DoD awards $460M contract to Lockheed Martin for guided missile and space vehicle manufacturing

Contract Overview

Contract Amount: $459,840,829 ($459.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2010-05-13

End Date: 2017-09-30

Contract Duration: 2,697 days

Daily Burn Rate: $170.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FRP 5

Place of Performance

Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $459.8 million to LOCKHEED MARTIN CORPORATION for work described as: FRP 5 Key points: 1. Contract awarded on a firm-fixed-price basis, indicating predictable costs for the government. 2. Sole-source award suggests potential lack of competition, which could impact pricing. 3. Contract duration of over 7 years implies a long-term need for these services. 4. The contract falls under 'Guided Missile and Space Vehicle Manufacturing,' a critical defense sector. 5. Awarded by the Department of the Army, indicating a specific military application. 6. The contractor, Lockheed Martin, is a major defense industry player with extensive experience.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific deliverables or comparable sole-source awards. The firm-fixed-price structure is generally favorable for cost control. However, the lack of competition inherent in a sole-source award raises concerns about whether the government secured the best possible price. Further analysis would require understanding the specific components and services procured under this large dollar value contract.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. The lack of competition limits price discovery and may result in higher costs compared to a fully competed procurement.

Taxpayer Impact: Sole-source awards can mean taxpayers may not be getting the most competitive pricing. Without a competitive bidding process, there's less pressure on the contractor to offer the lowest possible price.

Public Impact

The primary beneficiaries are the U.S. Army and potentially other branches of the Department of Defense requiring guided missile and space vehicle components. The contract supports the manufacturing of critical defense systems essential for national security. The geographic impact is primarily centered around Lockheed Martin's manufacturing facilities, likely in Texas given the 'ST' state code. This contract supports a significant number of jobs within the defense manufacturing sector, particularly in specialized engineering and production roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
Long contract duration could lead to cost overruns if not managed effectively.
Lack of transparency in sole-source justification requires careful review.
Reliance on a single contractor for critical components poses supply chain risk.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to a major defense contractor like Lockheed Martin suggests access to established expertise and technology.
Contract supports critical national defense capabilities.

Sector Analysis

This contract falls within the 'Guided Missile and Space Vehicle Manufacturing' sector, a highly specialized and critical part of the aerospace and defense industry. This sector is characterized by high barriers to entry, significant R&D investment, and long production cycles. Spending in this area is driven by national security requirements and technological advancements. Comparable spending benchmarks would typically involve other large-scale defense manufacturing contracts for complex weapon systems.

Small Business Impact

The data indicates this contract was not set aside for small businesses (SS: false, SB: false). Given the nature of guided missile and space vehicle manufacturing, it is likely that the prime contractor, Lockheed Martin, would subcontract portions of the work. Analysis of subcontracting plans would be necessary to determine the extent to which small businesses participate in fulfilling this contract's requirements.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. Specific oversight mechanisms would include contract performance reviews, audits, and potentially the Defense Contract Management Agency (DCMA). Transparency is generally limited for sole-source awards, but reporting requirements for contract progress and financial expenditures would still apply. Inspector General jurisdiction would cover any allegations of fraud, waste, or abuse.

Related Government Programs

Missile Manufacturing
Space Vehicle Production
Defense Procurement
Aerospace Manufacturing
National Security Systems

Risk Flags

Sole Source Award
Potential for Limited Competition
Long Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $459.8 million to LOCKHEED MARTIN CORPORATION. FRP 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 $459.8 million.

What is the period of performance?

Start: 2010-05-13. End: 2017-09-30.

What is Lockheed Martin's track record with similar sole-source defense contracts?

Lockheed Martin, as one of the largest defense contractors globally, has a long history of receiving sole-source contracts for complex defense systems, including missiles and aerospace vehicles. These awards are often justified by the company's unique technological capabilities, existing infrastructure, and established production lines for specific platforms. While such contracts are essential for maintaining national security capabilities, they also draw scrutiny regarding pricing and competition. Historical data suggests that while sole-source awards can ensure timely delivery of critical systems, they necessitate robust government oversight to ensure fair pricing and prevent cost overruns. Analyzing past performance on similar sole-source contracts would involve reviewing program execution, cost performance reports, and any associated audits or investigations to gauge Lockheed Martin's reliability and cost-effectiveness in such scenarios.

How does the $460 million value compare to other guided missile and space vehicle manufacturing contracts?

The $460 million value for this contract is substantial, reflecting the complexity and scale of guided missile and space vehicle manufacturing. To benchmark this value, one would compare it against other large-scale, sole-source, or competed contracts within the same product service code (PSC) or similar defense manufacturing categories. For instance, contracts for fighter jets, submarines, or advanced satellite systems often run into billions of dollars. However, for specific missile systems or components, $460 million over a multi-year period (2010-2017) represents a significant investment. Without knowing the exact nature of the 'guided missile and space vehicle' components, direct comparison is difficult. However, it is within the typical range for major sub-system production runs or the manufacturing of a specific class of missile systems by a prime contractor.

What are the primary risks associated with this sole-source contract?

The primary risks associated with this sole-source contract are centered around cost and competition. Firstly, the lack of competition means the government may not be achieving the lowest possible price, potentially leading to higher expenditures for taxpayers. Secondly, there's a risk of contractor complacency or reduced incentive to innovate and improve efficiency when competition is absent. Thirdly, a sole-source award can create a dependency on Lockheed Martin for these specific components, posing a supply chain risk if the contractor faces production issues, financial instability, or geopolitical challenges. Finally, without competitive pressure, there's a heightened need for stringent government oversight to ensure quality, timely delivery, and adherence to contract terms to mitigate potential cost overruns and performance shortfalls.

How effective is the firm-fixed-price (FFP) contract type in managing costs for this type of manufacturing?

The firm-fixed-price (FFP) contract type is generally considered effective for managing costs in manufacturing environments where the scope of work is well-defined and risks are understood. For guided missile and space vehicle manufacturing, FFP places the primary cost risk on the contractor, incentivizing them to control expenses and improve efficiency to maximize profit. This structure provides the government with cost certainty, as the price is fixed regardless of the contractor's actual costs. However, the effectiveness of FFP in a sole-source context can be diminished if the initial price negotiation is not robust or if significant scope changes occur during the contract's long duration. In such cases, the government might still face cost increases through contract modifications, underscoring the importance of thorough initial pricing and diligent contract administration.

What are the historical spending patterns for guided missile and space vehicle manufacturing by the Department of the Army?

Historical spending patterns for guided missile and space vehicle manufacturing by the Department of the Army typically show consistent, high-value investments driven by evolving threats and technological advancements. The Army relies heavily on a range of missile systems for air defense, ground attack, and strategic deterrence, as well as components for space-based assets supporting communication and intelligence. Spending in this category often involves multi-year procurement contracts awarded to major defense contractors like Lockheed Martin, Raytheon, and Northrop Grumman. These patterns are influenced by defense budgets, geopolitical events, and modernization priorities. Analyzing historical data reveals significant outlays for research, development, testing, and production of both existing and next-generation missile and space technologies, often characterized by large, complex, and long-duration contracts.

Industry Classification

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

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W31P4Q10R0012

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

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: $459,840,829

Exercised Options: $459,840,829

Current Obligation: $459,840,829

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline