DoD awards $143M contract for HIMARS/M270A1 logistics support to Lockheed Martin

Contract Overview

Contract Amount: $143,175,470 ($143.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2014-06-27

End Date: 2024-12-31

Contract Duration: 3,840 days

Daily Burn Rate: $37.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF LIFE CYCLE LOGISTICS SUPPORT - HIMARS/ M270A1 CONTRACT AWARD

Place of Performance

Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $143.2 million to LOCKHEED MARTIN CORPORATION for work described as: IGF::OT::IGF LIFE CYCLE LOGISTICS SUPPORT - HIMARS/ M270A1 CONTRACT AWARD Key points: 1. Contract awarded to a single, large defense contractor, raising questions about competition. 2. Long contract duration (10 years) suggests a need for sustained, specialized support. 3. Cost-plus fixed fee contract type may incentivize cost overruns. 4. Focus on guided missile manufacturing indicates a critical component of national defense. 5. Contract awarded by the Department of the Army, a major user of these systems. 6. The contract is a definitive contract, indicating a clear scope of work.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without detailed cost breakdowns. The cost-plus fixed fee structure, while common for complex defense systems, can lead to higher final costs compared to fixed-price contracts if not managed tightly. The long duration suggests a significant need for these services, but the lack of competitive bidding makes it difficult to assess if the pricing reflects optimal value for money. Further analysis of cost performance reports and comparison to similar sustainment contracts for other major weapon systems would be necessary for a more definitive assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This typically occurs when a single contractor possesses unique capabilities, proprietary technology, or is the sole manufacturer of the required goods or services. The lack of competition limits the government's ability to leverage market forces to drive down prices and may result in higher costs for taxpayers. It also raises questions about whether alternative solutions or competitors were adequately explored.

Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the best possible price due to the absence of competitive pressure. This can lead to higher overall spending on defense logistics.

Public Impact

The primary beneficiaries are the U.S. Army and potentially other branches utilizing HIMARS and M270A1 systems, ensuring operational readiness. Services delivered include essential logistics support for guided missile systems, crucial for national defense capabilities. The geographic impact is likely nationwide, supporting military bases and operations across the U.S. and potentially overseas. Workforce implications include the potential for sustained employment at Lockheed Martin facilities involved in logistics and support.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher prices and reduced innovation.
Cost-plus contract type can incentivize increased spending without strict cost controls.
Long contract duration could lock the government into a potentially suboptimal arrangement.
Sole-source nature limits opportunities for small businesses to participate in this specific contract.

Positive Signals

Ensures continued operational readiness of critical missile systems.
Provides specialized logistics support that may not be readily available elsewhere.
Long-term contract offers stability for both the contractor and the government.
Award to a major defense contractor suggests established expertise and infrastructure.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a critical component of the broader aerospace and defense industry. This sector is characterized by high barriers to entry, significant R&D investment, and long product life cycles. Spending in this area is driven by national security requirements and technological advancements. Comparable spending benchmarks would involve analyzing sustainment contracts for other major weapon platforms, which often represent substantial long-term investments.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Given the sole-source nature and the specialized requirements for supporting advanced missile systems, it is unlikely that significant subcontracting opportunities for small businesses would be mandated or readily available within the prime contract. This limits the direct impact on the small business ecosystem for this specific award, though the prime contractor may engage small businesses in their broader supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. The Inspector General (IG) for the Department of Defense would have jurisdiction to investigate potential fraud, waste, or abuse. Transparency is facilitated through contract award databases, but detailed cost performance reports and program reviews are typically internal or classified. The cost-plus fixed fee structure necessitates robust oversight to manage costs effectively.

Related Government Programs

HIMARS Sustainment
M270A1 Maintenance
Guided Missile Logistics
Defense Contract Management
Aerospace Manufacturing Support

Risk Flags

Sole-source award lacks competition
Cost-plus contract type may inflate costs
Long contract duration limits flexibility

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $143.2 million to LOCKHEED MARTIN CORPORATION. IGF::OT::IGF LIFE CYCLE LOGISTICS SUPPORT - HIMARS/ M270A1 CONTRACT AWARD

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 $143.2 million.

What is the period of performance?

Start: 2014-06-27. End: 2024-12-31.

What is Lockheed Martin Corporation's track record with similar defense logistics contracts?

Lockheed Martin Corporation is a major global defense contractor with extensive experience in managing complex logistics and sustainment programs for a wide array of military platforms, including missile systems. They have a long history of supporting programs like HIMARS and M270A1, often acting as the prime manufacturer and sustainment provider. Their track record includes numerous large-scale contracts with various branches of the U.S. military and allied nations. While generally considered capable, like any large contractor, they have faced scrutiny over cost performance and contract modifications on specific programs. A detailed review of their performance on past, similar contracts, including any audits or investigations by the DoD IG, would provide further insight into their reliability and efficiency in executing such agreements.

How does the cost-plus fixed fee (CPFF) contract type compare to other pricing arrangements for this type of service?

The Cost-Plus Fixed Fee (CPFF) contract type is often used for research and development or complex services where the final costs are uncertain. In a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This contrasts with Fixed-Price contracts, where the price is set upfront, placing more cost risk on the contractor. CPFF can be advantageous when the scope is not fully defined or when innovation is paramount, as it incentivizes the contractor to perform the work without being overly constrained by a fixed budget. However, it shifts significant cost risk to the government and requires robust oversight to prevent cost overruns and ensure value. For sustainment services, where operational needs can evolve, CPFF might be chosen for flexibility, but it necessitates stringent cost controls and performance monitoring to be cost-effective compared to other arrangements like Firm-Fixed-Price (FFP) or Cost Plus Incentive Fee (CPIF).

What are the primary risks associated with a sole-source award for critical defense logistics?

The primary risks associated with a sole-source award for critical defense logistics include a lack of competitive pricing, which can lead to higher costs for taxpayers. Without competition, there is less incentive for the contractor to innovate or improve efficiency, potentially resulting in suboptimal service delivery or higher long-term operational expenses. Furthermore, sole-source awards can create vendor lock-in, making it difficult and costly to switch providers or adopt alternative technologies in the future. There's also a risk that the government may not be aware of or have access to the full range of capabilities or solutions available in the market. This lack of market pressure can also impact the responsiveness of the contractor to evolving requirements or emerging threats.

What is the historical spending pattern for HIMARS/M270A1 logistics support by the Department of the Army?

Historical spending data for HIMARS/M270A1 logistics support by the Department of the Army indicates a consistent and significant investment in maintaining the operational readiness of these critical weapon systems. While specific annual figures fluctuate based on operational tempo, modernization efforts, and sustainment needs, the overall trend shows a sustained requirement for comprehensive support services. This includes spare parts, maintenance, repair, technical support, and system upgrades. The long-term nature of these systems, often in service for decades, necessitates ongoing funding for logistics. Analyzing past contract awards, modifications, and task orders provides insight into the evolving cost drivers and the total lifecycle investment required to keep these platforms mission-capable, often amounting to hundreds of millions or even billions of dollars over their service life.

How does the geographic location of the contractor (Texas) impact contract performance and delivery?

The contractor's location in Texas (st: TX) is relevant for logistics and supply chain management. Texas hosts significant military installations and defense industry presence, potentially facilitating collaboration, site visits, and personnel deployment. However, for a national or global defense logistics contract, the physical location of the prime contractor is often less critical than the robustness of their established supply chain, distribution networks, and ability to provide support wherever needed. Proximity to key military depots or operational theaters could offer advantages in response times and transportation costs. Conversely, if the primary support activities are conducted remotely or at various military sites, the Texas location might have minimal direct impact on day-to-day operations, though it influences state-level economic impact and tax revenue.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD 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, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $147,750,435

Exercised Options: $143,175,470

Current Obligation: $143,175,470

Actual Outlays: $869,453

Subaward Activity

Number of Subawards: 321

Total Subaward Amount: $61,083,472

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline