DoD awards $674M+ for HIMARS production to Lockheed Martin, impacting international allies

Contract Overview

Contract Amount: $674,487,291 ($674.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2007-12-28

End Date: 2013-09-16

Contract Duration: 2,089 days

Daily Burn Rate: $322.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: HIMARS FULL RATE PRODUCTION (FRP) -3, FOR FMS-UAE AND SINGAPORE, WITH ASSOCIATED EQUIPMENT, LOGISTICS SUPPORT, AND A PROVISION FOR ADDITIVE OPTIONS FOR HIMARS FRP 4 AND 5.

Place of Performance

Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $674.5 million to LOCKHEED MARTIN CORPORATION for work described as: HIMARS FULL RATE PRODUCTION (FRP) -3, FOR FMS-UAE AND SINGAPORE, WITH ASSOCIATED EQUIPMENT, LOGISTICS SUPPORT, AND A PROVISION FOR ADDITIVE OPTIONS FOR HIMARS FRP 4 AND 5. Key points: 1. Contract awarded as a sole-source, indicating limited competition for this specialized defense system. 2. Significant portion allocated for Foreign Military Sales (FMS) to UAE and Singapore, highlighting international reliance. 3. Includes logistics support and options for future production, suggesting a long-term commitment. 4. The contract's duration of over 2000 days points to a substantial, multi-year acquisition. 5. Focus on guided missile manufacturing places this within a critical, high-value defense sector.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and specific application for HIMARS. However, the total award amount of over $674 million for a multi-year production run, including associated equipment and logistics, suggests a significant investment. Without competitive bids, it's difficult to definitively assess if the pricing represents the best value for taxpayers. The inclusion of options for future production phases (FRP 4 and 5) indicates a strategic, albeit potentially costly, approach to ensuring continued supply.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Lockheed Martin Corporation. This approach is often taken for highly specialized defense systems where only one manufacturer possesses the necessary technology, expertise, and production capabilities. The lack of competition means there was no direct price comparison through bidding, potentially leading to higher costs than if multiple vendors had vied for the contract.

Taxpayer Impact: The sole-source nature of this award means taxpayers did not benefit from the price reductions typically seen in competitive bidding processes. This could result in a higher overall expenditure for the acquisition of these critical defense systems.

Public Impact

The primary beneficiaries are the United Arab Emirates (UAE) and Singapore, receiving advanced HIMARS systems through Foreign Military Sales. The contract ensures the continued production and delivery of the High Mobility Artillery Rocket System (HIMARS), a key strategic weapon. Geographic impact is international, supporting the defense capabilities of allied nations. Workforce implications include sustained employment at Lockheed Martin facilities, particularly in Texas where the contract is managed.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential cost savings for the government.
Long-term commitment with options for future production phases could lead to escalating costs if not carefully managed.
Reliance on a single contractor for a critical defense system poses a supply chain risk.

Positive Signals

Ensures continued availability of a vital defense asset for both U.S. and allied forces.
Includes comprehensive logistics support, contributing to the operational readiness of the systems.
Awarding options for future production phases demonstrates a strategic approach to long-term defense needs.

Sector Analysis

The defense sector, specifically guided missile and space vehicle manufacturing, is characterized by high barriers to entry, significant R&D investment, and long production cycles. Contracts like this represent substantial portions of a company's revenue and are critical for maintaining national defense capabilities. Comparable spending benchmarks are difficult to establish due to the unique nature of the HIMARS system, but multi-billion dollar defense procurement programs are common.

Small Business Impact

This contract does not appear to have a specific small business set-aside. Given the specialized nature of HIMARS production, it is unlikely that small businesses would be primary contractors. However, Lockheed Martin may engage small businesses as subcontractors for components or support services, contributing to the broader defense industrial base.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. The Army Contracting Command likely oversees the execution. Transparency is generally maintained through contract award databases, though specific details of production costs and performance metrics may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Guided Missile Manufacturing
Foreign Military Sales
Artillery Systems
Defense Logistics Support
Advanced Weapons Platforms

Risk Flags

Sole-source award
Potential for cost overruns
Long-term dependency on a single supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $674.5 million to LOCKHEED MARTIN CORPORATION. HIMARS FULL RATE PRODUCTION (FRP) -3, FOR FMS-UAE AND SINGAPORE, WITH ASSOCIATED EQUIPMENT, LOGISTICS SUPPORT, AND A PROVISION FOR ADDITIVE OPTIONS FOR HIMARS FRP 4 AND 5.

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 $674.5 million.

What is the period of performance?

Start: 2007-12-28. End: 2013-09-16.

What is the historical spending trend for HIMARS production contracts awarded to Lockheed Martin?

Historical data indicates a consistent need for HIMARS production, with multiple contracts awarded to Lockheed Martin over the years. While this specific award is for over $674 million, previous awards have also been substantial, reflecting the system's strategic importance. For instance, prior Full Rate Production (FRP) phases have also involved significant financial commitments. Analyzing the cumulative spending across all FRP phases would provide a clearer picture of the long-term investment in this platform. The trend suggests a sustained demand driven by both U.S. military requirements and international partnerships, making it a significant and ongoing expenditure within the defense budget.

How does the pricing of this HIMARS contract compare to similar defense systems or previous HIMARS procurements?

Direct price comparisons for this specific HIMARS contract are challenging due to its sole-source nature and the inclusion of associated equipment and logistics. However, the per-unit cost of advanced missile systems can be substantial. Benchmarking against other complex, multi-launch rocket systems or similar high-mobility platforms within the defense sector would be necessary for a comprehensive value assessment. Without competitive bids, it's difficult to ascertain if the negotiated price reflects optimal value. Future contract actions, especially if they move towards a more competitive environment or involve scaled production, could offer better comparative data points.

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

Key performance indicators for this HIMARS production contract would likely include on-time delivery of systems and components, adherence to quality standards (e.g., defect rates), and successful integration of associated equipment and logistics support. For Foreign Military Sales (FMS), meeting the specific requirements and delivery schedules agreed upon with the UAE and Singapore is paramount. Contractor performance metrics, such as production efficiency and cost control within the awarded budget, are also critical. The successful completion of optional phases (FRP 4 and 5) would also be a measure of long-term program success and contractor capability.

What is the track record of Lockheed Martin Corporation in delivering complex defense systems like HIMARS?

Lockheed Martin Corporation has a long and extensive track record in developing and producing complex defense systems, including the HIMARS. They are a major prime contractor for the U.S. Department of Defense and numerous international clients. Their experience spans decades, encompassing a wide range of platforms from aircraft and missiles to naval systems and space technology. While specific contract performance can vary, Lockheed Martin is generally recognized for its capability to deliver sophisticated, high-value defense assets. Their consistent role as a primary supplier for systems like HIMARS suggests a strong performance history in meeting demanding technical and production requirements.

What are the potential risks associated with the sole-source nature of this contract?

The primary risk associated with a sole-source contract is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government has less leverage to negotiate the best possible price. This can lead to higher overall expenditures for taxpayers. Additionally, sole-source awards can create a dependency on a single supplier, potentially leading to supply chain vulnerabilities if that supplier faces production issues, financial instability, or geopolitical challenges. It also limits opportunities for innovation that might arise from a more competitive market.

How does this contract contribute to the U.S. Department of Defense's strategic objectives?

This contract directly supports the U.S. Department of Defense's strategic objectives by ensuring the continued production and availability of the HIMARS, a critical component of modern artillery and long-range precision strike capabilities. By fulfilling orders for allied nations (UAE and Singapore), it strengthens international partnerships and enhances coalition interoperability, a key tenet of U.S. foreign policy and defense strategy. The contract also sustains domestic defense industrial capacity, ensuring that the U.S. maintains a robust manufacturing base for essential weaponry, thereby supporting national security and readiness.

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

Solicitation ID: W31P4Q07R0122

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 DR, GRAND PRAIRIE, TX, 75051

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $1,324,019,700

Exercised Options: $1,324,019,700

Current Obligation: $674,487,291

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline