DoD's $66.9M Patriot Missile Support Contract Awarded to Lockheed Martin Without Competition

Contract Overview

Contract Amount: $66,937,453 ($66.9M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2011-03-01

End Date: 2015-09-30

Contract Duration: 1,674 days

Daily Burn Rate: $40.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: PATRIOT ADVANCED CAPABILITY-3 (PAC-3) MISSILE SUPPORT CENTER (P3MSC)

Place of Performance

Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $66.9 million to LOCKHEED MARTIN CORPORATION for work described as: PATRIOT ADVANCED CAPABILITY-3 (PAC-3) MISSILE SUPPORT CENTER (P3MSC) Key points: 1. Contract awarded to a single, incumbent provider, raising questions about competitive pricing. 2. Significant duration of over 4 years suggests a long-term reliance on this specific contractor. 3. The cost-plus-fixed-fee structure may incentivize cost overruns, requiring close oversight. 4. Lack of competition limits opportunities for new entrants and potentially higher-value solutions. 5. This contract supports a critical defense capability, indicating a high stakes for performance. 6. The geographic location in Texas may have implications for regional economic impact and workforce.

Value Assessment

Rating: questionable

The contract's value of $66.9 million over approximately 4.5 years for missile support services warrants scrutiny. Without competitive bidding, it's difficult to benchmark the pricing against market rates or alternative providers. The cost-plus-fixed-fee (CPFF) contract type, while common for complex defense systems, can lead to higher costs if not managed diligently. The absence of a clear per-unit cost comparison makes value assessment challenging, relying heavily on the contractor's efficiency and the government's oversight.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Lockheed Martin Corporation, was solicited. This approach bypasses the standard competitive procurement process, which typically involves soliciting bids from multiple qualified companies. While sole-source awards can be justified for unique capabilities or urgent needs, they reduce the government's leverage in negotiating prices and may not result in the most cost-effective solution for taxpayers.

Taxpayer Impact: Sole-source awards limit the potential for cost savings that arise from competitive bidding. Taxpayers may end up paying a premium when alternative, potentially more affordable, solutions are not explored.

Public Impact

The primary beneficiaries are the U.S. Army's missile defense programs, ensuring operational readiness. Services include support for the PATRIOT Advanced Capability-3 (PAC-3) missile system, crucial for national security. The contract's execution is centered in Texas, potentially impacting the local economy and specialized workforce. This contract sustains jobs within the defense manufacturing and support sector, particularly for Lockheed Martin employees.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs over the contract's life.
The CPFF structure could incentivize higher spending if not rigorously monitored.
Sole-source awards limit innovation by excluding potential new market entrants.
Performance metrics and oversight are critical to ensure value for taxpayer dollars.

Positive Signals

Contract supports a critical national defense asset, ensuring mission capability.
Lockheed Martin is an established provider with deep expertise in this system.
The contract duration allows for stable support and planning for the missile system.

Sector Analysis

The Guided Missile and Space Vehicle Manufacturing sector is a highly specialized and capital-intensive industry within the broader aerospace and defense market. This contract falls under the domain of advanced defense systems, where a few large, established companies like Lockheed Martin dominate due to high barriers to entry, including intellectual property, manufacturing complexity, and security clearances. Spending in this sector is driven by national security priorities and technological advancements, often involving long-term development and sustainment contracts.

Small Business Impact

This contract does not appear to include specific small business set-aside provisions. Given the sole-source nature and the specialized requirements of missile support, it is unlikely that significant subcontracting opportunities for small businesses would be mandated or readily available unless directly identified by the prime contractor. Further analysis would be needed to determine if Lockheed Martin has internal small business subcontracting goals for this specific award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Given the sole-source nature and CPFF structure, rigorous oversight of costs, performance, and compliance is essential. The Defense Contract Audit Agency (DCAA) and potentially the Department of Defense Inspector General (DoDIG) may conduct audits to ensure financial accountability and prevent waste, fraud, and abuse. Transparency is enhanced through contract reporting mechanisms, but the lack of competition limits public visibility into pricing benchmarks.

Related Government Programs

Patriot Missile System Procurement
Missile Defense Agency Programs
Department of Defense Weapon System Sustainment
Guided Missile Manufacturing Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competitive benchmarking

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $66.9 million to LOCKHEED MARTIN CORPORATION. PATRIOT ADVANCED CAPABILITY-3 (PAC-3) MISSILE SUPPORT CENTER (P3MSC)

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 $66.9 million.

What is the period of performance?

Start: 2011-03-01. End: 2015-09-30.

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

Lockheed Martin Corporation has a long history of securing sole-source or limited-competition contracts for the sustainment and upgrade of complex defense systems, including the PATRIOT missile family. Their extensive experience and established infrastructure provide a strong justification for such awards when specific expertise or unique capabilities are required. However, the absence of competition in these instances necessitates robust government oversight to ensure fair pricing and prevent potential cost escalations. Analyzing past performance on similar contracts, including any audit findings or cost overruns, is crucial for assessing the value and risk associated with this specific award. The company's deep integration with the PATRIOT program likely contributes to its continued sole-source awards for specialized support.

How does the cost-plus-fixed-fee structure compare to other contract types for this kind of service?

The Cost-Plus-Fixed-Fee (CPFF) contract type used here is common for complex research, development, and specialized support services where the scope of work may evolve or is difficult to precisely define upfront. It allows the contractor to recover all allowable costs plus a predetermined fixed fee representing profit. While this provides flexibility, it shifts some cost risk to the government, as the contractor is incentivized to incur costs to achieve the fixed fee. Alternative structures like Firm-Fixed-Price (FFP) could offer better cost certainty if the scope were more defined, but might require more upfront negotiation and potentially higher initial bids to account for contractor risk. Cost-Plus-Incentive-Fee (CPIF) could offer a middle ground by incentivizing cost savings, but CPFF is often chosen for its simplicity and ability to accommodate evolving requirements in long-term sustainment.

What are the primary risks associated with awarding a contract of this magnitude without competition?

The primary risk of awarding a contract of this magnitude ($66.9M) without competition is the potential for paying a non-competitive price. Without bids from other qualified vendors, the government lacks a benchmark to ensure it is receiving the best value. This can lead to inflated costs over the contract's duration. Additionally, a lack of competition can stifle innovation, as there is less pressure on the incumbent contractor to improve efficiency or introduce new technologies. There's also a risk of complacency, where the contractor may not feel the same urgency to perform at peak levels compared to a competitive environment. Robust government oversight, performance monitoring, and clear contract terms are critical to mitigate these risks.

What historical spending patterns exist for PAC-3 missile support, and how does this contract compare?

Historical spending on PAC-3 missile support, particularly for sustainment and upgrades, has been substantial, reflecting the critical nature of the system and the complexity of its maintenance. Contracts for such specialized defense assets often span multiple years and involve significant dollar values, frequently awarded to incumbent prime contractors like Lockheed Martin due to their deep system knowledge and established production lines. This $66.9 million contract, awarded over approximately 4.5 years, appears consistent with the scale of spending typically seen for major weapon system sustainment programs within the Department of Defense. Without access to detailed historical contract data for PAC-3 specific support services and their competitive history, a precise comparison is difficult, but the value aligns with the expected investment in maintaining advanced air defense capabilities.

Are there specific performance metrics or KPIs tied to this contract to ensure effectiveness?

While the provided data does not detail specific Key Performance Indicators (KPIs) or performance metrics for this contract, it is standard practice for Department of Defense contracts, especially those involving critical weapon systems like the PAC-3, to include performance requirements. These typically cover aspects such as system availability, response times for maintenance and repair, quality of service, and adherence to delivery schedules. The effectiveness of the contract is largely dependent on the government's ability to monitor and enforce these metrics. The CPFF structure necessitates close tracking of deliverables and outcomes to ensure the contractor is meeting its obligations and providing value for the funds expended. Contract performance reviews and potential award fees or penalties would likely be tied to these metrics.

Industry Classification

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

Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

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: $66,937,453

Exercised Options: $66,937,453

Current Obligation: $66,937,453

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline