DoD awards $177M for ATACMS missiles, highlighting sole-source procurement for critical defense assets

Contract Overview

Contract Amount: $177,181,673 ($177.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2015-04-02

End Date: 2019-12-31

Contract Duration: 1,734 days

Daily Burn Rate: $102.2K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ATACMS: AWARD FOR ACQUISITION OF 24 EACH ATACMS T2K UNITARY M57 MISSILES, TEST HARDWARE, AND EQUIPMENT.

Place of Performance

Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $177.2 million to LOCKHEED MARTIN CORPORATION for work described as: ATACMS: AWARD FOR ACQUISITION OF 24 EACH ATACMS T2K UNITARY M57 MISSILES, TEST HARDWARE, AND EQUIPMENT. Key points: 1. Procurement of advanced missile systems underscores a significant investment in strategic defense capabilities. 2. The contract's firm-fixed-price structure aims to provide cost certainty for the Department of Defense. 3. Sole-source award indicates a lack of readily available alternatives or a specific technological requirement. 4. The duration of the contract suggests a long-term need for these munitions. 5. Focus on unitary missiles points to specific battlefield requirements and mission profiles. 6. The award to a single, established prime contractor suggests a reliance on existing defense industrial base expertise.

Value Assessment

Rating: fair

Benchmarking the value of this specific ATACMS missile contract is challenging due to its sole-source nature and specialized defense application. Without competitive bids, it's difficult to definitively assess if the $177 million represents optimal value for money. However, the firm-fixed-price contract type provides cost predictability. The unit cost, derived from the total award and quantity, would need to be compared against historical ATACMS pricing or similar advanced missile systems, if publicly available, to gauge relative affordability.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Lockheed Martin Corporation, was solicited. This approach is typically employed when a specific system is required, and no other source can meet the government's needs, often due to proprietary technology, unique capabilities, or existing system integration. The lack of competition means the government did not benefit from a bidding process that could have potentially driven down prices through market forces.

Taxpayer Impact: Sole-source procurement limits opportunities for taxpayer savings that could arise from competitive bidding. The government relies on negotiation and oversight to ensure a fair price, but the absence of alternatives inherently reduces price discovery mechanisms.

Public Impact

The primary beneficiaries are the U.S. Army, receiving advanced missile capabilities to enhance its long-range strike power. Services delivered include the acquisition of 24 ATACMS T2K Unitary missiles, along with associated test hardware and equipment. The geographic impact is national, supporting U.S. military readiness, with potential deployment to various theaters of operation. Workforce implications are primarily within Lockheed Martin's defense manufacturing facilities, supporting specialized engineering and production roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting long-term cost-effectiveness.
Reliance on a single contractor for critical munitions raises concerns about supply chain resilience.
Lack of public detail on the specific 'test hardware and equipment' makes full scope assessment difficult.

Positive Signals

Firm-fixed-price contract provides budget certainty for the Department of Defense.
Procurement of advanced ATACMS missiles directly supports strategic defense objectives and warfighter capabilities.
Award to an established prime contractor suggests leveraging existing expertise and production lines for timely delivery.

Sector Analysis

The Guided Missile and Space Vehicle Manufacturing sector is a critical component of the U.S. defense industrial base. This contract falls within the domain of advanced munitions manufacturing, a highly specialized area dominated by a few key contractors. Spending in this sector is driven by national security requirements, technological advancements, and geopolitical considerations. Comparable spending benchmarks would typically involve other large-scale missile system procurements, often characterized by high unit costs and long development cycles.

Small Business Impact

This contract does not appear to include specific small business set-aside provisions, as indicated by 'sb: false'. The prime contractor, Lockheed Martin Corporation, is a large aerospace and defense company. While large prime contractors are often required to subcontract portions of their work to small businesses, the specific details of subcontracting goals or achievements are not provided in this data snippet. The absence of a small business set-aside suggests the primary focus was on securing the specialized capabilities of the sole-source provider.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army and the Department of Defense's contracting and program management offices. As a definitive contract, it is subject to standard federal procurement regulations and oversight mechanisms. Accountability is managed through contract milestones, delivery schedules, and quality assurance processes. Transparency is limited due to the sole-source nature and the classified or sensitive aspects of advanced weaponry, but contract awards are generally reported in federal databases.

Related Government Programs

Tactical Missile Programs
Long-Range Strike Systems
Ammunition Procurement
Missile Defense Systems

Risk Flags

Sole-source procurement
Lack of competition
Potential for cost overruns (inherent in FFP, though risk is on contractor)
Supply chain dependency on single vendor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $177.2 million to LOCKHEED MARTIN CORPORATION. ATACMS: AWARD FOR ACQUISITION OF 24 EACH ATACMS T2K UNITARY M57 MISSILES, TEST HARDWARE, AND EQUIPMENT.

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 $177.2 million.

What is the period of performance?

Start: 2015-04-02. End: 2019-12-31.

What is the historical spending trend for ATACMS missiles by the Department of Defense?

Analyzing historical spending on ATACMS missiles requires accessing detailed contract award data over multiple fiscal years. While this specific award is for $177 million, understanding the broader trend involves looking at previous procurements, upgrades, and sustainment contracts for various ATACMS variants. Factors influencing spending include evolving military doctrine, threat assessments, and budget allocations for strategic weapon systems. Historically, the U.S. military has invested significantly in long-range precision strike capabilities, with ATACMS being a key component. Fluctuations in spending can be attributed to modernization programs, inventory replenishment needs, and the introduction of newer missile systems. A comprehensive review would likely show periods of sustained procurement followed by phases focused on upgrades or integration with new platforms.

How does the unit cost of these ATACMS missiles compare to similar advanced missile systems?

Directly comparing the unit cost of these ATACMS missiles to similar advanced systems is challenging without specific cost breakdowns and access to proprietary pricing data. The reported award of $177 million for 24 missiles suggests a unit cost of approximately $7.38 million per missile. This figure needs to be contextualized by the specific variant (T2K Unitary), the inclusion of test hardware and equipment, and the firm-fixed-price nature of the contract. Advanced missile systems, particularly those with long ranges, precision guidance, and specialized warheads, are inherently expensive due to complex research, development, and manufacturing processes. Comparisons would ideally be made against other tactical ballistic missiles or long-range guided rockets from different manufacturers or government programs, considering factors like payload, range, and technological sophistication. Publicly available data often lacks the granularity for precise apples-to-apples comparisons.

What are the primary risks associated with a sole-source procurement of critical defense assets like ATACMS?

Sole-source procurement of critical defense assets like ATACMS presents several key risks. Firstly, the absence of competition can lead to higher prices than might be achieved in a competitive bidding environment, as the government lacks the leverage of multiple offers. Secondly, it can foster vendor lock-in, making it difficult and costly to switch providers or integrate alternative systems in the future. Thirdly, reliance on a single supplier can create supply chain vulnerabilities; any disruption at the sole source, whether due to production issues, financial instability, or geopolitical factors, could significantly impact national security readiness. Lastly, without competitive pressure, there might be less incentive for the sole-source provider to innovate or aggressively pursue cost reductions, potentially impacting long-term affordability and technological advancement.

What is Lockheed Martin Corporation's track record with producing ATACMS and similar missile systems?

Lockheed Martin Corporation has a well-established and extensive track record in the development and production of the Army Tactical Missile System (ATACMS) and a wide array of other advanced missile and munitions systems. As the original developer and prime contractor for ATACMS, the company possesses deep institutional knowledge and manufacturing expertise for this specific weapon. Their portfolio includes numerous other high-profile programs such as the Patriot missile defense system, HIMARS (which launches ATACMS), Javelin anti-tank missile, and various air-to-air and air-to-ground munitions. Lockheed Martin is a major defense contractor with decades of experience delivering complex weapon systems to the U.S. military and allied nations, generally demonstrating a strong capability in meeting production schedules and performance specifications, though like any large contractor, they have faced scrutiny on specific program costs and timelines.

How does the contract's firm-fixed-price (FFP) structure mitigate financial risks for the government?

The Firm-Fixed-Price (FFP) contract structure is designed to provide the highest degree of cost certainty for the government. Under an FFP agreement, the contractor, Lockheed Martin Corporation, assumes the primary responsibility for all costs incurred in fulfilling the contract. This means that the agreed-upon price of $177,181,673.11 is the maximum the government will pay, regardless of whether the contractor's actual costs are higher. This structure is particularly beneficial for acquiring well-defined products like missiles, where the scope of work is clear and risks of unforeseen cost overruns are manageable. It shifts the financial risk from the buyer (government) to the seller (contractor), allowing for more predictable budgeting and financial planning. However, FFP contracts often include higher initial prices to compensate the contractor for the risk they are undertaking.

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: W31P4Q14R0049

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: $177,181,673

Exercised Options: $177,181,673

Current Obligation: $177,181,673

Subaward Activity

Number of Subawards: 33

Total Subaward Amount: $7,518,256

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline