DoD's $16.6M contract for Letterkenny Depot repair capability awarded to Lockheed Martin without competition

Contract Overview

Contract Amount: $16,589,197 ($16.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2007-07-25

End Date: 2009-08-31

Contract Duration: 768 days

Daily Burn Rate: $21.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: FACILITIZATION OF LETTERKENNY ARMY DEPOT FOR FUTURE REPAIR CAPABILITY OF HIMARS AND M270A1 MISSILE SYSTEM COMPONENTS.

Place of Performance

Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $16.6 million to LOCKHEED MARTIN CORPORATION for work described as: FACILITIZATION OF LETTERKENNY ARMY DEPOT FOR FUTURE REPAIR CAPABILITY OF HIMARS AND M270A1 MISSILE SYSTEM COMPONENTS. Key points: 1. Contract awarded on a cost-plus-incentive-fee basis, potentially leading to cost overruns if not managed carefully. 2. Sole-source award raises concerns about price discovery and potential lack of competitive pressure to reduce costs. 3. Contract duration of 768 days suggests a significant undertaking for establishing future repair capabilities. 4. Focus on HIMARS and M270A1 missile systems indicates a critical defense readiness requirement. 5. The contract's value, while substantial, needs benchmarking against similar sustainment and depot modernization efforts. 6. Lack of competition may limit opportunities for smaller, specialized firms to contribute to this critical defense infrastructure.

Value Assessment

Rating: questionable

The contract's cost-plus-incentive-fee structure requires close monitoring to ensure value for money. Without competitive bidding, it's difficult to benchmark the pricing against market rates or alternative providers. The total obligated amount of $16.6 million for establishing repair capabilities for specific missile systems warrants scrutiny to ensure it aligns with industry standards for similar depot modernization or sustainment contracts. Further analysis would require understanding the specific scope of work and the cost drivers involved.

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 approach is typically used when only one responsible source can provide the required goods or services. The lack of competition means that the government did not benefit from the price discovery and innovation that typically arises from multiple bidders vying for a contract. This can potentially lead to higher costs for the taxpayer.

Taxpayer Impact: The absence of competition means taxpayers may not have received the best possible price for establishing this critical repair capability. Without competing offers, the government had limited leverage to negotiate down the price.

Public Impact

The primary beneficiaries are the U.S. Army and Department of Defense, ensuring readiness for HIMARS and M270A1 missile systems. The contract aims to establish or enhance repair capabilities at the Letterkenny Army Depot. This initiative supports the sustainment of critical defense assets, contributing to national security. The contract may have implications for the specialized workforce at Letterkenny Army Depot and potentially the surrounding region in Texas.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs.
Cost-plus-incentive-fee structure requires robust oversight to prevent cost overruns.
Lack of transparency in the procurement process due to sole-source nature.

Positive Signals

Addresses a critical need for missile system repair capability, enhancing defense readiness.
Awarded to a known defense contractor (Lockheed Martin) with relevant expertise.
Focus on specific, high-value defense assets suggests strategic importance.

Sector Analysis

This contract falls within the defense industrial base, specifically focusing on the maintenance and repair of complex military equipment. The market for such specialized depot-level repair services is often concentrated among a few large defense contractors. Benchmarking this contract's value would require comparing it to other sustainment contracts for similar weapon systems or depot modernization projects within the Department of Defense, which often involve significant investment in infrastructure and specialized labor.

Small Business Impact

The contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. This sole-source award to a large prime contractor limits opportunities for small businesses that might possess specialized repair capabilities for missile system components. The impact on the small business ecosystem is likely minimal unless Lockheed Martin voluntarily engages small business subcontractors.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army and the Department of Defense contracting and program management offices. Given the cost-plus-incentive-fee structure, rigorous financial oversight and performance monitoring are crucial to ensure the contractor meets objectives efficiently and cost-effectively. Transparency may be limited due to the sole-source nature, but contract performance reviews and audits by relevant Inspector General offices would be standard.

Related Government Programs

HIMARS Sustainment Programs
M270A1 MLRS Sustainment
Army Depot Maintenance Programs
Missile System Component Repair
Defense Logistics Agency (DLA) Support Contracts

Risk Flags

Sole-source award
Cost-plus-incentive-fee contract type
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.6 million to LOCKHEED MARTIN CORPORATION. FACILITIZATION OF LETTERKENNY ARMY DEPOT FOR FUTURE REPAIR CAPABILITY OF HIMARS AND M270A1 MISSILE SYSTEM COMPONENTS.

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 $16.6 million.

What is the period of performance?

Start: 2007-07-25. End: 2009-08-31.

What is Lockheed Martin's track record with similar depot repair and sustainment contracts for the DoD?

Lockheed Martin Corporation is a major defense contractor with extensive experience in sustainment, logistics, and depot-level maintenance for a wide array of military platforms, including missile systems. They have a long history of managing complex contracts for the Department of Defense, often involving the repair, overhaul, and upgrade of critical weapon systems. While specific details on past performance for HIMARS and M270A1 component repair at a depot level would require deeper research into contract databases and performance reports, Lockheed Martin's overall portfolio suggests they possess the necessary technical expertise and infrastructure. However, the performance on cost-plus-incentive-fee contracts can vary, and close oversight is always necessary to ensure efficiency and value.

How does the $16.6 million contract value compare to similar efforts in establishing missile system repair capabilities?

Benchmarking the $16.6 million contract value for establishing repair capabilities for HIMARS and M270A1 components is challenging without detailed scope of work and specific deliverables. However, depot modernization and sustainment contracts for complex weapon systems can range from millions to hundreds of millions of dollars, depending on the scope, duration, and required infrastructure. Given this is for specific component repair capabilities rather than full system overhaul, $16.6 million over approximately two years appears to be within a plausible range for establishing specialized repair lines. A more precise comparison would require analyzing contracts for similar depot-level maintenance facilities or sustainment efforts for comparable missile artillery systems.

What are the primary risks associated with a sole-source, cost-plus-incentive-fee contract for depot modernization?

The primary risks associated with a sole-source, cost-plus-incentive-fee (CPIF) contract for depot modernization are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated costs as the contractor may not feel compelled to offer the most competitive pricing. The government has less leverage in price negotiation. Secondly, the CPIF structure, while incentivizing performance, can lead to cost overruns if the target costs are not well-defined or if the contractor's efficiency is not rigorously monitored. There's a risk that the final cost could significantly exceed initial estimates if the incentive structure is not perfectly aligned with cost control and efficient execution. Robust government oversight is critical to mitigate these risks.

What is the historical spending pattern for Letterkenny Army Depot for similar repair and sustainment services?

Historical spending data for Letterkenny Army Depot on similar repair and sustainment services would provide valuable context for this $16.6 million contract. Letterkenny Army Depot has a long history of supporting missile systems and munitions for the U.S. Army. Analyzing past contracts awarded to Letterkenny, whether for depot maintenance, modernization, or component repair, would reveal trends in spending, typical contract types (competitive vs. sole-source), and average contract values. This analysis could help determine if the current contract's value and terms are consistent with historical investments in maintaining similar capabilities at the depot or if there are significant deviations that warrant further investigation.

How does the 'Commercial and Industrial Machinery and Equipment Repair and Maintenance' NAICS code relate to the specific missile system components being repaired?

The NAICS code 811310, 'Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance,' is a broad classification. While missile system components are highly specialized, they can fall under this category if they are considered industrial machinery requiring complex repair and maintenance services. This code suggests the contract involves the physical repair, servicing, and maintenance of mechanical or electro-mechanical equipment. The specific nature of HIMARS and M270A1 components likely involves intricate mechanical systems, hydraulics, and potentially some electronic integration, fitting within the general scope of industrial equipment repair, albeit at a highly specialized defense level.

Industry Classification

NAICS: Other Services (except Public Administration) › Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance › Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance

Product/Service Code: UTILITIES AND HOUSEKEEPING › HOUSEKEEPING SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W31P4Q07R0102

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

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

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $16,589,197

Exercised Options: $16,589,197

Current Obligation: $16,589,197

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline