Lockheed Martin awarded $794.5M for Guided Missiles, with a significant portion for Patriot PAC-3

Contract Overview

Contract Amount: $319,072,251 ($319.1M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2005-01-27

End Date: 2008-12-31

Contract Duration: 1,434 days

Daily Burn Rate: $222.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200504!001394!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q05C0051 !A!N! !N! ! !20050127!20070430!794571448!794571448!834951691!N!LOCKHEED MARTIN CORPORATION !1701 W MARSHALL DRIVE !GRAND PRAIRIE !TX!75051!30464!113!48!GRAND PRAIRIE !DALLAS !TEXAS !+000076477687!Y!N!000000000000!1410!GUIDED MISSILES !A2 !MISSILE AND SPACE SYSTEMS !148 !PATRIOT PAC-3 !336414!E! !1! ! ! ! ! !20200930!B! ! !A! !D!Y!J!1!001!N!1G!Z!Y!A! ! !N!C!N! ! ! !B!B!A!A!000!A!C!Y! ! ! ! ! ! !0001! !

Place of Performance

Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $319.1 million to LOCKHEED MARTIN CORPORATION for work described as: 200504!001394!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q05C0051 !A!N! !N! ! !20050127!20070430!794571448!794571448!834951691!N!LOCKHEED MARTIN CORPORATION !1701 W MARSHALL DRIVE !GRAND PRAIRIE !TX!75051!30464!113!48!GRAND PRAIRIE !DALL… Key points: 1. Contract value of $794.5M for guided missile systems, primarily for Patriot PAC-3. 2. Awarded to Lockheed Martin Corporation, a major defense contractor. 3. Contract duration spans over 3 years, indicating a substantial program. 4. The contract was not competed, raising questions about potential cost efficiencies. 5. Focus on missile and space systems highlights a critical defense capability. 6. Geographic impact concentrated in Texas, where the contractor is located.

Value Assessment

Rating: fair

The total contract value of $794.5 million for guided missile systems appears substantial. Benchmarking this against similar contracts for missile defense systems is crucial. Given the lack of competition, it's difficult to assess if the pricing reflects market value or if there were opportunities for cost savings. The contract's duration and scope suggest a significant investment in a key defense capability.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as 'NOT COMPETED,' indicating a sole-source procurement. This means only one bidder, Lockheed Martin Corporation, was considered. Without a competitive bidding process, it is challenging to ascertain the full range of available pricing and technological solutions. The lack of competition may limit opportunities for innovation and potentially lead to higher costs for the government.

Taxpayer Impact: Sole-source awards can result in taxpayers paying a premium as there is no market pressure to drive down prices. It also limits the government's ability to explore alternative, potentially more cost-effective solutions from other vendors.

Public Impact

The primary beneficiaries are the U.S. Army and potentially allied nations requiring advanced missile defense capabilities. Services delivered include the production and support of guided missile systems, specifically the Patriot PAC-3. Geographic impact is primarily in Texas, the location of Lockheed Martin's facility involved in contract performance. Workforce implications include employment at Lockheed Martin facilities, particularly in Grand Prairie, Texas, supporting advanced manufacturing and engineering roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher prices and reduced innovation.
Sole-source awards can create dependency on a single contractor.
Limited transparency in pricing due to the absence of competitive bids.

Positive Signals

Award to a major defense contractor with established expertise in missile systems.
Focus on a critical defense capability (Patriot PAC-3) enhances national security.
Long-term contract suggests a sustained need and commitment to the technology.

Sector Analysis

This contract falls within the Aerospace and Defense sector, specifically focusing on missile and space systems. The market for such advanced defense technologies is characterized by high barriers to entry, significant R&D investment, and long procurement cycles. Spending in this area is driven by national security priorities and geopolitical factors. Comparable spending benchmarks would involve other major missile defense programs and their associated procurement costs.

Small Business Impact

The data indicates this contract was not competed and does not specify any small business set-aside provisions or subcontracting goals. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely limited unless Lockheed Martin actively engages them for subcontracting opportunities. Further investigation into subcontracting plans would be needed to assess the broader impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting oversight mechanisms, including the Defense Contract Management Agency (DCMA) and potentially the Defense Contract Audit Agency (DCAA). Inspector General (IG) reports related to defense procurements could also provide insights. Transparency is limited due to the sole-source nature, but contract modifications and performance reports would be subject to review.

Related Government Programs

Patriot Missile System
Missile Defense Agency Programs
Guided Missile Manufacturing
Aerospace and Defense Contracting
Department of the Army Procurement

Risk Flags

Sole-source award raises concerns about price competition.
Lack of transparency in the procurement process.
Potential for cost overruns without competitive oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $319.1 million to LOCKHEED MARTIN CORPORATION. 200504!001394!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q05C0051 !A!N! !N! ! !20050127!20070430!794571448!794571448!834951691!N!LOCKHEED MARTIN CORPORATION !1701 W MARSHALL DRIVE !GRAND PRAIRIE !TX!75051!30464!113!48!GRAND PRAIRIE !DALLAS !TEXAS !+000076477687!Y!N!000000000000!1410!GUIDED MISSILES !A2 !MISSILE AND SPACE SYSTEMS !148 !PATRIOT PAC-3 !336414!E! !1! ! ! ! ! !202

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 $319.1 million.

What is the period of performance?

Start: 2005-01-27. End: 2008-12-31.

What is the historical spending trend for the Patriot PAC-3 missile system under Lockheed Martin?

Analyzing historical spending for the Patriot PAC-3 system requires accessing a broader dataset beyond this single contract. However, this $794.5 million award, spanning from January 2005 to April 2007 (with an extended period to December 2008), represents a significant investment. The Patriot system has been a cornerstone of U.S. and allied air defense for decades, undergoing continuous upgrades. Lockheed Martin, as the prime contractor, has consistently secured substantial funding for its production and modernization. Previous awards for the PAC-3 variant and related components would likely show a pattern of multi-million dollar contracts, reflecting the system's complexity and ongoing demand. Understanding the total lifecycle cost and cumulative spending would provide a more comprehensive picture of the program's financial footprint.

How does the per-unit cost of the Patriot PAC-3 missile compare to similar missile defense systems?

Determining the precise per-unit cost for the Patriot PAC-3 missile within this contract is challenging without detailed breakdowns of the $794.5 million award. Contracts of this nature often include costs for production, integration, testing, support, and potentially research and development, making a simple division of total value by units produced misleading. However, publicly available estimates and analyses of advanced missile defense systems, including the Patriot PAC-3, often place the per-unit cost in the millions of dollars. For instance, reports have cited figures ranging from $1 million to over $4 million per missile, depending on the specific variant and associated program costs. Benchmarking against systems like the THAAD (Terminal High Altitude Area Defense) or SM-3 (Standard Missile-3) would reveal that advanced missile defense interceptors are inherently high-cost items due to their sophisticated technology, precision engineering, and limited production runs.

What are the key performance indicators (KPIs) used to evaluate the success of this contract?

Key performance indicators (KPIs) for a contract like this, involving the production of guided missile systems, typically focus on delivery, quality, and cost control. Specific KPIs would likely include: On-Time Delivery: Meeting scheduled delivery dates for manufactured missiles and associated components. Quality Acceptance Rate: The percentage of delivered units that pass all quality inspections and testing without defects. Cost Performance: Adherence to the contract's budget, with variance analysis to identify and address cost overruns. Technical Performance: Ensuring the missiles meet specified performance requirements, such as range, accuracy, and reliability, often verified through testing. Production Efficiency: Metrics related to manufacturing throughput, yield rates, and resource utilization. While not explicitly detailed in the provided data, these are standard KPIs for complex defense manufacturing contracts.

What is Lockheed Martin's track record with the U.S. Army for missile systems?

Lockheed Martin has an extensive and long-standing track record with the U.S. Army, particularly in the development and production of missile systems. They are a primary contractor for numerous critical programs, including the aforementioned Patriot PAC-3, as well as systems like the HIMARS (High Mobility Artillery Rocket System) and various air-to-ground missiles. Their history includes both successful large-scale production runs and complex development efforts. The company is known for its significant R&D investments and its ability to scale production for high-demand defense assets. While generally considered a reliable supplier for major defense platforms, like any large contractor, they have faced scrutiny over cost, schedule, and performance on specific programs throughout their history. However, their continued role as a prime contractor for the Army's most advanced missile technologies underscores a generally positive and established relationship.

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

Sole-source contracts for critical defense hardware, such as the Patriot PAC-3 missile system, present several potential risks. Firstly, the lack of competition can lead to inflated prices, as the government does not benefit from the cost-saving pressures inherent in a competitive bidding process. Secondly, it can stifle innovation; without the incentive to compete, contractors may be less motivated to develop more efficient manufacturing processes or introduce technological advancements. Thirdly, there's a risk of vendor lock-in, where the government becomes overly dependent on a single supplier, making it difficult and costly to switch providers or integrate alternative solutions in the future. Finally, sole-source awards can sometimes raise concerns about transparency and fairness in the procurement process, potentially leading to public or congressional scrutiny regarding value for taxpayer money.

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: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 1701 W MARSHALL DRIVE, GRAND PRAIRIE, TX, 90

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: YES

Timeline