulnerabilities if that supplier faces production issues, financial instability, or decides to exit the market. The government also risks paying a premium for technology that may become outdated without the impetus of competitive market forces driving upgrades.

How effective was this contract in ensuring the availability of critical missile components?

The effectiveness of this contract in ensuring the availability of critical missile components can be inferred from its long duration (2195 days) and its award to a major defense manufacturer. A contract of this length, ending in 2010, suggests a sustained need and likely successful delivery of parts over that period. The Department of the Army, a branch of the DoD, would have had specific operational requirements that this contract aimed to fulfill. While the absence of competition limits our ability to assess cost-effectiveness, the contract's existence implies that the necessary components were procured to support military readiness. Further assessment would require examining delivery performance metrics and operational reports related to the missile systems utilizing these parts.

What does historical spending data reveal about this type of contract?

Historical spending data for 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' often shows a mix of competitive and sole-source awards. Sole-source contracts are prevalent in this niche due to the specialized nature of the products, proprietary technologies, and the limited number of qualified manufacturers. Over time, spending in this category fluctuates based on defense budgets, modernization programs, and geopolitical events. Contracts awarded in the mid-2000s, like this one, reflect the defense priorities and procurement strategies of that era. Analyzing trends in contract values, durations, and competition levels over longer periods can highlight shifts in market dynamics and government procurement approaches for critical defense components.

Industry Classification

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

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 1701 W MARSHALL DRIVE, GRAND PRAIRIE, TX, 75051

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline