DoD's $258M HIMARS/M270A1 support contract awarded to Lockheed Martin without competition

Contract Overview

Contract Amount: $258,262,043 ($258.3M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2008-01-01

End Date: 2019-09-30

Contract Duration: 4,290 days

Daily Burn Rate: $60.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: HIMARS/M270A1 LIFE-CYCLE CONTRACTOR SUPPORT, CALENDAR YEARS 2008-2010.

Place of Performance

Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $258.3 million to LOCKHEED MARTIN CORPORATION for work described as: HIMARS/M270A1 LIFE-CYCLE CONTRACTOR SUPPORT, CALENDAR YEARS 2008-2010. Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential overpayment. 2. Long contract duration (2008-2019) suggests a sustained need for contractor support. 3. The contract type (Firm Fixed Price) aims to control costs but may not reflect market dynamics without competition. 4. Focus on repair and maintenance of critical missile systems highlights the importance of reliable support. 5. Contractor's sole award indicates a potential lack of market alternatives or a strategic decision to use a single provider. 6. Geographic location in Texas may point to specific operational or logistical hubs for these systems.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and long duration. Without competitive bids, it's difficult to ascertain if the $258 million spent represents a fair market price. The firm fixed-price structure provides some cost certainty, but the absence of competition limits the government's ability to leverage market forces for better pricing. Further analysis would require comparing the services rendered and their costs against similar support contracts for other major weapon systems, which are not readily available in this dataset.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded without competition, meaning only one offer was solicited and considered. This approach is typically justified when only one responsible source is available or when a compelling urgency dictates a sole-source award. The lack of multiple bidders means the Department of Defense did not benefit from a competitive bidding process, which usually drives down prices and encourages innovation. The rationale for this sole-source award would need to be thoroughly documented by the agency to ensure it was justified.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing offers, the government has less leverage to negotiate the best possible price, potentially leading to higher overall expenditures.

Public Impact

The primary beneficiaries are the U.S. Army units operating the HIMARS (High Mobility Artillery Rocket System) and M270A1 Multiple Launch Rocket System. Services delivered include essential life-cycle contractor support, likely encompassing maintenance, repair, logistics, and potentially upgrades for these critical weapon platforms. The geographic impact is centered in Texas, where the contractor is located, suggesting a concentration of support activities or personnel in that state. Workforce implications include the employment of skilled technicians and support staff by Lockheed Martin to fulfill the contract requirements.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Long contract duration may indicate a lack of market alternatives or potential for vendor lock-in.
Lack of transparency in the justification for sole-source award could hide inefficiencies.
Firm Fixed Price contract, while aiming for cost control, might not reflect true market value without competition.

Positive Signals

Firm Fixed Price contract provides cost certainty for the government.
Contract supports critical and advanced weapon systems, ensuring operational readiness.
Long-term support contract suggests a stable and reliable partnership for essential services.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically supporting complex military equipment. The market for life-cycle support of specialized weapon systems like HIMARS and M270A1 is often concentrated among a few prime contractors due to the high technical expertise and security clearances required. Spending benchmarks for such specialized support are difficult to establish without direct comparisons to similar sole-source contracts for other advanced military platforms, but the scale of this contract indicates a significant investment in maintaining these capabilities.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss': false and 'sb': false. The sole-source nature of the award further suggests that opportunities for small businesses to participate as prime contractors were likely limited. While Lockheed Martin, the prime contractor, may engage small businesses for subcontracting, the primary award mechanism did not prioritize small business participation.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. Accountability measures would be tied to the performance metrics outlined in the contract and the firm fixed-price structure. Transparency regarding the justification for the sole-source award and the specific services provided would be crucial for assessing accountability. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

HIMARS Program Support
M270A1 Program Support
Missile Systems Maintenance Contracts
Defense Logistics Support Contracts
Lockheed Martin Defense Contracts

Risk Flags

Sole-source award
Lack of competitive bidding
Long contract duration
Potential for cost overruns without competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $258.3 million to LOCKHEED MARTIN CORPORATION. HIMARS/M270A1 LIFE-CYCLE CONTRACTOR SUPPORT, CALENDAR YEARS 2008-2010.

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 $258.3 million.

What is the period of performance?

Start: 2008-01-01. End: 2019-09-30.

What was the specific justification provided by the Department of the Army 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 awarded under circumstances such as only one responsible source being available, or when a compelling urgency necessitates immediate action that precludes full and open competition. For a contract of this magnitude and duration supporting critical weapon systems, the justification would likely involve proprietary technology, unique manufacturing capabilities, or specialized expertise held exclusively by Lockheed Martin. Without the official justification document, it is impossible to definitively state the Army's rationale, but it would need to meet Federal Acquisition Regulation (FAR) criteria for non-competitive procurement.

How does the total contract value of $258 million compare to similar life-cycle support contracts for comparable weapon systems?

Direct comparison of this $258 million contract value to similar life-cycle support contracts for comparable weapon systems is challenging without access to a broader dataset of defense contracts, particularly those awarded on a sole-source basis. The HIMARS and M270A1 are complex, high-value systems, and their life-cycle support costs can be substantial. However, the absence of competition makes it difficult to assess if this value is competitive. A firm fixed-price contract over an 11-year period (2008-2019) suggests significant sustainment requirements. To benchmark effectively, one would need to analyze contracts for similar systems (e.g., other rocket artillery or missile platforms) that were competed, or sole-source contracts with similar durations and service scopes, to identify potential cost variances.

What are the potential risks associated with a sole-source, firm-fixed-price contract of this duration for critical defense systems?

A sole-source, firm-fixed-price contract of this duration presents several potential risks. Firstly, the lack of competition means the government may not be achieving the best possible price, potentially leading to overspending. Secondly, vendor lock-in is a significant risk; the contractor may have less incentive to innovate or reduce costs over time, knowing there are no immediate alternatives. Thirdly, the long duration could mask inefficiencies or scope creep if not rigorously overseen. While firm-fixed-price aims to cap costs, without competition, the initial price might be inflated. Finally, reliance on a single contractor for critical systems can create vulnerabilities if the contractor faces financial instability, operational issues, or changes in strategic focus.

What performance metrics or oversight mechanisms were likely in place to ensure contractor performance and value for money, despite the sole-source nature?

Despite the sole-source nature, robust oversight mechanisms are typically expected for contracts of this magnitude supporting critical defense systems. Performance metrics would likely be defined within the contract's Statement of Work (SOW), focusing on aspects like system availability, response times for maintenance and repair, quality of work, and adherence to delivery schedules. Oversight would involve government program managers, quality assurance representatives, and potentially contracting officers' representatives (CORs) who monitor contractor activities and deliverables. Regular performance reviews, audits, and milestone tracking would be employed to ensure the contractor meets its obligations and that the services provided align with the contract's objectives and value expectations.

How has spending on HIMARS/M270A1 life-cycle support evolved over the contract period (2008-2019), and are there trends visible?

The provided data aggregates the total spending of $258,262,042.89 over the entire contract period from January 1, 2008, to September 30, 2019 (approximately 11.75 years). It does not provide a year-over-year breakdown of spending. Therefore, specific trends in spending evolution cannot be determined from this data alone. To analyze spending trends, one would need access to annual or quarterly expenditure data for this contract. Such data could reveal patterns related to operational tempo, system upgrades, or changes in maintenance requirements over the contract's lifespan.

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: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

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 DR, GRAND PRAIRIE, TX, 75051

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $258,262,043

Exercised Options: $258,262,043

Current Obligation: $258,262,043

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline