DoD Awards $2.2B to Lockheed Martin for Missile Propulsion Units, Lacking Competition
Contract Overview
Contract Amount: $2,213,842,633 ($2.2B)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2023-03-30
End Date: 2028-09-30
Contract Duration: 2,011 days
Daily Burn Rate: $1.1M/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: AGMS PRODUCTION
Place of Performance
Location: ORLANDO, ORANGE County, FLORIDA, 32819
State: Florida Government Spending
Plain-Language Summary
Department of Defense obligated $2.21 billion to LOCKHEED MARTIN CORPORATION for work described as: AGMS PRODUCTION Key points: 1. Significant contract value of $2.2 billion awarded to a single large corporation. 2. Lack of competition raises concerns about potential overpricing and reduced innovation. 3. The contract spans five years, indicating a long-term reliance on this supplier. 4. This spending falls within the Defense sector, specifically missile propulsion systems.
Value Assessment
Rating: questionable
The contract's fixed-price incentive structure aims to control costs, but without competition, it's difficult to benchmark against market rates. The awarded amount of $2.2 billion for 2011 units suggests a high per-unit cost.
Cost Per Unit: $1,037,480
Competition Analysis
Competition Level: limited
The contract was 'NOT COMPETED,' indicating a sole-source or limited competition scenario. This significantly limits price discovery and potentially leads to higher costs for taxpayers.
Taxpayer Impact: The absence of competitive bidding for a $2.2 billion contract likely results in higher costs for taxpayers compared to a fully competed procurement.
Public Impact
Taxpayers may be overpaying for critical missile propulsion systems due to a lack of competitive bidding. The long-term nature of the contract could lock the DoD into a potentially inefficient pricing structure. Reliance on a single supplier for such a vital component could pose national security risks if supply is disrupted.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of Competition
- High Per-Unit Cost
- Sole-Source Award
- Long-Term Commitment
Positive Signals
- Definitive Contract Awarded
- Fixed Price Incentive Structure
Sector Analysis
This contract falls under the Defense Industrial Base, specifically focusing on the manufacturing of guided missile and space vehicle propulsion units. Spending in this sector is critical for national security but often involves complex, high-cost components where competition can be challenging.
Small Business Impact
The contract was awarded to Lockheed Martin Corporation, a major defense contractor, and there is no indication of small business participation. This suggests a lack of opportunity for small businesses in this specific procurement.
Oversight & Accountability
The 'NOT COMPETED' status warrants further investigation by oversight bodies to ensure the pricing is fair and reasonable and that competition was genuinely not feasible. Transparency in the justification for limited competition is crucial.
Related Government Programs
- Guided Missile and Space Vehicle Propulsion Unit and Propulsion Unit Parts Manufacturing
- Department of Defense Contracting
- Department of the Army Programs
Risk Flags
- Lack of competition raises concerns about fair pricing.
- High per-unit cost requires further justification.
- Sole-source award limits market leverage.
- Long contract duration may lead to price lock-in.
- Potential for missed technological advancements.
Tags
guided-missile-and-space-vehicle-propuls, department-of-defense, fl, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $2.21 billion to LOCKHEED MARTIN CORPORATION. AGMS PRODUCTION
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 $2.21 billion.
What is the period of performance?
Start: 2023-03-30. End: 2028-09-30.
What is the justification for not competing this $2.2 billion contract, and has an independent cost analysis been performed to ensure fair and reasonable pricing?
The justification for not competing this significant contract is critical for ensuring taxpayer value. An independent cost analysis is essential to validate the pricing, especially in sole-source or limited competition scenarios. Without this, it's difficult to ascertain if the government is receiving a fair deal or if the fixed-price incentive contract is truly optimizing costs.
What are the specific risks associated with relying on a single supplier for missile propulsion units for a five-year period, particularly concerning supply chain disruptions or technological obsolesc
Reliance on a single supplier for critical components like missile propulsion units for an extended period introduces significant supply chain risks. Disruptions due to geopolitical events, natural disasters, or the supplier's internal issues could halt production. Furthermore, technological advancements might render the current propulsion units obsolete, yet the contract locks the DoD into this specific technology.
How does the per-unit cost of $1,037,480 compare to similar propulsion units procured through competitive means, and what is the projected long-term cost impact of this contract?
The per-unit cost of $1,037,480 is substantial and requires comparison with competitively procured similar units to assess value. Without competitive benchmarks, it's challenging to determine if this price is inflated. The long-term cost impact depends on the contract's incentive structure and potential future modifications, but a non-competed award suggests a higher likelihood of sustained elevated costs.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Propulsion Unit and Propulsion Unit Parts Manufacturing
Product/Service Code: GUIDED MISSLES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: W31P4Q21R0005
Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE (L)
Evaluated Preference: NONE
Contractor Details
Parent Company: Lockheed Martin Corp
Address: 5600 W SAND LAKE RD, 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: $5,408,611,340
Exercised Options: $2,213,842,633
Current Obligation: $2,213,842,633
Subaward Activity
Number of Subawards: 545
Total Subaward Amount: $563,407,280
Contract Characteristics
Multi-Year Contract: Yes
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2023-03-30
Current End Date: 2028-09-30
Potential End Date: 2028-09-30 12:09:00
Last Modified: 2025-12-17
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