DoD's $67.5M contract for guided missiles awarded to Lockheed Martin, citing UK direction

Contract Overview

Contract Amount: $67,562,030 ($67.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2009-03-10

End Date: 2013-02-28

Contract Duration: 1,451 days

Daily Burn Rate: $46.6K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: M270B2 SYSTEM. SOURCE DIRECTED BY THE UNITED KINGDOM.

Place of Performance

Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $67.6 million to LOCKHEED MARTIN CORPORATION for work described as: M270B2 SYSTEM. SOURCE DIRECTED BY THE UNITED KINGDOM. Key points: 1. Contract awarded under sole-source conditions due to foreign government direction. 2. Significant portion of contract value allocated to a single, large prime contractor. 3. Contract duration spans over four years, indicating a substantial project. 4. Fixed-price contract type aims to control costs, but scope creep remains a risk. 5. Geographic location of performance is Texas, potentially impacting local economy. 6. No small business set-aside noted, suggesting limited direct benefit to smaller firms.

Value Assessment

Rating: questionable

The contract's value of $67.5 million for guided missile systems is difficult to benchmark without specific system details and comparable international sales. The sole-source nature, driven by UK direction, bypasses standard competitive price discovery, making a direct value-for-money assessment challenging. While a firm fixed-price structure is generally favorable for cost control, the absence of competition raises concerns about whether the pricing reflects the best possible value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, as it was sourced directly by the United Kingdom. This sole-source award mechanism, while potentially efficient for meeting specific allied requirements, limits the opportunity for multiple vendors to bid and drive down prices through competition. The lack of a competitive process means that pricing and terms were likely negotiated directly with Lockheed Martin based on the UK's requirements.

Taxpayer Impact: Taxpayers may not be receiving the best possible price due to the absence of a competitive bidding process. The government's ability to negotiate favorable terms is reduced when only one supplier is considered.

Public Impact

The primary beneficiary is the United Kingdom's defense apparatus, receiving advanced guided missile systems. The contract supports the manufacturing and delivery of guided missile and space vehicles. Performance is concentrated in Texas, potentially creating or sustaining jobs in that region. The contract contributes to the broader defense industrial base, particularly in missile technology.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits transparency and potential cost savings.
Reliance on a single large contractor for critical defense components.
Potential for cost overruns if initial pricing does not account for all eventualities.
Lack of small business involvement may limit broader economic impact.

Positive Signals

Awarded to a known, established defense contractor with significant experience.
Firm fixed-price contract type provides cost certainty for the base scope.
Contract directly supports a key ally (United Kingdom), strengthening international partnerships.
Performance location in Texas may provide regional economic benefits.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a specialized segment of the aerospace and defense industry. This sector is characterized by high R&D investment, stringent quality control, and often involves complex, long-term production cycles. Spending in this area is typically driven by national security requirements and international defense cooperation. Comparable spending benchmarks are difficult to establish due to the proprietary nature of specific weapon systems and the unique demands of foreign military sales.

Small Business Impact

This contract does not appear to include a small business set-aside, nor is there an indication of significant subcontracting opportunities for small businesses based on the provided data. The award to a large prime contractor like Lockheed Martin suggests that the primary focus is on the prime's capabilities. This could limit the direct economic benefits and opportunities for the small business ecosystem within this specific contract's scope.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, with potential involvement from the Defense Contract Management Agency (DCMA). Accountability is managed through contract clauses, performance metrics, and payment schedules. Transparency is limited due to the sole-source nature and foreign military sales context. Inspector General jurisdiction would apply to allegations of fraud, waste, or abuse.

Related Government Programs

Foreign Military Sales Program
Guided Missile Procurement
Aerospace and Defense Manufacturing
Lockheed Martin Contracts
Department of Defense Major Contracts

Risk Flags

Sole-source award lacks competitive pricing validation.
Contract duration is lengthy, increasing exposure to potential risks.
Specific system details and capabilities are not publicly disclosed.
No small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $67.6 million to LOCKHEED MARTIN CORPORATION. M270B2 SYSTEM. SOURCE DIRECTED BY THE UNITED KINGDOM.

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 $67.6 million.

What is the period of performance?

Start: 2009-03-10. End: 2013-02-28.

What is the specific type of guided missile system being procured, and what are its intended capabilities?

The provided data does not specify the exact model or type of guided missile system. The contract falls under PSC (Product Service Code) NA, which covers Guided Missile and Space Vehicle Manufacturing. Without further details, it's impossible to ascertain the specific capabilities, such as range, payload, guidance technology, or target set. This information is crucial for understanding the strategic importance and technological sophistication of the procurement, as well as for conducting meaningful comparisons with other defense systems.

How does the unit cost of these missiles compare to similar systems procured by the US or other allied nations?

A direct comparison of unit cost is not feasible with the given data. The contract value of $67.5 million is for a definitive contract, likely encompassing multiple units, associated support, and potentially training or logistics, rather than a simple per-unit price. Furthermore, as this is a sole-source award directed by the UK, there is no competitive benchmark. Prices for specialized defense systems are often influenced by factors such as research and development costs, production volume, specific technological requirements, and the strategic relationship between the buyer and seller, making direct apples-to-apples comparisons challenging even with more data.

What are the key performance indicators (KPIs) or milestones outlined in the contract, and how is Lockheed Martin's performance being tracked?

The provided data does not detail the specific Key Performance Indicators (KPIs) or contractual milestones. However, as a definitive contract with a fixed end date (February 28, 2013) and a duration of 1451 days, it implies a schedule with defined delivery or production targets. Performance tracking would typically involve regular progress reports from Lockheed Martin, site visits by government representatives (e.g., DCMA), and adherence to technical specifications and quality assurance protocols. Failure to meet these would likely trigger contractual remedies or discussions.

What is the historical spending trend for similar guided missile systems procured by the Department of Defense or through Foreign Military Sales?

Historical spending on guided missile systems by the DoD and through FMS is substantial and varies significantly based on system type, quantity, and technological advancement. While this specific $67.5 million contract is for a UK-directed procurement, the DoD itself invests billions annually in various missile programs, including air-to-air, surface-to-air, ballistic, and cruise missiles. Analyzing past FMS contracts for similar weapon categories could provide context, but precise historical comparisons are difficult without knowing the specific system procured here. Trends often show increasing costs due to technological sophistication and decreasing production runs for highly specialized systems.

What level of technical expertise or specialized facilities does Lockheed Martin possess that justifies this sole-source award?

Lockheed Martin is a major defense contractor with extensive, well-established expertise and infrastructure in aerospace and defense manufacturing, including missile systems. They possess significant research and development capabilities, advanced manufacturing facilities, and a proven track record in producing complex weapon systems. For a sole-source award driven by a foreign government's specific requirements, it's often assumed that the designated contractor possesses unique capabilities, proprietary technology, or existing production lines tailored to that requirement, making them the only viable or most efficient source without extensive technology transfer or new development.

Industry Classification

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

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W31P4Q08R0193

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: $67,562,030

Exercised Options: $67,562,030

Current Obligation: $67,562,030

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline