Department of the Army awards $238.8M contract for GMLRS unitary rockets and pods to Lockheed Martin

Contract Overview

Contract Amount: $238,825,139 ($238.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2015-06-04

End Date: 2020-10-31

Contract Duration: 1,976 days

Daily Burn Rate: $120.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: FRP 10 FOR GMLRS UNITARY, AW AND LCRRPR ROCKET PODS ALONG WITH ASSOCIATED SERVICES AND AW SPARES.

Place of Performance

Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $238.8 million to LOCKHEED MARTIN CORPORATION for work described as: FRP 10 FOR GMLRS UNITARY, AW AND LCRRPR ROCKET PODS ALONG WITH ASSOCIATED SERVICES AND AW SPARES. Key points: 1. Contract awarded for guided missile and space vehicle manufacturing, indicating a focus on defense capabilities. 2. The contract spans nearly two years, suggesting a significant operational requirement. 3. Awarded to a single, established defense contractor, raising questions about competition. 4. The fixed-price incentive contract type aims to balance cost control with performance incentives. 5. The contract's value places it in the mid-to-large range for defense procurement. 6. Geographic location of performance is Texas, a state with a significant defense industrial base.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific unit cost data or comparisons to similar GMLRS procurements. However, the total award of over $238 million for a 1976-day period suggests a substantial investment in guided missile systems. The fixed-price incentive structure implies that cost overruns beyond a certain point would be shared, but the initial pricing assessment is difficult without more granular data. The contract's duration and scope indicate a significant need for these munitions.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Lockheed Martin Corporation. Sole-source awards typically occur when only one responsible source can provide the required supplies or services. This lack of competition can limit price discovery and potentially lead to higher costs for the government compared to a fully competed procurement. The justification for a sole-source award would need to be thoroughly reviewed to ensure it aligns with federal acquisition regulations.

Taxpayer Impact: The absence of competition means taxpayers may not benefit from the cost savings that could arise from a competitive bidding process. This could result in a less efficient use of public funds if alternative suppliers could have offered comparable products at a lower price.

Public Impact

The primary beneficiaries are the U.S. Army, receiving critical munitions for ground operations. Services delivered include the provision of GMLRS unitary rockets, associated services, and spare parts. The geographic impact is primarily within Texas, where the contract is performed. Workforce implications include potential employment opportunities within Lockheed Martin and its supply chain in Texas.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher prices for taxpayers.
Sole-source awards require strong justification to ensure fair pricing.
Limited transparency into the pricing structure without competitive bids.

Positive Signals

Award to a known, experienced defense contractor ensures product reliability.
Fixed-price incentive contract type provides some cost control mechanisms.
Contract supports critical U.S. Army operational capabilities.

Sector Analysis

The Guided Missile and Space Vehicle Manufacturing sector is a critical component of the defense industrial base. This contract falls within the domain of advanced munitions manufacturing, a specialized area dominated by a few large defense contractors. The market is characterized by high barriers to entry due to technological complexity and stringent regulatory requirements. Comparable spending benchmarks would involve analyzing other large-scale procurements of guided missile systems by the Department of Defense.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the award to Lockheed Martin, a large prime contractor, suggests that small businesses are unlikely to be direct recipients of this prime contract. However, Lockheed Martin may engage small businesses as subcontractors, contributing to the small business ecosystem indirectly. The extent of small business subcontracting would need to be monitored to ensure opportunities are provided where feasible.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures are embedded within the contract terms, particularly the fixed-price incentive structure. Transparency is limited due to the sole-source nature of the award; however, contract awards are generally reported in federal procurement databases. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Guided Multiple Launch Rocket System (GMLRS)
Army Tactical Missile System (ATACMS)
Precision Guided Munitions
Defense Procurement Contracts
Ammunition Manufacturing

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns without strong oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $238.8 million to LOCKHEED MARTIN CORPORATION. FRP 10 FOR GMLRS UNITARY, AW AND LCRRPR ROCKET PODS ALONG WITH ASSOCIATED SERVICES AND AW SPARES.

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 $238.8 million.

What is the period of performance?

Start: 2015-06-04. End: 2020-10-31.

What is Lockheed Martin Corporation's track record with the Department of Defense for similar munitions contracts?

Lockheed Martin Corporation is a major defense contractor with an extensive history of supplying munitions and missile systems to the Department of Defense. They are the primary manufacturer of the Guided Multiple Launch Rocket System (GMLRS) family of munitions, which this contract pertains to. Their track record includes numerous awards for production, upgrades, and sustainment of various missile systems. While their experience is extensive, the scale and specific nature of this contract would require a detailed review of their performance on past, similar sole-source or competitively awarded contracts to fully assess their reliability and cost-effectiveness in this instance. Past performance evaluations and contract close-out data would be crucial for a comprehensive understanding.

How does the pricing of this contract compare to other GMLRS procurements, considering it was sole-sourced?

Direct comparison of pricing for this sole-source contract to other GMLRS procurements is challenging without access to detailed pricing breakdowns and the competitive landscape of those other awards. Sole-source awards inherently lack the price discovery mechanism of open competition, which can sometimes lead to higher unit costs. To assess value, one would need to compare the unit prices within this contract to historical GMLRS unit prices from competitively bid contracts, if available, or to prices paid by allied nations for similar systems. The fixed-price incentive (FPI) structure aims to control costs by sharing savings or overruns, but the baseline target price is critical. Without this baseline and competitive benchmarks, a definitive value assessment is difficult.

What are the primary risks associated with a sole-source award for critical munitions like GMLRS?

The primary risks associated with a sole-source award for critical munitions like GMLRS include potential for inflated pricing due to the lack of competitive pressure, reduced incentive for the contractor to innovate or improve efficiency, and a potential over-reliance on a single supplier, which can create supply chain vulnerabilities. Taxpayers may bear a higher cost than if the contract were competed. Furthermore, the government has less leverage to negotiate favorable terms. Robust oversight and negotiation are crucial to mitigate these risks, ensuring that the government obtains the best possible value and that the contractor is held accountable for performance and cost targets.

How effective is the fixed-price incentive (FPI) contract type in managing costs for this type of defense procurement?

The Fixed-Price Incentive (FPI) contract type is designed to provide a middle ground between fixed-price and cost-reimbursement contracts, aiming to balance cost control with performance incentives. In this context, it means that the final price is adjusted based on the contractor's performance relative to target cost and target profit goals. If the contractor achieves lower costs than targeted, both the government and contractor share in the savings. Conversely, if costs exceed the target, both share the overrun, up to a ceiling price. This structure incentivizes the contractor to manage costs effectively while ensuring the government benefits from cost reductions. However, the effectiveness hinges on the realism of the initial target cost and the clarity of the incentive clauses.

What are the historical spending patterns for GMLRS procurements by the Department of the Army?

Historical spending patterns for GMLRS procurements by the Department of the Army show a consistent and significant investment in these munitions over the years. The Army has procured GMLRS in large quantities to support its ground operations, often through multi-year contracts or annual appropriations. Spending has fluctuated based on operational tempo, inventory needs, and modernization efforts. While specific annual figures vary, the overall trend indicates a sustained demand for GMLRS, reflecting its importance as a key weapon system. This contract, valued at over $238 million, aligns with the historical scale of GMLRS acquisitions, underscoring its ongoing strategic relevance.

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

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

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: $238,825,139

Exercised Options: $238,825,139

Current Obligation: $238,825,139

Actual Outlays: $1,874

Subaward Activity

Number of Subawards: 78

Total Subaward Amount: $247,871,788

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline