Lockheed Martin awarded $42.3M for MLRS M270A1 launcher development, a definitive contract with full and open competition

Contract Overview

Contract Amount: $42,261,178 ($42.3M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2012-05-31

End Date: 2020-08-12

Contract Duration: 2,995 days

Daily Burn Rate: $14.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: DEVELOPMENT EFFORT (IAC) FOR THE MLRS M270A1 LAUNCHER.

Place of Performance

Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $42.3 million to LOCKHEED MARTIN CORPORATION for work described as: DEVELOPMENT EFFORT (IAC) FOR THE MLRS M270A1 LAUNCHER. Key points: 1. Contract awarded to a single, large defense contractor, indicating a focus on specialized capabilities. 2. The contract type, Cost Plus Fixed Fee, suggests potential for cost overruns if not closely managed. 3. A long performance period of nearly 8 years implies a complex and lengthy development cycle. 4. The geographic location of performance in Texas may have implications for regional economic impact. 5. The absence of small business set-asides suggests this contract was not specifically targeted for smaller enterprises.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics or comparable development efforts. The Cost Plus Fixed Fee structure inherently carries risk for the government, as costs can escalate. However, the fixed fee component provides some cost certainty for the contractor's profit. The total award amount of $42.3 million over nearly 8 years suggests a moderate investment in this specific launcher development.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders were likely considered. This approach is generally favorable for price discovery and ensuring the government receives competitive offers. The specific number of bidders is not provided, but the designation implies a robust competitive process was initiated.

Taxpayer Impact: Full and open competition generally benefits taxpayers by fostering a competitive environment that can lead to more favorable pricing and innovative solutions.

Public Impact

The primary beneficiary is the Department of the Army, receiving enhanced capabilities for the MLRS M270A1 launcher. This contract supports the development and potential modernization of critical missile launch systems. The geographic impact is concentrated in Texas, where the contractor is located. Workforce implications include employment for engineers, technicians, and support staff involved in defense manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contracts can lead to higher final costs if not managed diligently.
Lack of specific competition details (number of bidders) limits a full assessment of price competitiveness.
The long duration of the contract increases the risk of scope creep or evolving requirements impacting cost and schedule.

Positive Signals

Awarded under full and open competition, suggesting a structured and potentially competitive bidding process.
The contract addresses a critical defense capability, indicating strategic importance.
The definitive contract award provides a clear framework for the development effort.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a specialized segment of the broader aerospace and defense industry. This sector is characterized by high R&D investment, stringent quality requirements, and long product development cycles. Spending in this area is often driven by national security priorities and technological advancements. Comparable spending benchmarks would typically involve other major defense development programs for complex weapon systems.

Small Business Impact

The data indicates this contract was not set aside for small businesses (sb: false). Lockheed Martin Corporation, the awardee, is a large prime contractor. There is no explicit information on subcontracting plans for small businesses within this award, but large prime contractors typically engage small businesses for specialized components or services in defense manufacturing.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army and the Department of Defense. Accountability measures are embedded in the Cost Plus Fixed Fee structure, requiring detailed cost reporting and adherence to the fixed fee. Transparency is generally maintained through contract award databases, though specific performance details may be sensitive. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Multiple Launch Rocket System (MLRS) Programs
Guided Missile Manufacturing
Defense Development Contracts
Army Weapon Systems Procurement

Risk Flags

Cost Overrun Risk (CPFF)
Schedule Slippage Potential
Limited Publicly Available Performance Data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $42.3 million to LOCKHEED MARTIN CORPORATION. DEVELOPMENT EFFORT (IAC) FOR THE MLRS M270A1 LAUNCHER.

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 $42.3 million.

What is the period of performance?

Start: 2012-05-31. End: 2020-08-12.

What is the historical spending trend for MLRS M270A1 launcher development by the Department of the Army?

Analyzing historical spending for the MLRS M270A1 launcher development requires examining past contracts related to this specific system or its predecessors. Without access to a comprehensive database of historical contract awards specifically for the M270A1 development effort, it's difficult to provide precise figures. However, the MLRS program itself has a long history, with various upgrades and modifications over the decades. Spending would likely have fluctuated based on modernization priorities, budget allocations, and geopolitical needs. The $42.3 million awarded in this instance represents a specific development phase, and understanding the overall trend would involve aggregating data from multiple contracts over time, potentially showing periods of high investment during major upgrades and lower investment during sustainment phases. It's also important to note that development costs are often distinct from procurement or sustainment costs.

How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types for similar defense development efforts?

The Cost Plus Fixed Fee (CPFF) contract type is commonly used for research and development efforts where the scope of work is not precisely defined at the outset, or where innovation is a key component. In a CPFF contract, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This contrasts with other common types like Firm-Fixed-Price (FFP), where the price is set regardless of actual costs, offering maximum cost certainty to the government but placing cost risk on the contractor. Cost-Plus-Incentive-Fee (CPIF) contracts share cost reimbursement with CPFF but include incentives for meeting cost, schedule, or performance targets. For defense development, CPFF is often chosen when the government wants to encourage innovation and exploration without imposing the full cost risk on the contractor, but it requires robust oversight to manage potential cost growth. FFP is preferred when requirements are well-defined, while CPIF offers a balance of risk and reward.

What are the key performance indicators (KPIs) typically associated with the development of complex weapon systems like the MLRS M270A1?

Key performance indicators (KPIs) for the development of complex weapon systems like the MLRS M270A1 typically revolve around technical performance, schedule adherence, and cost control. Technical KPIs might include accuracy, range, reliability (Mean Time Between Failures - MTBF), maintainability, and integration with existing command and control systems. Schedule KPIs focus on meeting key milestones, such as design reviews, prototype testing, and production readiness. Cost KPIs involve managing the total project cost within the allocated budget, tracking the Earned Value Management (EVM) metrics, and controlling cost overruns, especially critical in CPFF contracts. For the M270A1 specifically, KPIs would likely be tailored to its role as a launcher, focusing on its ability to effectively deploy various munitions, its survivability on the battlefield, and its operational readiness rates. These KPIs are crucial for assessing the contractor's progress and the overall success of the development effort.

What is Lockheed Martin Corporation's track record with Cost Plus Fixed Fee contracts in the defense sector?

Lockheed Martin Corporation, as one of the largest defense contractors globally, has extensive experience with various contract types, including Cost Plus Fixed Fee (CPFF). Their track record with CPFF contracts is generally characterized by managing large, complex, and often technologically advanced programs. While specific performance data for every CPFF contract is not publicly available, major defense programs managed by Lockheed Martin often involve elements of cost-reimbursable structures due to the inherent uncertainties in developing cutting-edge military hardware. Historically, like many large contractors managing complex projects, they may have faced challenges related to cost overruns or schedule delays on certain CPFF contracts, which is typical for the nature of such agreements. However, their long-standing position in the industry suggests a capability to navigate these complexities and deliver on significant defense development objectives, often under intense government oversight.

How does the geographic location of contract performance (Texas) potentially influence cost and logistics for this development effort?

The geographic location of contract performance in Texas (ST: TX) can influence costs and logistics in several ways for a defense development effort. Texas has a significant aerospace and defense industrial base, which can mean access to a skilled workforce, specialized suppliers, and established infrastructure, potentially streamlining operations. However, labor costs in certain regions of Texas might be higher than in other areas. Logistics costs for materials, components, and finished products will depend on the proximity of suppliers and the final destination for testing or integration. For a large corporation like Lockheed Martin, having facilities in Texas likely means established supply chains and logistical networks are already in place, which can mitigate some of the challenges. The state's business environment and any specific incentives offered to defense contractors could also play a role in the overall cost-effectiveness of performing the work there.

Industry Classification

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

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W31P4Q11R0043

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

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: $54,821,212

Exercised Options: $42,261,178

Current Obligation: $42,261,178

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $6,504,053

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline