DoD awards $30.25M to Lockheed Martin for PAC-3 missile support, with limited competition

Contract Overview

Contract Amount: $30,253,134 ($30.3M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2019-09-12

End Date: 2026-05-01

Contract Duration: 2,423 days

Daily Burn Rate: $12.5K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: THIS CONTRACT IS FOR PATRIOT ADVANCED CAPABILITY-3 (PAC-3) MISSILE SUPPORT CENTER (P3MSC) FOR THE US AND FOREIGN MILITARY SALES (FMS) CUSTOMERS.

Place of Performance

Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $30.3 million to LOCKHEED MARTIN CORPORATION for work described as: THIS CONTRACT IS FOR PATRIOT ADVANCED CAPABILITY-3 (PAC-3) MISSILE SUPPORT CENTER (P3MSC) FOR THE US AND FOREIGN MILITARY SALES (FMS) CUSTOMERS. Key points: 1. Contract value of $30.25M for PAC-3 missile support over nearly 7 years. 2. Sole-source award to Lockheed Martin, raising concerns about price competition. 3. High-risk contract type (Cost Plus Fixed Fee) may incentivize cost overruns. 4. Support services are critical for maintaining advanced missile defense capabilities. 5. Contracting agency is the Department of the Army, with potential foreign military sales. 6. Texas-based contractor indicates potential regional economic impact. 7. No small business set-aside, suggesting limited opportunities for smaller firms.

Value Assessment

Rating: questionable

The contract's value of $30.25M for PAC-3 missile support over approximately 6.7 years appears to be a significant investment. However, without comparable sole-source contracts for similar missile support, a precise value-for-money assessment is difficult. The Cost Plus Fixed Fee (CPFF) contract type, while common for complex systems requiring specialized knowledge, carries inherent risks of cost escalation if not closely managed. Benchmarking against other sole-source sustainment contracts for major defense systems would be necessary for a more robust value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to Lockheed Martin Corporation, the original equipment manufacturer for the PAC-3 missile system. This approach is often taken for specialized support services where only the original manufacturer possesses the necessary technical data, expertise, and tooling. The lack of competition means that pricing is not driven by market forces, and the government relies heavily on negotiation and oversight to ensure fair pricing.

Taxpayer Impact: The sole-source nature of this award limits the government's ability to leverage competitive bidding to secure the lowest possible price for taxpayers. This can result in higher overall costs compared to a competed contract.

Public Impact

The U.S. Army benefits from continued operational readiness of its PAC-3 missile defense systems. Foreign Military Sales customers also receive critical support for their PAC-3 systems, enhancing regional security. The contract ensures the availability of advanced air and missile defense capabilities for national security. Workforce implications include specialized technical and engineering roles at Lockheed Martin's Texas facility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Cost Plus Fixed Fee contract type can incentivize higher spending if not rigorously managed.
Lack of small business participation may limit opportunities for smaller, innovative firms in the defense supply chain.
Long contract duration (nearly 7 years) requires sustained oversight to ensure performance and cost control.
Reliance on a single contractor for critical support could create vendor lock-in.

Positive Signals

Ensures continued operational readiness of vital PAC-3 missile defense systems.
Leverages the specialized expertise of the original equipment manufacturer for critical support.
Supports U.S. national security and that of allied nations through FMS.
Provides long-term sustainment for a key component of air defense.

Sector Analysis

The PAC-3 missile system is a critical component of U.S. and allied air and missile defense strategies. The market for advanced missile support is highly specialized, often dominated by the original equipment manufacturers due to proprietary technology and extensive testing requirements. Lockheed Martin is a primary contractor in this sector. Comparable spending benchmarks for sustainment of similar advanced missile systems would likely be in the tens to hundreds of millions of dollars over multi-year periods, reflecting the complexity and strategic importance of these platforms.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the specialized nature of PAC-3 missile support, it is likely that Lockheed Martin is the only entity capable of providing these services. There is no indication of subcontracting opportunities for small businesses within the provided data, which could limit their participation in this high-value defense contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Given the sole-source nature and CPFF structure, rigorous oversight of costs, performance, and adherence to contract terms is crucial. Transparency may be limited due to the proprietary nature of the support services. The Inspector General's office within the Department of Defense would have jurisdiction to investigate any potential fraud, waste, or abuse.

Related Government Programs

PAC-3 Missile Production
Missile Defense Agency Programs
Foreign Military Sales - Air Defense Systems
Army Aviation and Missile Command Sustainment Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of competition
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.3 million to LOCKHEED MARTIN CORPORATION. THIS CONTRACT IS FOR PATRIOT ADVANCED CAPABILITY-3 (PAC-3) MISSILE SUPPORT CENTER (P3MSC) FOR THE US AND FOREIGN MILITARY SALES (FMS) CUSTOMERS.

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 $30.3 million.

What is the period of performance?

Start: 2019-09-12. End: 2026-05-01.

What is Lockheed Martin's track record with PAC-3 missile support contracts?

Lockheed Martin Corporation, as the prime contractor for the PAC-3 missile system, has an established track record in providing support for this platform. Their experience encompasses manufacturing, integration, testing, and sustainment services. The company has consistently been awarded contracts related to the PAC-3 program, indicating a level of trust and proven capability from the Department of Defense and other government agencies. Analyzing past performance metrics, delivery timelines, and cost variances on previous PAC-3 support contracts would provide further insight into their reliability and efficiency in fulfilling such requirements. However, specific details on past performance for this exact support center are not publicly available in this dataset.

How does the $30.25M contract value compare to similar PAC-3 support contracts?

Direct comparison of the $30.25M contract value for PAC-3 missile support is challenging without access to specific, comparable sole-source sustainment contracts for the same system. However, given the nearly 7-year duration and the critical nature of advanced missile defense systems, this figure appears to be within a reasonable range for specialized, long-term support. Sustaining complex defense platforms often involves significant recurring costs for technical expertise, spare parts, diagnostics, and readiness assurance. Without more data points on similar sole-source sustainment efforts for other major missile systems, a definitive value-for-money assessment relative to peers is difficult, but the investment reflects the strategic importance and technological sophistication of the PAC-3.

What are the primary risks associated with this Cost Plus Fixed Fee (CPFF) contract?

The primary risk associated with this Cost Plus Fixed Fee (CPFF) contract is the potential for cost overruns. In a CPFF arrangement, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. While the fixed fee provides some incentive for the contractor to control costs (as it doesn't increase with higher costs), the reimbursement of all costs means the government bears the financial risk if actual expenses exceed estimates. This structure can be less cost-effective for the government compared to fixed-price contracts, especially if the scope of work is not precisely defined or if unforeseen technical challenges arise, leading to increased costs that are passed on to the government.

How effective is sole-source contracting for specialized defense systems like the PAC-3?

Sole-source contracting can be effective for highly specialized defense systems like the PAC-3 when the original equipment manufacturer (OEM) is the only entity with the requisite technical knowledge, proprietary data, and manufacturing capabilities. This is often the case for complex systems requiring unique expertise for sustainment, upgrades, and maintenance. It ensures that critical systems remain operational by leveraging the OEM's deep understanding. However, the effectiveness is contingent on robust government negotiation and oversight to mitigate the lack of price competition and ensure fair and reasonable pricing. Without competition, the government must rely heavily on its contracting expertise to achieve value.

What are the historical spending patterns for PAC-3 missile support?

Historical spending patterns for PAC-3 missile support, while not detailed in this specific data point, generally reflect a long-term commitment to maintaining advanced air defense capabilities. Contracts for such systems typically span multiple years and involve significant annual outlays for sustainment, upgrades, and operational support. Spending tends to increase as the systems age and require more maintenance, or when new variants or capabilities are introduced. The Department of Defense consistently allocates substantial budgets to missile defense programs, including the PAC-3, reflecting its strategic importance. Analyzing aggregated spending data over several fiscal years would reveal trends in investment and the overall lifecycle cost of the PAC-3 program.

What oversight mechanisms are in place for this sole-source contract?

Oversight for this sole-source contract is managed by the Department of the Army's contracting and program management teams. Key oversight mechanisms include regular performance reviews, audits of contractor costs and financial records, and monitoring of delivery schedules and technical performance metrics. Given the CPFF structure, detailed cost accounting and reporting by the contractor are essential, allowing the government to verify incurred costs. The Defense Contract Management Agency (DCMA) often plays a role in overseeing contractor performance and compliance. Furthermore, the Department of Defense's Inspector General can conduct audits and investigations to ensure accountability and prevent waste, fraud, and abuse.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

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: $30,253,134

Exercised Options: $30,253,134

Current Obligation: $30,253,134

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $112,518,081

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W31P4Q17D0026

IDV Type: IDC

Timeline