DoD awards $170M to Lockheed Martin for GMLRS rocket production capacity increase

Contract Overview

Contract Amount: $169,996,774 ($170.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2022-12-08

End Date: 2025-12-31

Contract Duration: 1,119 days

Daily Burn Rate: $151.9K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: PROCUREMENT OF TOOLING TO INCREASE CAPACITY TO 14,004 GUIDED MULTIPLE LAUNCH ROCKETS SYSTEM (GMLRS) ROCKETS.

Place of Performance

Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $170.0 million to LOCKHEED MARTIN CORPORATION for work described as: PROCUREMENT OF TOOLING TO INCREASE CAPACITY TO 14,004 GUIDED MULTIPLE LAUNCH ROCKETS SYSTEM (GMLRS) ROCKETS. Key points: 1. Contract aims to significantly boost production of critical GMLRS rockets. 2. Sole-source award to Lockheed Martin raises questions about price competition. 3. Long-term contract duration suggests sustained demand for GMLRS. 4. Focus on capacity expansion indicates a strategic response to geopolitical needs. 5. Geographic concentration in Texas for production. 6. Contract type (Cost Plus Fixed Fee) may allow for cost overruns.

Value Assessment

Rating: questionable

The contract value of $169,996,774 for tooling to increase GMLRS rocket capacity is substantial. However, without a competitive bidding process, it is difficult to benchmark the value for money. The Cost Plus Fixed Fee (CPFF) contract type, while common for complex procurements, can sometimes lead to higher costs than fixed-price contracts if not managed carefully. The lack of competition makes it challenging to assess if the pricing is fair and reasonable compared to potential market alternatives.

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 justification for this approach is not provided in the data, but it is common for sole-source awards when a specific contractor possesses unique capabilities or intellectual property essential for the requirement. The lack of competition means there was no opportunity for other manufacturers to bid, potentially limiting price discovery and innovation.

Taxpayer Impact: Taxpayers may not benefit from the most competitive pricing due to the absence of a bidding process. This could result in a higher overall cost for the increased rocket production capacity.

Public Impact

The primary beneficiaries are the Department of Defense and its operational units requiring GMLRS rockets for national security missions. The contract will facilitate the production of Guided Multiple Launch Rocket System (GMLRS) rockets. Production is located in Texas, potentially creating or sustaining jobs in the region. This supports the readiness and strategic capabilities of the U.S. military.

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 overseen.
Lack of transparency regarding the justification for sole-source procurement.
Long contract duration could mask inefficiencies if performance is not closely monitored.

Positive Signals

Addresses a critical need for increased production of a key munition.
Invests in expanding manufacturing capacity, a strategic imperative.
Contract awarded to a known entity with established production capabilities.
Clear end date provides a defined period for capacity build-up.

Sector Analysis

The defense industrial base, specifically the guided missile and space vehicle manufacturing sector, is characterized by high barriers to entry, significant R&D investment, and often consolidated markets. This contract falls within the 'Guided Missile and Space Vehicle Manufacturing' industry (NAICS 336414). Spending in this sector is heavily influenced by geopolitical events and national defense priorities. Comparable spending benchmarks are difficult to establish without more specific details on the tooling and capacity increase, but significant investments are typical for expanding production of advanced munitions.

Small Business Impact

The data indicates that small business participation (sb) is false and there was no small business set-aside (ss). This suggests that the primary contract is not directly benefiting small businesses through set-asides. However, Lockheed Martin, as the prime contractor, may engage small businesses as subcontractors for components or services, which would be a secondary impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army and the Department of Defense's contracting and program management offices. Accountability measures would be tied to the Cost Plus Fixed Fee structure, requiring detailed cost reporting and performance metrics. Transparency is limited by the sole-source nature of the award and the proprietary information typically associated with defense manufacturing. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Guided Multiple Launch Rocket System (GMLRS)
Munitions Production
Defense Industrial Base Expansion
Army Aviation and Missile Command Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $170.0 million to LOCKHEED MARTIN CORPORATION. PROCUREMENT OF TOOLING TO INCREASE CAPACITY TO 14,004 GUIDED MULTIPLE LAUNCH ROCKETS SYSTEM (GMLRS) ROCKETS.

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 $170.0 million.

What is the period of performance?

Start: 2022-12-08. End: 2025-12-31.

What is the specific justification for awarding this contract on a sole-source basis to Lockheed Martin?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source procurements are justified when only one responsible source is capable of providing the required supplies or services. This could be due to unique capabilities, proprietary technology, essential integration with existing systems, or a lack of viable alternatives in the market. For advanced munitions like GMLRS, Lockheed Martin is often the sole manufacturer with the necessary expertise, tooling, and production lines. A formal Justification for Other Than Full and Open Competition (JOFOC) would normally be required and publicly available through channels like SAM.gov.

How does the Cost Plus Fixed Fee (CPFF) contract type impact the overall cost and risk for the government?

The CPFF contract type involves the contractor being reimbursed for all allowable costs plus a fixed fee representing their profit. This structure shifts some of the cost risk to the government, as the final cost is not fixed upfront. While it can be advantageous for complex projects where costs are difficult to estimate precisely, it requires robust government oversight to ensure costs are reasonable and allocable. The 'fixed fee' component provides some incentive for the contractor to control costs to protect their profit margin, but the primary risk mitigation relies on stringent government administration and auditing of incurred costs.

What is the historical spending trend for GMLRS production and capacity expansion by the Department of Defense?

Historical spending data for GMLRS production and capacity expansion by the DoD would reveal a pattern of significant investment, particularly in recent years given the increased global demand for precision-guided munitions. The DoD has consistently funded GMLRS procurement through various contracts, often with Lockheed Martin as the prime contractor. Capacity expansion efforts, like this one, are typically driven by strategic assessments of future conflict scenarios and the need to replenish stocks. Analyzing past awards for similar tooling or production line upgrades would provide context on the scale and frequency of such investments.

What are the potential risks associated with relying on a single contractor for critical munition production capacity?

Relying on a single contractor like Lockheed Martin for critical munition production capacity carries several risks. Firstly, it creates a single point of failure; any disruption at the contractor's facility (e.g., supply chain issues, labor disputes, natural disasters) could halt production. Secondly, it reduces leverage for the government in price negotiations and contract renewals, potentially leading to higher costs over time. Thirdly, it can stifle innovation as there is less competitive pressure to develop more efficient or advanced production methods. Finally, it makes the supply chain vulnerable to geopolitical pressures or the contractor's strategic decisions.

How does this contract align with broader DoD strategies for munitions readiness and industrial base resilience?

This contract directly aligns with broader DoD strategies focused on enhancing munitions readiness and bolstering the defense industrial base. The significant investment in increasing GMLRS production capacity signals a strategic priority to ensure sufficient stockpiles of this critical weapon system, especially in light of recent global conflicts. It reflects an effort to move beyond 'just-in-time' inventory models towards building surge capacity and ensuring long-term availability. By expanding production capabilities, the DoD aims to improve its ability to meet sustained operational demands and deter potential adversaries.

Industry Classification

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

Product/Service Code: HARDWARE AND ABRASIVES

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: $169,996,774

Exercised Options: $169,996,774

Current Obligation: $169,996,774

Subaward Activity

Number of Subawards: 25

Total Subaward Amount: $5,014,524

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W31P4Q23D0003

IDV Type: IDC

Timeline