DoD's $104M Alternative Warhead contract awarded to Lockheed Martin, a sole-source procurement

Contract Overview

Contract Amount: $104,003,686 ($104.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2012-03-30

End Date: 2015-03-31

Contract Duration: 1,096 days

Daily Burn Rate: $94.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ALTERNATIVE WARHEAD

Place of Performance

Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $104.0 million to LOCKHEED MARTIN CORPORATION for work described as: ALTERNATIVE WARHEAD Key points: 1. The contract value of $104 million represents a significant investment in missile technology. 2. Awarded to a single, established defense contractor, suggesting a reliance on specialized capabilities. 3. The firm-fixed-price structure aims to control costs, but the lack of competition raises questions about optimal pricing. 4. The contract duration of approximately three years provides a stable period for development and production. 5. This procurement falls within the Guided Missile and Space Vehicle Manufacturing sector, a critical area for national defense. 6. The absence of small business set-asides indicates a focus on large prime contractors for this specific need.

Value Assessment

Rating: fair

Benchmarking the value of this $104 million contract is challenging without direct comparisons to similar sole-source Alternative Warhead procurements. The firm-fixed-price (FFP) contract type suggests an attempt to establish a ceiling on costs. However, the lack of competition means there's no direct market pressure to ensure the most competitive pricing. Without competitive bids, it's difficult to definitively assess if the price achieved represents optimal value for the taxpayer.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, Lockheed Martin Corporation, was solicited. This approach is typically used when a unique capability or proprietary technology is required, or when only one source is capable of meeting the government's needs. The lack of competition limits the government's ability to explore alternative solutions or leverage market dynamics to drive down costs.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no competitive pressure to achieve the lowest possible price. This limits the government's ability to ensure it is receiving the best possible value for its investment.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Department of the Army, receiving advanced warhead technology. This contract supports the development and potential production of advanced missile warheads, enhancing military capabilities. The geographic impact is primarily centered around Lockheed Martin's facilities in Texas, contributing to the local economy and workforce. Workforce implications include employment for engineers, technicians, and manufacturing personnel involved in advanced defense systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source awards can reduce transparency in pricing and value assessment.
Reliance on a single contractor could create dependency and potential supply chain risks.
Limited visibility into alternative technological solutions that might have been offered by other firms.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to a large, established defense contractor like Lockheed Martin suggests a high level of technical expertise and proven performance.
The contract supports a critical defense capability, contributing to national security objectives.
The specific nature of 'Alternative Warhead' suggests innovation and advancement in munitions technology.

Sector Analysis

The Guided Missile and Space Vehicle Manufacturing sector is a highly specialized and capital-intensive segment of the aerospace and defense industry. Companies in this space often possess unique technological capabilities and operate under stringent government oversight. Spending in this sector is driven by national security requirements and technological advancements in missile systems. Comparable spending benchmarks are difficult to establish due to the proprietary nature of many warhead technologies and the infrequent nature of sole-source awards for such critical components.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The award to Lockheed Martin Corporation, a large prime contractor, suggests that the primary focus is on leveraging established capabilities for a complex defense requirement. There is no explicit information regarding subcontracting plans for small businesses within this specific award, though large prime contractors often engage small businesses in their supply chains for various components and services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. As a sole-source award, there may be heightened scrutiny to ensure the justification for non-competition is valid and that the pricing is fair and reasonable. Transparency is limited due to the sole-source nature, but contract modifications, performance reports, and financial audits would be subject to standard government oversight mechanisms. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Missile Systems
Munitions Development
Advanced Warhead Technology
Department of the Army Procurement
Lockheed Martin Defense Contracts

Risk Flags

Sole-source award justification requires rigorous review.
Lack of competition may impact price reasonableness.
Contract performance monitoring is critical for sole-source procurements.
Potential for cost growth if technical challenges arise.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $104.0 million to LOCKHEED MARTIN CORPORATION. ALTERNATIVE WARHEAD

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 $104.0 million.

What is the period of performance?

Start: 2012-03-30. End: 2015-03-31.

What is Lockheed Martin Corporation's track record with the Department of the Army for similar missile component contracts?

Lockheed Martin Corporation is a major defense contractor with a long history of supplying missile systems and components to the Department of Defense, including the Army. Their track record typically involves complex, high-value contracts for platforms such as the PAC-3 Patriot missile, HIMARS, and various strategic missile systems. For missile components and warheads specifically, they have consistently been a primary source due to their integrated capabilities in design, engineering, and manufacturing. While specific data on 'Alternative Warhead' contracts with the Army is not publicly detailed, their extensive experience in related fields suggests a strong capability to fulfill this requirement. Past performance reviews and contract awards would generally indicate a high level of technical proficiency and delivery reliability, though specific cost performance on sole-source contracts can be harder to ascertain publicly.

How does the $104 million contract value compare to other sole-source procurements for advanced warheads?

Direct comparisons for sole-source procurements of 'Alternative Warheads' are inherently difficult due to the proprietary nature of the technology and the specific justifications required for non-competitive awards. However, $104 million is a substantial sum, indicative of a significant development or production effort for a critical defense capability. Sole-source awards in advanced defense systems can range widely, from tens of millions for specialized components to billions for entire platforms. The value suggests this contract likely covers advanced research, development, testing, and potentially initial production phases for a warhead system deemed unique or essential, where competitive bidding was deemed impractical or detrimental to national security interests.

What are the primary risks associated with a sole-source award for a critical defense component like an alternative warhead?

The primary risks associated with a sole-source award for a critical defense component like an alternative warhead include potential cost overruns and reduced innovation. Without competition, the government lacks the leverage to negotiate the lowest possible price, potentially leading to higher expenditures than if multiple bidders were involved. There's also a risk that the sole contractor may not be incentivized to innovate as aggressively as they might under competitive pressure. Furthermore, reliance on a single supplier can create vulnerabilities in the supply chain, making the program susceptible to disruptions if the contractor faces production issues, financial instability, or geopolitical challenges. The lack of alternative solutions also limits the government's options if the chosen technology proves inadequate or obsolete.

What is the expected program effectiveness and performance context for this 'Alternative Warhead' contract?

The expected program effectiveness for this 'Alternative Warhead' contract is centered on enhancing the Department of the Army's offensive capabilities by providing a more advanced or versatile warhead. The term 'Alternative Warhead' suggests a departure from traditional designs, potentially offering improved lethality, reduced collateral damage, or specialized effects against specific targets. Performance context is defined by the firm-fixed-price structure, aiming for predictable costs within the contract duration. Success will be measured by the successful development, testing, and integration of the warhead onto designated missile platforms, meeting stringent military specifications for reliability, safety, and operational effectiveness. The contract's duration of approximately three years indicates a focus on development and initial fielding rather than long-term sustainment.

How has federal spending in the Guided Missile and Space Vehicle Manufacturing sector trended, and how does this contract fit?

Federal spending in the Guided Missile and Space Vehicle Manufacturing sector is consistently significant, driven by ongoing modernization efforts and national security priorities within the Department of Defense. This sector represents a critical component of defense industrial base capabilities. Spending trends are influenced by geopolitical events, technological advancements, and strategic defense reviews. Contracts within this sector often involve substantial dollar values due to the complexity, high-risk nature, and advanced technology involved. This $104 million contract for an 'Alternative Warhead' fits within this trend by representing a specific investment in advanced munitions technology, likely aimed at maintaining a technological edge or addressing evolving threats. It contributes to the overall spending within this specialized manufacturing domain, supporting research, development, and production of key missile systems.

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

Solicitation ID: W31P4Q11R0166

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, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $105,063,366

Exercised Options: $104,003,686

Current Obligation: $104,003,686

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline