DoD's $274M M299 Launcher Modernization Program awarded to Lockheed Martin shows fair value with 2 bidders

Contract Overview

Contract Amount: $27,429,253 ($27.4M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2008-07-31

End Date: 2016-03-31

Contract Duration: 2,800 days

Daily Burn Rate: $9.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: M299 LAUNCHER MODERNIZATION PROGRAM.

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $27.4 million to LOCKHEED MARTIN CORPORATION for work described as: M299 LAUNCHER MODERNIZATION PROGRAM. Key points: 1. The contract awarded to Lockheed Martin for the M299 Launcher Modernization Program appears to represent fair value, given the competitive nature of the bidding process. 2. Competition dynamics indicate a healthy market for this specialized defense component, with two significant bidders vying for the contract. 3. Risk indicators are moderate, primarily associated with the complexity of defense system upgrades and potential for schedule slippage. 4. Performance context suggests a focus on modernizing existing missile launcher systems, crucial for maintaining technological superiority. 5. The contract positions Lockheed Martin as a key player in the defense sector for missile system components. 6. The firm-fixed-price contract type helps mitigate cost overrun risks for the government.

Value Assessment

Rating: good

The total award amount of $274.3 million for the M299 Launcher Modernization Program appears reasonable when considering the specialized nature of defense hardware and the firm-fixed-price contract type. Benchmarking against similar complex defense system upgrades suggests that this pricing falls within expected ranges. The presence of two bidders also implies a degree of market validation for the proposed costs. However, a more granular analysis of the specific components and labor hours would be needed for a definitive value-for-money assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The fact that two bids were received suggests a competitive environment for this specific defense requirement. While two bidders is a positive sign, a higher number of bidders could potentially drive prices down further. The selection of Lockheed Martin implies their bid was deemed the most advantageous to the government.

Taxpayer Impact: The full and open competition, with two bidders, suggests that taxpayers likely benefited from a competitive pricing structure, avoiding the potential overpricing associated with sole-source or limited competition contracts.

Public Impact

The primary beneficiaries of this contract are the U.S. Army, receiving modernized missile launcher systems essential for national defense. The services delivered include the modernization of M299 launchers, enhancing their capability and lifespan. The geographic impact is primarily within the United States, with potential deployment of modernized systems to various operational theaters. Workforce implications include skilled labor in manufacturing, engineering, and program management within the defense industry, particularly at Lockheed Martin facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen technical challenges arise during modernization.
Dependence on a single prime contractor for critical defense system components.
Risk of schedule delays in complex defense procurement processes.

Positive Signals

Firm-fixed-price contract structure limits government exposure to cost increases.
Awarded under full and open competition, suggesting competitive pricing.
Experienced contractor (Lockheed Martin) with a track record in defense systems.

Sector Analysis

The defense sector, particularly within the guided missile and space vehicle propulsion unit manufacturing sub-sector, is characterized by high barriers to entry, significant R&D investment, and long-term government contracts. This contract fits within the broader strategy of modernizing aging military hardware to maintain technological superiority. Comparable spending benchmarks in this niche often involve multi-year, high-value contracts due to the complexity and criticality of the systems involved.

Small Business Impact

There is no indication that this contract included specific small business set-asides. However, as a large prime contractor, Lockheed Martin is expected to engage small businesses through subcontracting opportunities. The extent of small business participation will depend on the specific requirements and supply chain utilized for this modernization program.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Army contracting officers and program managers. Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of specified modernized systems. Transparency is generally maintained through contract award databases and reporting requirements, though specific technical details may be sensitive. The Inspector General's office within the Department of Defense would have jurisdiction over any potential fraud, waste, or abuse.

Related Government Programs

Missile Systems Modernization Programs
Army Aviation and Missile Command Contracts
Guided Missile Launcher Programs
Defense Logistics Agency Procurement

Risk Flags

Potential for schedule delays
Technical complexity of modernization
Contractor performance risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.4 million to LOCKHEED MARTIN CORPORATION. M299 LAUNCHER MODERNIZATION PROGRAM.

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 $27.4 million.

What is the period of performance?

Start: 2008-07-31. End: 2016-03-31.

What is Lockheed Martin's track record with similar defense modernization contracts?

Lockheed Martin has an extensive and well-established track record in executing large-scale defense modernization programs for various branches of the U.S. military. They are a primary contractor for numerous missile systems, including the Patriot, THAAD, and HIMARS, which involve complex integration, upgrades, and sustainment. Their experience spans decades, encompassing research, development, production, and lifecycle support for critical defense assets. While specific performance metrics for every contract are not publicly detailed, their consistent selection for major programs suggests a generally positive performance history and a strong capability to meet stringent military requirements. However, like any large defense contractor, they have faced scrutiny and challenges on specific projects related to cost, schedule, and technical performance, which are inherent risks in the defense industry.

How does the value of this contract compare to other M299 launcher modernization efforts?

Direct comparisons for the M299 Launcher Modernization Program's value are challenging without access to detailed historical procurement data for this specific system. However, the $274.3 million award for a definitive contract spanning approximately 2.8 years (2800 days) suggests a significant investment in upgrading these critical components. The firm-fixed-price nature indicates a defined scope and budget. To benchmark effectively, one would need to analyze the number of units being modernized, the specific technological upgrades included, and compare this to previous or concurrent modernization efforts for similar launcher systems across different military branches or even allied nations. The presence of two bidders implies a degree of market assessment that the price was competitive within the existing landscape for such specialized defense hardware.

What are the primary risks associated with this specific contract?

The primary risks associated with the M299 Launcher Modernization Program contract include technical complexity, potential for schedule delays, and contractor performance. Modernizing defense systems often involves integrating new technologies with legacy platforms, which can lead to unforeseen technical challenges and require extensive testing and validation. Schedule delays are a common risk in defense procurement due to the intricate planning, manufacturing, and testing processes involved, as well as potential supply chain disruptions. Contractor performance risk, while mitigated by Lockheed Martin's experience, always exists; ensuring the contractor meets all technical specifications, quality standards, and delivery timelines is crucial. Furthermore, geopolitical shifts or changes in defense priorities could potentially impact the program's scope or urgency.

How effective has the Department of the Army been in managing similar large-scale hardware modernization contracts?

The Department of the Army has a long history of managing large-scale hardware modernization contracts, with varying degrees of success. They have successfully modernized critical platforms like tanks, aircraft, and missile systems, enhancing warfighting capabilities. However, these programs are often complex and subject to significant oversight due to their high cost and strategic importance. Challenges such as cost overruns, schedule slippage, and performance issues have been documented in various Army modernization efforts. The Army employs a range of management strategies, including robust program management offices, competitive contracting, and oversight from agencies like the Government Accountability Office (GAO) and the Department of Defense Inspector General, to mitigate these risks. The effectiveness can vary significantly depending on the specific program, the technologies involved, and the contracting approach utilized.

What are the historical spending patterns for guided missile and space vehicle propulsion unit manufacturing?

Historical spending patterns in the guided missile and space vehicle propulsion unit manufacturing sector reveal a consistent and significant investment by the U.S. government, primarily the Department of Defense. This sector is characterized by high R&D costs, long development cycles, and the production of highly specialized, technologically advanced components. Spending tends to be concentrated among a few major defense contractors due to the expertise and infrastructure required. Trends often reflect evolving military strategies, the need to counter emerging threats, and the lifecycle management of existing weapon systems. Major spending surges can occur during periods of increased geopolitical tension or when new generations of missile technology are being developed and fielded. The overall trend is one of sustained, albeit fluctuating, high-value procurement driven by national security imperatives.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Propulsion Unit and Propulsion Unit Parts Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W31P4Q08R0204

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 5600 W SAND LAKE RD MP125, ORLANDO, FL, 32819

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $27,429,253

Exercised Options: $27,429,253

Current Obligation: $27,429,253

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline