DoD's $544M Unitary Tri Mode Rocket Contract Awarded to Lockheed Martin Raises Cost Concerns
Contract Overview
Contract Amount: $544,185,114 ($544.2M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2008-12-29
End Date: 2012-06-30
Contract Duration: 1,279 days
Daily Burn Rate: $425.5K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: UNITARY TRI MODE ROCKET
Place of Performance
Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051
State: Texas Government Spending
Plain-Language Summary
Department of Defense obligated $544.2 million to LOCKHEED MARTIN CORPORATION for work described as: UNITARY TRI MODE ROCKET Key points: 1. Significant spending on a specialized missile system. 2. Sole-source award limits competitive pricing. 3. Potential for cost overruns given fixed-price contract type. 4. Missile manufacturing sector is highly specialized and consolidated.
Value Assessment
Rating: questionable
The total award value of $544 million for 1 unit over approximately 3.5 years is difficult to benchmark without per-unit cost data. The firm fixed-price contract type suggests an attempt to control costs, but the lack of competition could lead to inflated pricing.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
The contract was not competed, indicating a sole-source award. This significantly limits price discovery and negotiation leverage for the government, potentially resulting in higher costs than if multiple vendors had bid.
Taxpayer Impact: The lack of competition in this sole-source award means taxpayers may be paying a premium for this missile system, as there was no market pressure to drive down costs.
Public Impact
Taxpayers fund advanced missile technology for defense. Limited public information on the specific capabilities and necessity of this missile. Potential for long-term sustainment costs beyond the initial contract.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Lack of per-unit cost data
- High total contract value
Positive Signals
- Firm fixed-price contract
Sector Analysis
This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, which is characterized by high R&D costs, stringent quality requirements, and a limited number of prime contractors. Spending benchmarks are difficult to establish due to the specialized nature of such systems.
Small Business Impact
The data indicates this contract was awarded to Lockheed Martin Corporation, a large defense contractor. There is no indication that small businesses were involved as prime contractors or significant subcontractors in this specific award.
Oversight & Accountability
The contract was awarded by the Department of the Army, a component of the Department of Defense. Oversight would typically involve program management reviews and contract performance monitoring, but the sole-source nature might reduce scrutiny on pricing.
Related Government Programs
- Guided Missile and Space Vehicle Manufacturing
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Sole-source award limits competition.
- Lack of per-unit cost data hinders value assessment.
- High total contract value for a single unit.
- Potential for contractor to exploit lack of competition.
- Limited transparency on pricing justification.
Tags
guided-missile-and-space-vehicle-manufac, department-of-defense, tx, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $544.2 million to LOCKHEED MARTIN CORPORATION. UNITARY TRI MODE ROCKET
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 $544.2 million.
What is the period of performance?
Start: 2008-12-29. End: 2012-06-30.
What was the rationale for awarding this contract on a sole-source basis, and what steps were taken to ensure fair and reasonable pricing?
The rationale for a sole-source award typically involves unique capabilities, proprietary technology, or a lack of viable alternatives. Without further documentation, it's unclear what specific justification was used. To ensure fair and reasonable pricing, the government might have conducted a price analysis based on historical data, cost proposals, or independent government cost estimates, but the absence of competition inherently weakens the negotiation position.
What are the potential risks associated with a sole-source, firm-fixed-price contract for a complex missile system?
A sole-source, firm-fixed-price contract for a complex missile system carries risks of inflated pricing due to lack of competition and potential cost overruns if the contractor underestimated development or production expenses. The government has limited leverage to negotiate price reductions. Furthermore, reliance on a single supplier can create supply chain vulnerabilities and reduce future flexibility.
How does the $544 million expenditure for one missile unit align with the effectiveness and strategic value of the Unitary Tri Mode Rocket system?
Assessing the effectiveness and strategic value requires detailed knowledge of the missile's capabilities, threat environment, and alternative solutions. The high cost per unit suggests a highly advanced or specialized system. Without performance data and a clear understanding of its contribution to national security objectives, it's challenging to definitively state if the expenditure aligns with its intended effectiveness and value.
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 DR, GRAND PRAIRIE, TX, 75051
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $544,221,475
Exercised Options: $544,185,114
Current Obligation: $544,185,114
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2008-12-29
Current End Date: 2012-06-30
Potential End Date: 2012-06-30 12:06:00
Last Modified: 2016-09-27
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