DoD Awards $375.8M Letter Contract for 16 FY15 Hellfire II Missile Components to Lockheed Martin
Contract Overview
Contract Amount: $1,841,506,961 ($1.8B)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2015-09-14
End Date: 2023-01-06
Contract Duration: 2,671 days
Daily Burn Rate: $689.4K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: THIS LETTER CONTRACT IS ISSUED TO ACQUIRE BUY 16 FISCAL YEAR (FY) 2015 HELLFIRE II MISSILE HARDWARE/COMPONENT PRODUCTION REQUIREMENTS FOR THE U.S. ARMY, U.S. AIR FORCE, AND FOREIGN MILITARY SALES COUNTRIES (TUNISIA, INDONESIA, IRAQ, PAKISTAN, EGYPT). THE MAXIMUM NOT-TO-EXCEED (NTE) FIRM FIXED PRICE CEILING AMOUNT FOR THIS LETTER CONTRACT IS $375,804,316. ALL NTE AMOUNTS ARE SUBJECT TO DOWNWARD NEGOTIATION ONLY. IN NO EVENT SHALL THE FINAL DEFINITIZED FIRM FIXED PRICES EXCEED THE ESTABLISHED NTE PRICES.
Place of Performance
Location: ORLANDO, ORANGE County, FLORIDA, 32819
State: Florida Government Spending
Plain-Language Summary
Department of Defense obligated $1.84 billion to LOCKHEED MARTIN CORPORATION for work described as: THIS LETTER CONTRACT IS ISSUED TO ACQUIRE BUY 16 FISCAL YEAR (FY) 2015 HELLFIRE II MISSILE HARDWARE/COMPONENT PRODUCTION REQUIREMENTS FOR THE U.S. ARMY, U.S. AIR FORCE, AND FOREIGN MILITARY SALES COUNTRIES (TUNISIA, INDONESIA, IRAQ, PAKISTAN, EGYPT). THE MAXIMUM NOT-TO-EXCEED (NT… Key points: 1. This contract covers 16 FY15 Hellfire II missile hardware/component production requirements for the U.S. Army, U.S. Air Force, and FMS countries. 2. The maximum not-to-exceed (NTE) amount is $375,804,316, with final prices subject to downward negotiation. 3. Lockheed Martin Corporation is the sole awardee, indicating a lack of competition for this specific procurement. 4. The sector is Guided Missile and Space Vehicle Manufacturing, a critical defense industry.
Value Assessment
Rating: questionable
The contract has a high NTE ceiling of $375.8M. However, the actual awarded amount is significantly lower at $184.1M, suggesting potential for downward negotiation. Without knowing the final negotiated price, a precise value assessment is difficult.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers compared to a competitive process.
Taxpayer Impact: The lack of competition raises concerns about whether the government achieved the best possible price for these critical missile components.
Public Impact
Procurement of essential missile components for U.S. military branches and allied nations. Potential impact on defense readiness and foreign military sales programs. Taxpayer funds allocated for defense manufacturing and supply chain support.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competition and price negotiation.
- High NTE ceiling may not reflect final negotiated price.
- Long contract duration (2671 days) could introduce cost volatility.
Positive Signals
- Addresses critical FY15 missile hardware requirements.
- Supports U.S. military and foreign military sales.
- Firm Fixed Price contract type provides cost certainty once negotiated.
Sector Analysis
This procurement falls within the Guided Missile and Space Vehicle Manufacturing sector, a specialized area of defense industrial base. Spending in this sector is driven by national security needs and technological advancements.
Small Business Impact
The data indicates this contract was awarded to Lockheed Martin Corporation, a large prime contractor. There is no specific information provided regarding subcontracting opportunities for small businesses on this contract.
Oversight & Accountability
As a letter contract, it requires definitization into a definitive contract. Oversight will be crucial to ensure fair and reasonable pricing is negotiated and that contract terms are met.
Related Government Programs
- Guided Missile and Space Vehicle Manufacturing
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Lack of competition
- Potential for cost overruns
- Long contract duration
- Reliance on a single supplier
Tags
guided-missile-and-space-vehicle-manufac, department-of-defense, fl, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $1.84 billion to LOCKHEED MARTIN CORPORATION. THIS LETTER CONTRACT IS ISSUED TO ACQUIRE BUY 16 FISCAL YEAR (FY) 2015 HELLFIRE II MISSILE HARDWARE/COMPONENT PRODUCTION REQUIREMENTS FOR THE U.S. ARMY, U.S. AIR FORCE, AND FOREIGN MILITARY SALES COUNTRIES (TUNISIA, INDONESIA, IRAQ, PAKISTAN, EGYPT). THE MAXIMUM NOT-TO-EXCEED (NTE) FIRM FIXED PRICE CEILING AMOUNT FOR THIS LETTER CONTRACT IS $375,804,316. ALL NTE AMOUNTS ARE SUBJECT TO DOWNWARD NEGOTIATION ONLY. IN NO EVENT SHALL THE FINAL DEFINITIZED FIRM FIXED PRICES EXCEED THE ESTABLISHED NTE
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 $1.84 billion.
What is the period of performance?
Start: 2015-09-14. End: 2023-01-06.
What is the final negotiated price of this contract, and how does it compare to the NTE ceiling and market benchmarks?
The final negotiated price is not yet available as this is a letter contract with a $375.8M NTE ceiling and an initial award of $184.1M. A comparison to market benchmarks for similar missile components would be necessary to assess value. The downward negotiation clause suggests the final price could be lower than the NTE, but without the final figure, a definitive value assessment is pending.
What are the risks associated with a sole-source award for critical defense components like Hellfire II missiles?
Sole-source awards carry risks of inflated pricing due to lack of competition, reduced innovation, and potential vendor lock-in. For critical defense components, this can impact national security if costs are excessive or if the sole supplier faces production issues. It also limits opportunities for other capable manufacturers to enter the market.
How effective is the Department of Defense in managing letter contracts to ensure optimal pricing and timely delivery of essential hardware?
The effectiveness of managing letter contracts varies. While they allow for rapid acquisition in urgent situations, the risk of cost overruns is higher if not properly managed and definitized promptly. Robust oversight, clear negotiation strategies, and market research are key to ensuring effectiveness and achieving fair pricing for taxpayers.
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: W31P4Q14R0005
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: $4,801,960,823
Exercised Options: $1,842,104,798
Current Obligation: $1,841,506,961
Actual Outlays: $-2,979,781
Subaward Activity
Number of Subawards: 558
Total Subaward Amount: $2,078,649,059
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2015-09-14
Current End Date: 2023-01-06
Potential End Date: 2023-01-06 12:01:00
Last Modified: 2025-08-26
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