DoD awards $49.6M for Javelin weapon system support, but competition concerns arise

Contract Overview

Contract Amount: $49,628,152 ($49.6M)

Contractor: Raytheon/Lockheed Martin Javelin JV

Awarding Agency: Department of Defense

Start Date: 2024-09-01

End Date: 2027-08-31

Contract Duration: 1,094 days

Daily Burn Rate: $45.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LIFE CYCLE CONTRACTOR SUPPORT SERVICES FY24-FY26 FOR JAVELIN WEAPON SYSTEM

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85756

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $49.6 million to RAYTHEON/LOCKHEED MARTIN JAVELIN JV for work described as: LIFE CYCLE CONTRACTOR SUPPORT SERVICES FY24-FY26 FOR JAVELIN WEAPON SYSTEM Key points: 1. Contract awarded on a firm-fixed-price basis, indicating clear cost expectations. 2. Sole-source award raises questions about potential price overruns and lack of competitive pressure. 3. Long contract duration of 1094 days suggests a need for sustained support. 4. Awarded to a joint venture, potentially consolidating expertise but limiting market entry. 5. Focus on lifecycle contractor support highlights the importance of sustainment for critical weapon systems. 6. Geographic concentration in Arizona for support services.

Value Assessment

Rating: questionable

The contract's value of $49.6 million over three years for lifecycle support of the Javelin weapon system appears to be a significant investment. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The firm-fixed-price structure provides some cost certainty, but the absence of competition means there's no external validation of whether this represents the best value for the government. Further analysis would be needed to compare the scope of services to other weapon system sustainment contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, proprietary knowledge, or when urgency dictates. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices and fostered innovation. It suggests a reliance on a specific entity for this critical support.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure, as the contractor faces less incentive to offer the most cost-effective solution.

Public Impact

The U.S. Army benefits from sustained operational readiness of the Javelin weapon system. Services include lifecycle contractor support, ensuring the weapon system remains functional and updated. The geographic impact is concentrated in Arizona, where the support services will be performed. Workforce implications include employment opportunities within the contractor's organization in Arizona.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Lack of competition may reduce incentives for innovation and efficiency.
Long-term reliance on a single contractor could create vendor lock-in.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to a specialized joint venture suggests access to deep expertise for a critical system.
Focus on lifecycle support ensures long-term sustainment of a vital defense asset.

Sector Analysis

The defense sector, particularly guided missile manufacturing and support, is characterized by high technological complexity and significant government investment. Contracts for weapon system sustainment are crucial for maintaining military readiness and often involve specialized knowledge and long-term partnerships. The market for such services is typically concentrated among a few large defense contractors or specialized joint ventures due to the stringent requirements and security protocols involved. This contract fits within the broader category of defense sustainment services, which represent a substantial portion of the Department of Defense's overall spending.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The award is to a joint venture, which may or may not involve small business participation in its structure or subcontracting. Without specific subcontracting plans or data, the direct impact on the small business ecosystem is unclear, but the sole-source nature limits opportunities for small businesses to compete directly for this prime contract.

Oversight & Accountability

Oversight for this contract will likely fall under the Department of the Army's contracting and program management offices. Transparency is limited by the sole-source nature of the award. Accountability measures would be defined within the contract's terms and conditions, including performance metrics and reporting requirements. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract.

Related Government Programs

Javelin Weapon System Procurement
Missile Defense Systems Support
Tactical Missile Support Contracts
Department of Defense Sustainment Services

Risk Flags

Sole-source award lacks competitive justification.
Potential for uncompetitive pricing.
Limited transparency in procurement process.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $49.6 million to RAYTHEON/LOCKHEED MARTIN JAVELIN JV. LIFE CYCLE CONTRACTOR SUPPORT SERVICES FY24-FY26 FOR JAVELIN WEAPON SYSTEM

Who is the contractor on this award?

The obligated recipient is RAYTHEON/LOCKHEED MARTIN JAVELIN JV.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $49.6 million.

What is the period of performance?

Start: 2024-09-01. End: 2027-08-31.

What is the historical spending on lifecycle support for the Javelin weapon system, and how does this award compare?

Historical spending data for the Javelin weapon system's lifecycle support is not directly provided in the given data. However, the current award of approximately $49.6 million over three years (FY24-FY26) represents a significant annual investment in sustainment. To provide a comparative analysis, one would need to examine previous contracts for Javelin support, looking at both the total value and the annual expenditure rates. Understanding trends in sustainment costs over the weapon system's life cycle is crucial for budgeting and identifying potential cost efficiencies. Without prior data, it's challenging to determine if this $49.6 million award is higher, lower, or consistent with past spending patterns for similar support services.

What specific lifecycle contractor support services are included in this $49.6 million contract?

The provided data indicates the contract is for 'LIFE CYCLE CONTRACTOR SUPPORT SERVICES FY24-FY26 FOR JAVELIN WEAPON SYSTEM.' While the specific breakdown of services is not detailed, lifecycle contractor support typically encompasses a range of activities essential for maintaining a weapon system's operational readiness throughout its lifespan. This can include maintenance, repair, overhaul, upgrades, technical support, logistics management, training, and engineering services. For the Javelin system, this likely involves ensuring the continued functionality of its guidance, launch, and warhead components, as well as providing technical expertise to the end-users and addressing any obsolescence issues that may arise. The firm-fixed-price nature suggests a defined scope of work for these services.

What are the risks associated with awarding this contract on a sole-source basis to the RAYTHEON/LOCKHEED MARTIN JAVELIN JV?

The primary risk associated with a sole-source award is the potential for inflated costs due to the lack of competitive bidding. Without competing offers, the government loses the opportunity to leverage market forces to secure the best possible price and value. This can lead to taxpayers bearing a higher cost than if the contract had been competed. Additionally, sole-source awards can reduce incentives for the contractor to innovate or improve efficiency, as there is less pressure from potential competitors. There's also a risk of vendor lock-in, where the government becomes overly dependent on a single provider, potentially limiting future flexibility and options. Finally, it raises questions about whether a competitive environment was truly unavailable or if other avenues for competition were overlooked.

How does the firm-fixed-price (FFP) contract type mitigate risks for the government in this sole-source scenario?

The firm-fixed-price (FFP) contract type offers a significant risk mitigation for the government, even in a sole-source situation. Under an FFP contract, the contractor agrees to a set price for the defined scope of work, regardless of their actual costs. This shifts the cost-risk from the government to the contractor. If the contractor's expenses are higher than anticipated, their profit margin will decrease; if they are lower, their profit will increase. This structure provides budget certainty for the government, as the total cost is known upfront, assuming the scope of work does not change. While it doesn't address the potential for the initial price being too high due to lack of competition, it does protect the government from cost overruns related to the contractor's performance or unforeseen expenses within the agreed-upon scope.

What is the significance of the Javelin weapon system to the U.S. Army, and why is sustained lifecycle support critical?

The Javelin is a highly significant anti-tank guided missile system for the U.S. Army, providing infantry and light combat units with a man-portable capability to defeat main battle tanks, armored vehicles, and fortifications. Its effectiveness in modern warfare, particularly in asymmetric conflicts and against peer adversaries, makes it a critical asset. Sustained lifecycle support is crucial because weapon systems like the Javelin are complex, high-tech assets that require ongoing maintenance, upgrades, and technical expertise to remain operational and effective throughout their extended service lives. This support ensures reliability, addresses potential obsolescence of components, incorporates necessary technological improvements, and provides training and logistical backing, ultimately guaranteeing the warfighter has a ready and capable system when needed.

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: W31P4Q23R0054

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1151 E HERMANS RD, TUCSON, AZ, 85756

Business Categories: Category Business, Manufacturer of Goods, Not Designated a Small Business, Partnership or Limited Liability Partnership, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $144,520,917

Exercised Options: $49,628,152

Current Obligation: $49,628,152

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline