DoD's $68.8M contract with Lockheed Martin for machinery manufacturing shows questionable value and limited competition

Contract Overview

Contract Amount: $68,864,769 ($68.9M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2017-06-15

End Date: 2022-06-14

Contract Duration: 1,825 days

Daily Burn Rate: $37.7K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: KAA RANGE 24

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32825

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $68.9 million to LOCKHEED MARTIN CORPORATION for work described as: KAA RANGE 24 Key points: 1. The contract's value proposition is unclear given the lack of detailed performance metrics and benchmarking. 2. Limited competition raises concerns about potential overpricing and reduced innovation. 3. The long duration of the contract (5 years) may not align with evolving technological needs. 4. The absence of small business set-asides limits opportunities for smaller players in this sector. 5. The fixed-price contract type offers limited flexibility for adjustments if requirements change.

Value Assessment

Rating: questionable

Benchmarking this $68.8 million contract against similar procurements for machinery manufacturing is challenging due to the limited public data. The firm fixed-price structure suggests an expectation of stable costs, but without clear performance metrics or comparisons to market rates for comparable equipment or services, assessing the true value for money is difficult. The lack of transparency regarding the specific machinery and its intended use prevents a robust cost-benefit analysis.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that only one vendor, Lockheed Martin Corporation, was considered capable of fulfilling the requirement. This lack of competition means that the government did not explore alternative solutions or pricing from other potential suppliers. Such awards often occur when a specific technology or capability is unique to a single provider, but it necessitates careful justification to ensure fair pricing and prevent market distortion.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competitive pressures to secure the best possible prices for taxpayers. This can potentially lead to higher costs compared to a competitively bid contract.

Public Impact

The primary beneficiary is the Department of the Army, receiving specialized machinery manufacturing capabilities. The contract supports the defense industrial base by procuring essential equipment. The geographic impact is concentrated in Florida, where the contractor is located. Workforce implications include employment opportunities within Lockheed Martin and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competitive bidding may lead to inflated costs.
Limited transparency on specific machinery and its application hinders value assessment.
Long contract duration could result in obsolescence or unmet evolving needs.
Sole-source award raises questions about the availability of alternative solutions.

Positive Signals

Award to a major defense contractor suggests established capabilities.
Firm fixed-price contract provides cost certainty for the government.
Contract supports critical defense manufacturing needs.

Sector Analysis

The machinery manufacturing sector is a critical component of the broader industrial base, supporting various government functions, including defense. This contract falls within the 'Other Commercial and Service Industry Machinery Manufacturing' category. While specific market size data for this niche is not readily available, the defense sector's reliance on specialized equipment underscores the importance of such procurements. Comparable spending benchmarks are difficult to establish without knowing the exact nature of the machinery.

Small Business Impact

This contract was not awarded as a small business set-aside, nor is there information indicating significant subcontracting opportunities for small businesses. The award to a large prime contractor like Lockheed Martin suggests that the primary focus was on established capabilities rather than fostering small business participation. This may limit the direct economic benefits to the small business ecosystem in this specific procurement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices. Accountability measures are inherent in the firm fixed-price structure, which places cost risk on the contractor. Transparency is limited due to the sole-source nature and the classification of the specific machinery. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Machinery Procurement
Lockheed Martin Defense Contracts
Sole-Source Defense Acquisitions
Commercial and Service Industry Machinery Manufacturing

Risk Flags

Sole-source award lacks competitive justification.
Limited public data on specific machinery and its use.
Absence of performance metrics hinders value assessment.
Potential for higher costs due to lack of competition.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $68.9 million to LOCKHEED MARTIN CORPORATION. KAA RANGE 24

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 $68.9 million.

What is the period of performance?

Start: 2017-06-15. End: 2022-06-14.

What specific type of machinery was procured under this contract, and what is its intended operational use?

The provided data indicates the contract falls under 'Other Commercial and Service Industry Machinery Manufacturing' (NAICS 333318). However, the specific type of machinery and its intended operational use are not detailed in the available information. This lack of specificity makes it challenging to assess the contract's necessity, potential risks, or value for money. Without knowing if it's for production lines, specialized testing equipment, or maintenance tools, a thorough analysis of its impact and cost-effectiveness remains incomplete. Further investigation into the contract's statement of work or associated documentation would be required to ascertain these details.

How does the $68.8 million contract value compare to similar machinery procurements by the Department of Defense or other federal agencies?

Direct comparison of the $68.8 million contract value for 'Other Commercial and Service Industry Machinery Manufacturing' is difficult without knowing the precise nature of the machinery. General machinery procurements can range from a few thousand dollars for standard equipment to hundreds of millions for highly specialized systems. Given this contract's sole-source award to Lockheed Martin, it suggests a potentially unique or highly specialized requirement. Benchmarking would require identifying contracts for comparable machinery, which is not feasible with the current data. However, for large-scale, sole-source defense procurements, this value is not exceptionally high but warrants scrutiny regarding necessity and pricing due to the lack of competition.

What are the key performance indicators (KPIs) associated with this contract, and how has Lockheed Martin performed against them?

The provided data does not include specific Key Performance Indicators (KPIs) for this contract. In a firm fixed-price contract, performance is typically measured against delivery schedules, technical specifications, and quality standards outlined in the contract's statement of work. Without access to these details or performance reports, it is impossible to assess Lockheed Martin's performance. The absence of publicly available performance metrics raises concerns about accountability and the ability to objectively evaluate the contractor's success in meeting the government's needs for the procured machinery.

What is the historical spending pattern for this type of machinery by the Department of the Army, and does this contract represent an increase or decrease?

Historical spending data for 'Other Commercial and Service Industry Machinery Manufacturing' by the Department of the Army is not readily available in a granular format that would allow for direct comparison with this specific $68.8 million contract. The Department of the Army procures a vast array of equipment, and this contract likely represents a specific need within that portfolio. Without knowing the exact nature of the machinery, it's impossible to determine if this spending is typical, an increase, or a decrease compared to past acquisitions of similar items. Analyzing broader trends in defense industrial base spending might offer context, but specific historical patterns for this niche are not publicly accessible.

What are the potential risks associated with a sole-source award for this type of machinery, particularly concerning cost overruns and technological obsolescence?

A sole-source award for machinery carries inherent risks. The primary risk concerning cost overruns stems from the lack of competitive pressure, which can allow the sole provider to set higher prices than might be achieved in a competitive environment. Without market checks, the government may overpay. Regarding technological obsolescence, a five-year contract duration (1825 days) for machinery, especially in a rapidly evolving sector, poses a risk. If the technology advances quickly, the procured machinery could become outdated before the contract ends, diminishing its long-term value. The government must ensure robust contract management and potentially include clauses for upgrades or technology refresh if feasible.

Industry Classification

NAICS: Manufacturing › Commercial and Service Industry Machinery Manufacturing › Other Commercial and Service Industry Machinery Manufacturing

Product/Service Code: TRAINING AIDS AND DEVICES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W900KK16R0010

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 100 GLOBAL INNOVATION CIR, ORLANDO, FL, 32825

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: $68,864,769

Exercised Options: $68,864,769

Current Obligation: $68,864,769

Subaward Activity

Number of Subawards: 64

Total Subaward Amount: $97,658,199

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline