DoD Awards $4.24B Letter Contract for PAC-3 Missile Components and Modifications to Lockheed Martin
Contract Overview
Contract Amount: $4,241,697,570 ($4.2B)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2013-12-31
End Date: 2023-03-31
Contract Duration: 3,377 days
Daily Burn Rate: $1.3M/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: LETTER CONTRACT FOR FY14 PAC-3 CRI MISSILES, LAUNCHER MODIFICATION KITS, SEEKER GIMBAL REDESIGN, AND INITIAL SPARES FOR US AND KUWAIT
Place of Performance
Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051
State: Texas Government Spending
Plain-Language Summary
Department of Defense obligated $4.24 billion to LOCKHEED MARTIN CORPORATION for work described as: LETTER CONTRACT FOR FY14 PAC-3 CRI MISSILES, LAUNCHER MODIFICATION KITS, SEEKER GIMBAL REDESIGN, AND INITIAL SPARES FOR US AND KUWAIT Key points: 1. Significant award for critical missile defense components and upgrades. 2. Sole-source award to Lockheed Martin, a major defense contractor. 3. Long contract duration (2013-2023) suggests complex, multi-year requirements. 4. High value indicates substantial investment in air defense capabilities.
Value Assessment
Rating: questionable
The contract value is substantial, but without competitive bidding, it's difficult to assess if the pricing is optimal. The firm-fixed-price structure provides cost certainty for the government, but the lack of competition raises concerns about potential overpricing.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to Lockheed Martin. This limits price discovery and potentially reduces the government's leverage in negotiating favorable terms.
Taxpayer Impact: The lack of competition may result in higher costs for taxpayers compared to a competitively awarded contract.
Public Impact
Enhances U.S. and Kuwaiti air defense capabilities with advanced missile technology. Supports the production and modification of critical components for the PAC-3 missile system. Potential for job creation within Lockheed Martin and its supply chain. Long-term sustainment and upgrade of a key defense asset.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- High contract value
- Long contract duration
Positive Signals
- Firm-fixed-price contract type
- Addresses critical defense needs
- Includes international partner (Kuwait)
Sector Analysis
This contract falls within the Defense sector, specifically the manufacturing of guided missile and space vehicle parts. Spending in this area is driven by national security priorities and technological advancements in defense systems.
Small Business Impact
The awardee is Lockheed Martin Corporation, a large prime contractor. There is no explicit information provided regarding subcontracting opportunities for small businesses on this specific contract.
Oversight & Accountability
As a sole-source award, oversight is crucial to ensure fair pricing and performance. The Department of the Army's contracting activity suggests internal review processes are in place, but the lack of competition warrants heightened scrutiny.
Related Government Programs
- Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Sole-source award limits competition and price discovery.
- High contract value represents significant taxpayer investment.
- Long contract duration may indicate potential for cost overruns or scope creep.
- Lack of transparency regarding the justification for sole-sourcing.
- Potential for vendor lock-in with critical defense technology.
Tags
other-guided-missile-and-space-vehicle-p, department-of-defense, tx, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $4.24 billion to LOCKHEED MARTIN CORPORATION. LETTER CONTRACT FOR FY14 PAC-3 CRI MISSILES, LAUNCHER MODIFICATION KITS, SEEKER GIMBAL REDESIGN, AND INITIAL SPARES FOR US AND KUWAIT
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 $4.24 billion.
What is the period of performance?
Start: 2013-12-31. End: 2023-03-31.
What was the justification for awarding this contract on a sole-source basis?
The justification for a sole-source award typically involves unique capabilities, proprietary technology, or urgent requirements where only one source can fulfill the need. Without specific documentation, it's presumed the Army determined Lockheed Martin was the only viable option for these specific PAC-3 missile components and modifications.
How does the pricing of this contract compare to similar sole-source awards for missile defense systems?
Benchmarking pricing for sole-source defense contracts is challenging due to the lack of direct comparison. However, the substantial value of this award, coupled with its long duration, suggests a significant investment. Further analysis would require access to historical pricing data for comparable sole-source contracts and detailed cost breakdowns.
What are the long-term implications of relying on a single source for these critical missile components?
Long-term reliance on a single source can lead to reduced innovation, potential price escalation over time, and supply chain vulnerabilities if the sole provider faces disruptions. It also limits the government's ability to leverage competition to drive down costs and encourage technological advancements from multiple vendors.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing
Product/Service Code: GUIDED MISSLES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: W31P4Q13R0004
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, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $4,241,697,572
Exercised Options: $4,241,697,570
Current Obligation: $4,241,697,570
Subaward Activity
Number of Subawards: 656
Total Subaward Amount: $1,757,515,348
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2013-12-31
Current End Date: 2023-03-31
Potential End Date: 2023-03-31 00:00:00
Last Modified: 2025-07-16
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