Lockheed Martin awarded $100.5M contract for PAVEWAY II munitions, highlighting significant defense spending in ammunition manufacturing
Contract Overview
Contract Amount: $100,528,883 ($100.5M)
Contractor: Lockheed Martin Corp
Awarding Agency: Department of Defense
Start Date: 2011-07-28
End Date: 2014-01-31
Contract Duration: 918 days
Daily Burn Rate: $109.5K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: PAVEWAY II DO 1
Place of Performance
Location: ARCHBALD, LACKAWANNA County, PENNSYLVANIA, 18403, UNITED STATES OF AMERICA
Plain-Language Summary
Department of Defense obligated $100.5 million to LOCKHEED MARTIN CORP for work described as: PAVEWAY II DO 1 Key points: 1. Contract value represents a substantial investment in critical munitions capabilities. 2. Sole awardee suggests a focused procurement strategy for this specific munition type. 3. Fixed-price contract structure aims to control costs and provide predictability. 4. Contract duration of over 3 years indicates a sustained need for these munitions. 5. This award falls within the broader category of defense procurement for operational readiness. 6. The specific munition type points to specialized aerial delivery systems.
Value Assessment
Rating: good
The contract value of $100.5 million for PAVEWAY II munitions appears reasonable given the nature of defense procurement and the supplier. Benchmarking against similar large-scale munitions contracts would provide a more precise value-for-money assessment. The firm fixed-price structure suggests an expectation of cost control by the Department of Defense. Without specific per-unit cost data or comparisons to alternative munition systems, a definitive value assessment is challenging, but the scale of the award indicates a significant operational requirement.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The presence of two bidders suggests a competitive environment, though the specific details of the bidding process and the nature of the competition (e.g., technical proposals, price points) are not fully detailed here. A competitive process generally benefits the government by fostering price discovery and encouraging innovation.
Taxpayer Impact: Full and open competition, even with two bidders, is generally favorable for taxpayers as it aims to secure the best possible price and quality for the munitions.
Public Impact
The primary beneficiaries are the U.S. Air Force and potentially other branches of the Department of Defense requiring precision-guided munitions. The services delivered include the manufacturing and supply of PAVEWAY II munitions, crucial for air-to-ground strike capabilities. The geographic impact is primarily national, supporting military readiness across various operational theaters. Workforce implications include jobs in manufacturing, engineering, and logistics at Lockheed Martin and its subcontractors.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns if initial estimates did not fully capture manufacturing complexities.
- Dependence on a single contractor for a critical munition could pose supply chain risks.
- The long-term sustainment and upgrade costs of this munition system are not detailed.
Positive Signals
- Firm fixed-price contract provides cost certainty for the government.
- Full and open competition suggests a robust bidding process.
- Award to a major defense contractor like Lockheed Martin indicates a reliable supplier for critical defense needs.
- The specific munition type (PAVEWAY II) is a proven system, reducing technical risk.
Sector Analysis
The defense sector, particularly the ammunition manufacturing sub-sector, is characterized by high barriers to entry, significant R&D investment, and long production cycles. Contracts like this are essential for maintaining the operational readiness of military forces. Spending in this area is often driven by geopolitical factors and the need for advanced weaponry. Comparable spending benchmarks would involve analyzing other large-scale munitions procurements and the market share of key players like Lockheed Martin in this specialized field.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Lockheed Martin, a large defense contractor, is the prime awardee. Subcontracting opportunities for small businesses may exist within the supply chain for components or services, but this is not explicitly detailed in the provided data. The impact on the small business ecosystem would depend on the extent of their inclusion in the subcontracting process.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. Accountability measures are embedded in the firm fixed-price contract terms, requiring delivery of specified munitions. Transparency is generally maintained through contract award databases, though detailed performance metrics and cost breakdowns may be proprietary. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- Precision-Guided Munitions
- Air-to-Ground Munitions
- Defense Ammunition Procurement
- Lockheed Martin Defense Contracts
- Air Force Munitions Systems
Risk Flags
- Potential for supply chain disruptions
- Long-term sustainment cost uncertainty
- Risk of technological obsolescence over time
Tags
defense, ammunition, munitions, lockheed-martin, air-force, precision-guided-munitions, firm-fixed-price, full-and-open-competition, large-contract, us-department-of-defense, pennsylvania, fixed-wing-aircraft-ordnance
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $100.5 million to LOCKHEED MARTIN CORP. PAVEWAY II DO 1
Who is the contractor on this award?
The obligated recipient is LOCKHEED MARTIN CORP.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Air Force).
What is the total obligated amount?
The obligated amount is $100.5 million.
What is the period of performance?
Start: 2011-07-28. End: 2014-01-31.
What is the historical spending trend for PAVEWAY II munitions by the Department of Defense?
Analyzing historical spending for PAVEWAY II munitions requires accessing detailed contract award databases over several fiscal years. While this specific award is for $100.5 million, understanding the trend involves looking at the total obligated amounts, number of awards, and average contract values for this munition type. Factors such as operational tempo, inventory levels, and the introduction of newer munition technologies would influence these trends. A significant increase or decrease in spending could indicate shifts in strategic priorities or the lifecycle stage of the PAVEWAY II system. Without access to comprehensive historical data, it's difficult to ascertain a precise trend, but substantial awards like this suggest continued reliance on the system.
How does the per-unit cost of PAVEWAY II munitions under this contract compare to industry benchmarks or previous contracts?
Determining the per-unit cost requires dividing the total contract value by the number of units procured. However, the provided data does not specify the quantity of munitions awarded. If we assume 'PAVEWAY II DO 1' refers to a specific variant or kit, and 'no': 2 might indicate two contract actions or task orders, it's still insufficient for a per-unit calculation. Comparing to industry benchmarks or previous contracts would necessitate access to those specific data points, including unit prices from prior awards or publicly available cost estimates for similar munitions. Given the lack of quantity and specific unit pricing, a direct comparison is not feasible with the current information.
What are the key performance indicators (KPIs) used to evaluate Lockheed Martin's performance on this contract?
Key performance indicators for a munitions manufacturing contract typically include on-time delivery, quality control (defect rates), adherence to technical specifications, and production efficiency. For PAVEWAY II munitions, specific KPIs might relate to the accuracy and reliability of the guidance kits, the yield rate during manufacturing, and the successful integration with delivery platforms. The firm fixed-price nature of the contract incentivizes meeting these KPIs to avoid penalties and ensure profitability. Performance would likely be monitored through regular progress reports, quality assurance inspections, and potentially operational testing of delivered munitions.
What is the projected lifespan and obsolescence risk associated with the PAVEWAY II munitions procured under this contract?
The PAVEWAY II system, while a proven munition, is part of a constantly evolving field. Its projected lifespan and obsolescence risk depend on several factors, including the rate of technological advancement in adversary defenses and the development of newer, more capable munitions by the U.S. and its potential adversaries. While the PAVEWAY II offers precision, newer systems may provide enhanced range, targeting capabilities, or reduced collateral damage. The Department of Defense likely has a roadmap for munitions modernization, and the PAVEWAY II's continued procurement suggests it remains relevant for current operational needs, but its long-term obsolescence risk increases as newer technologies mature.
How does this contract align with the Department of Defense's overall strategy for air-to-ground warfare and force modernization?
This contract for PAVEWAY II munitions aligns with the DoD's ongoing strategy to maintain a robust capability for air-to-ground precision strikes. PAVEWAY II kits, which convert unguided bombs into guided munitions, are a cost-effective way to enhance the effectiveness of existing ordnance. This procurement supports the need for precision engagement, minimizing collateral damage, and achieving desired effects against specific targets. It reflects a strategy that balances the acquisition of advanced, next-generation systems with the continued sustainment and modernization of proven, reliable platforms like the PAVEWAY II, ensuring operational readiness across a spectrum of conflict scenarios.
Industry Classification
NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing
Product/Service Code: AMMUNITION AND EXPLOSIVES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Offers Received: 2
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 459 KENNEDY DR, ARCHBALD, PA, 18403
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $100,528,883
Exercised Options: $100,528,883
Current Obligation: $100,528,883
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: FA821311D0007
IDV Type: IDC
Timeline
Start Date: 2011-07-28
Current End Date: 2014-01-31
Potential End Date: 2014-01-31 00:00:00
Last Modified: 2015-05-13
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