DoD awards $165M for M299 launchers and parts, with Lockheed Martin as sole source

Contract Overview

Contract Amount: $165,165,862 ($165.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2015-01-21

End Date: 2021-12-31

Contract Duration: 2,536 days

Daily Burn Rate: $65.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: M299 LAUNCHER AND SPARE PARTS

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $165.2 million to LOCKHEED MARTIN CORPORATION for work described as: M299 LAUNCHER AND SPARE PARTS Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. Long contract duration of 2536 days suggests a need for sustained support, but also potential for cost escalation. 3. Firm Fixed Price contract type offers cost certainty for the government, but may limit flexibility. 4. No small business set-aside indicates limited opportunities for smaller firms in this specific procurement. 5. Geographic location of performance in Florida may have implications for local economic impact and workforce. 6. The procurement of spare parts alongside launchers suggests a focus on sustainment and operational readiness.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific nature of military hardware. Without competitive bids, it's difficult to ascertain if the $165 million represents a fair market price. The firm fixed-price structure provides budget predictability, but the absence of competition means the government cannot leverage market forces to drive down costs. Further analysis would require comparing pricing for similar advanced weapon systems or spare parts procured competitively.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Lockheed Martin Corporation, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified for unique capabilities or urgent needs, they limit the government's ability to explore alternative solutions and negotiate the best possible price.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the absence of competition reduces pressure on the contractor to offer competitive pricing. This can result in less value for the money spent.

Public Impact

The primary beneficiaries are the U.S. Army, which receives critical M299 launchers and essential spare parts for its operations. The contract ensures the continued operational readiness and effectiveness of specific military units relying on this equipment. Performance is concentrated in Florida, potentially creating or sustaining jobs within the state's defense industrial base. The procurement supports the defense manufacturing sector, contributing to the specialized workforce required for advanced weapons systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs.
Lack of transparency in pricing due to non-competitive nature.
Long contract duration could mask inefficiencies or cost overruns if not closely monitored.
Dependence on a single contractor for critical components.

Positive Signals

Firm Fixed Price contract provides cost certainty for the government.
Award to a known prime contractor with established experience in defense systems.
Focus on sustainment through spare parts ensures long-term operational capability.

Sector Analysis

This contract falls within the Defense sector, specifically concerning the procurement of military hardware and associated spare parts. The market for such specialized systems is often dominated by a few large defense contractors. Spending benchmarks for similar advanced weapon systems can vary significantly based on technological complexity, quantity, and specific mission requirements. The $165 million award is substantial, reflecting the high cost of advanced military technology.

Small Business Impact

The contract data indicates no small business set-aside (ss=false) and no indication of subcontracting goals for small businesses (sb=false). This suggests that the primary contract was not specifically structured to benefit small businesses. Consequently, opportunities for small businesses to participate in this specific procurement are likely limited, potentially through direct subcontracting by Lockheed Martin, which is not explicitly detailed here.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management structures. Accountability measures are inherent in the firm fixed-price agreement, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

U.S. Army Weapon Systems Procurement
Defense Logistics Agency (DLA) Spare Parts Management
Lockheed Martin Missiles and Fire Control Contracts
Advanced Weapons Systems Manufacturing

Risk Flags

Sole-source award increases risk of non-competitive pricing.
Long contract duration (2536 days) may indicate potential for cost creep or technology obsolescence.
Lack of explicit small business subcontracting goals.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $165.2 million to LOCKHEED MARTIN CORPORATION. M299 LAUNCHER AND SPARE PARTS

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 $165.2 million.

What is the period of performance?

Start: 2015-01-21. End: 2021-12-31.

What is the historical spending pattern for M299 launchers and spare parts with Lockheed Martin?

Analyzing historical spending requires access to detailed contract databases beyond the provided data. However, the current award of $165.17 million for M299 launchers and spare parts, spanning from January 21, 2015, to December 31, 2021 (2536 days), indicates a significant, long-term investment. Without prior contract data, it's impossible to determine if this represents an increase or decrease in spending for this specific system. Typically, sustained procurement of major weapon systems and their associated parts suggests ongoing operational needs and a commitment to maintaining readiness. Future analysis could involve tracking awards for the M299 over time to identify trends in quantity, cost per unit, and overall program expenditure.

How does the pricing of this contract compare to similar advanced weapon systems procured competitively?

Direct comparison of this $165.17 million sole-source contract to competitively procured advanced weapon systems is difficult without specific details on the systems being compared. Sole-source awards inherently lack the price discovery mechanism of competition, often resulting in higher prices. If similar, albeit not identical, systems were procured through competitive bidding, their prices might be lower due to market pressures. To perform a robust comparison, one would need to identify comparable systems (e.g., other missile launchers, fire control systems) with similar technological sophistication and operational roles, then analyze their contract values, quantities, and procurement methods. The absence of competition here suggests potential for a price premium.

What are the key performance indicators (KPIs) for this contract, and how is performance being measured?

The provided data does not explicitly list Key Performance Indicators (KPIs) or specific performance measurement metrics for this contract. However, as a Firm Fixed Price (FFP) contract for hardware and spare parts, primary performance indicators would likely revolve around timely delivery, adherence to specifications (quality, technical requirements), and completeness of orders. The Department of the Army would typically monitor delivery schedules, conduct inspections of received goods, and verify that all components meet the contract's technical data package. Contract clauses would outline remedies for non-performance, such as penalties or termination. Formal performance reviews might occur periodically throughout the contract's duration.

What is the risk profile associated with this sole-source contract, and what mitigation strategies are in place?

The primary risk associated with this sole-source contract is the potential for inflated pricing due to the lack of competition. This increases the financial risk for the government. Other risks include contractor performance issues (delays, quality defects) and potential obsolescence of technology over the contract's long duration. Mitigation strategies might include robust government oversight, detailed technical specifications, and potentially negotiating specific price reduction clauses or performance incentives, although these are less common in sole-source awards. The government may also conduct should-cost analyses or market research to validate pricing reasonableness. The long duration also poses a risk of the technology becoming outdated before the contract ends.

What is the projected total cost of ownership for the M299 launchers procured under this contract, including sustainment?

The provided data only details the award amount of $165.17 million for the M299 launchers and spare parts. It does not encompass the full lifecycle cost or total cost of ownership (TCO). TCO would include initial procurement, sustainment (spare parts, maintenance, training), upgrades, and eventual disposal. The inclusion of spare parts in this contract suggests a focus on initial sustainment, but the long-term costs for maintenance, personnel, and potential future upgrades are not captured here. Estimating TCO would require projections based on operational tempo, maintenance schedules, expected lifespan of the systems, and future modernization plans, which are beyond the scope of this contract data.

Industry Classification

NAICS: Manufacturing › Alumina and Aluminum Production and Processing › Aluminum Sheet, Plate, and Foil Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W31P4Q13R0132

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 5600 W SAND LAKE RD # MP-265, ORLANDO, FL, 32819

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: $166,269,848

Exercised Options: $165,165,862

Current Obligation: $165,165,862

Actual Outlays: $3,296,225

Subaward Activity

Number of Subawards: 120

Total Subaward Amount: $500,301,700

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline