DoD Awards $4.58B PAC-3 Missile Production Contract to Lockheed Martin, Lacking Competition
Contract Overview
Contract Amount: $4,583,057,419 ($4.6B)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2018-12-21
End Date: 2027-03-31
Contract Duration: 3,022 days
Daily Burn Rate: $1.5M/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: W31P4Q-19-C-0011 PAC-3 PRODUCTION CONTRACT FOR THE FY19/20 US/FMS REQUIREMENTS, WHICH INCLUDES: MSE&CRI MISSILES, LMKS AND OTHER GROUND SUPPORT FOR PATRIOT/PAC-3 WEAPON.
Place of Performance
Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051
State: Texas Government Spending
Plain-Language Summary
Department of Defense obligated $4.58 billion to LOCKHEED MARTIN CORPORATION for work described as: W31P4Q-19-C-0011 PAC-3 PRODUCTION CONTRACT FOR THE FY19/20 US/FMS REQUIREMENTS, WHICH INCLUDES: MSE&CRI MISSILES, LMKS AND OTHER GROUND SUPPORT FOR PATRIOT/PAC-3 WEAPON. Key points: 1. Significant investment in critical missile defense technology. 2. Sole-source award to Lockheed Martin raises concerns about price discovery. 3. Long-term contract duration (2027) suggests sustained need. 4. No small business participation noted in this large prime contract.
Value Assessment
Rating: questionable
The contract value of $4.58 billion for PAC-3 missile production is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to potential alternatives or previous contract pricing.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to Lockheed Martin. This lack of competition limits price negotiation leverage and may lead to higher costs for taxpayers.
Taxpayer Impact: The absence of competition in a multi-billion dollar contract potentially results in taxpayers paying a premium for these essential missile defense systems.
Public Impact
Enhances U.S. and allied missile defense capabilities. Supports advanced technology development and manufacturing within the defense sector. Potential for long-term sustainment and upgrade requirements. Impacts geopolitical stability through enhanced defense posture.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Sole-source award
- High contract value
- No small business participation
Positive Signals
- Critical defense capability
- Long-term production
- Advanced technology
Sector Analysis
This contract falls within the 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' sector. Spending in this specialized defense manufacturing area is often characterized by high R&D costs, long production cycles, and significant reliance on a few prime contractors.
Small Business Impact
This contract does not appear to include provisions for small business participation. Given the prime contractor is Lockheed Martin and the nature of advanced missile production, subcontracting opportunities for small businesses may be limited or not explicitly tracked at this level.
Oversight & Accountability
The sole-source nature of this large contract warrants close oversight from the Department of Defense to ensure cost reasonableness and performance. Regular reviews of Lockheed Martin's pricing and production efficiency are crucial for accountability.
Related Government Programs
- Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Lack of competitive bidding
- Potential for cost overruns
- Limited transparency in pricing
- Long-term dependency on a single supplier
- No small business subcontracting plan evident
Tags
other-guided-missile-and-space-vehicle-p, department-of-defense, tx, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $4.58 billion to LOCKHEED MARTIN CORPORATION. W31P4Q-19-C-0011 PAC-3 PRODUCTION CONTRACT FOR THE FY19/20 US/FMS REQUIREMENTS, WHICH INCLUDES: MSE&CRI MISSILES, LMKS AND OTHER GROUND SUPPORT FOR PATRIOT/PAC-3 WEAPON.
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 $4.58 billion.
What is the period of performance?
Start: 2018-12-21. End: 2027-03-31.
What is the historical pricing trend for PAC-3 missiles under previous contracts, and how does the current pricing compare?
Historical pricing data for PAC-3 missiles would be essential to benchmark the current $4.58 billion contract. Without access to previous contract values, unit costs, and any negotiated adjustments, it's impossible to determine if this award represents an increase or decrease in cost efficiency over time. A comparative analysis is needed to assess value for money.
What are the specific justifications provided by the Department of Defense for awarding this contract on a sole-source basis?
The justification for a sole-source award typically centers on unique capabilities, proprietary technology, or the lack of viable alternative sources. For the PAC-3, this might relate to specific technological advancements or integration requirements with the Patriot system. Understanding these justifications is key to assessing the necessity of foregoing competition.
How will the performance and cost-effectiveness of the PAC-3 MSE&CRI missiles be monitored throughout the contract's duration?
Effective oversight mechanisms must be in place to monitor performance and cost-effectiveness. This includes tracking production milestones, quality control metrics, and adherence to cost targets. Regular reporting requirements and potential performance incentives or penalties for Lockheed Martin are crucial for ensuring the government receives the best value.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing
Product/Service Code: GUIDED MISSLES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: W31P4Q17R0031
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: $4,583,057,419
Exercised Options: $4,583,057,419
Current Obligation: $4,583,057,419
Actual Outlays: $3,095,076
Subaward Activity
Number of Subawards: 4246
Total Subaward Amount: $6,936,640,530
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2018-12-21
Current End Date: 2027-03-31
Potential End Date: 2027-03-31 00:00:00
Last Modified: 2025-12-08
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