DoD's $76M PAVEWAY II LGB Production contract awarded to Lockheed Martin for munitions
Contract Overview
Contract Amount: $76,050,158 ($76.1M)
Contractor: Lockheed Martin Corp
Awarding Agency: Department of Defense
Start Date: 2015-08-17
End Date: 2017-06-30
Contract Duration: 683 days
Daily Burn Rate: $111.3K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: PAVEWAY II LGB PRODUCTION
Place of Performance
Location: ARCHBALD, LACKAWANNA County, PENNSYLVANIA, 18403
Plain-Language Summary
Department of Defense obligated $76.1 million to LOCKHEED MARTIN CORP for work described as: PAVEWAY II LGB PRODUCTION Key points: 1. Value for money appears fair given the firm-fixed-price structure and competitive award. 2. Competition dynamics indicate a full and open process, suggesting potential for price discovery. 3. Risk indicators are moderate, with a fixed-price contract and established contractor. 4. Performance context is within standard defense procurement for guided bomb units. 5. Sector positioning is within the defense manufacturing industry, specifically ordnance.
Value Assessment
Rating: fair
The contract value of $76 million for PAVEWAY II LGB production is within a typical range for such defense procurements. The firm-fixed-price (FFP) contract type suggests that the contractor bears the risk of cost overruns, which can be beneficial for the government. Benchmarking against similar contracts for guided bomb units would provide a more precise value assessment, but the FFP structure and competitive award are positive indicators.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of two bidders suggests a degree of competition, which is generally favorable for achieving competitive pricing. However, the specific number of bids received and the details of the bidding process would offer further insight into the intensity of the competition.
Taxpayer Impact: A full and open competition process generally leads to better price discovery and potentially lower costs for taxpayers compared to sole-source or limited competition awards.
Public Impact
The primary beneficiaries are the U.S. Air Force, receiving essential munitions for air-to-ground operations. The service delivered is the production of PAVEWAY II Laser Guided Bomb (LGB) kits. Geographic impact is primarily within the United States, where production and delivery occur. Workforce implications include jobs in defense 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 the firm-fixed-price contract does not adequately account for all production variables.
- Dependence on a single large contractor for critical munitions production could pose supply chain risks.
- The specific performance metrics and quality control measures are not detailed in the provided data.
Positive Signals
- Awarded under full and open competition, suggesting a competitive bidding process.
- Firm-fixed-price contract type shifts cost risk to the contractor.
- Contractor, Lockheed Martin, is a well-established defense manufacturer with a track record.
- The contract is for a specific, proven munition system (PAVEWAY II LGB).
Sector Analysis
The defense sector, particularly the segment focused on munitions and precision-guided systems, is characterized by high R&D investment and long production cycles. Contracts like this are crucial for maintaining military readiness and technological superiority. Spending in this area is often driven by geopolitical factors and modernization efforts. Comparable spending benchmarks would involve analyzing other contracts for similar guided munitions from various defense manufacturers.
Small Business Impact
The provided data indicates that this contract was not specifically set aside for small businesses (ss: false, sb: false). While Lockheed Martin is a large prime contractor, there may be subcontracting opportunities for small businesses within its supply chain. The extent of small business participation would depend on Lockheed Martin's subcontracting plan and the specific requirements of the PAVEWAY II LGB production.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of Defense's contracting and procurement regulations, managed by the Department of the Air Force. Accountability measures are inherent in the firm-fixed-price contract, requiring delivery of specified goods. Transparency is generally maintained through contract award databases, though specific performance details might be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- Precision Guided Munitions Production
- Air-to-Ground Weapon Systems
- Defense Ammunition Manufacturing
- Lockheed Martin Defense Contracts
- Air Force Munitions Procurement
Risk Flags
- Contract awarded to a single large prime contractor.
- Potential for supply chain dependencies on specific components.
- Firm-fixed-price contracts can sometimes mask underlying cost efficiencies or inefficiencies.
- Aging technology, though still effective, may require future modernization or replacement.
Tags
defense, munitions, lockheed-martin, department-of-defense, air-force, full-and-open-competition, firm-fixed-price, guided-bomb-unit, ammunition-manufacturing, usa, production, delivery-order
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $76.1 million to LOCKHEED MARTIN CORP. PAVEWAY II LGB PRODUCTION
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 $76.1 million.
What is the period of performance?
Start: 2015-08-17. End: 2017-06-30.
What is Lockheed Martin's track record with PAVEWAY II LGB production and similar munitions contracts?
Lockheed Martin is a major defense contractor with extensive experience in producing a wide range of munitions, including guided bomb units. They have a long history with the PAVEWAY family of systems, which have been a staple in the U.S. military's arsenal for decades. Their track record typically involves large-scale production, integration with various aircraft platforms, and adherence to stringent military specifications. While specific performance metrics for this particular contract are not detailed, Lockheed Martin's overall reputation in this domain is that of a capable and experienced supplier of advanced ordnance.
How does the $76 million award compare to historical spending on PAVEWAY II LGB production?
The $76 million award represents a significant investment in PAVEWAY II LGB production. To provide a precise comparison, historical spending data for this specific munition would be needed, broken down by contract awards over time. However, given the nature of defense procurement, such figures can fluctuate based on demand, production runs, and technological updates. This award, covering a period of approximately two years (August 2015 to June 2017), suggests a substantial production volume. Without direct historical data for PAVEWAY II LGB, it's challenging to definitively state if this is high or low, but it aligns with the typical scale of major defense system production contracts.
What are the primary risks associated with this contract for the Department of Defense?
The primary risks for the Department of Defense (DoD) in this contract include potential production delays, quality control issues, and the risk of cost increases if the firm-fixed-price (FFP) contract was not adequately scoped. Given that Lockheed Martin is the sole awardee in this specific instance, there's also a concentration risk, making the DoD reliant on one supplier for this critical munition. Ensuring timely delivery of high-quality PAVEWAY II LGB kits is paramount for operational readiness. Furthermore, the long-term sustainment and potential obsolescence of the technology could pose future risks if not managed proactively through subsequent contracts or modernization efforts.
How effective is the PAVEWAY II LGB system in current military operations?
The PAVEWAY II LGB system, while an older generation of precision-guided munitions, remains an effective and widely used weapon system. Its effectiveness stems from its relatively low cost compared to newer technologies and its proven reliability in various combat scenarios. The system allows aircraft to accurately strike targets from standoff ranges, minimizing risk to aircrews. Its simplicity and modularity (using different warheads and fins) contribute to its versatility. While newer, more advanced munitions exist (e.g., JDAMs, SDBs), the PAVEWAY II LGB continues to be a relevant and cost-effective option for many tactical air-to-ground missions, particularly against fixed or slow-moving targets.
What is the typical production lead time for PAVEWAY II LGB kits?
The production lead time for PAVEWAY II LGB kits can vary significantly depending on the quantity ordered, the manufacturer's current production schedule, and the availability of raw materials and components. For a large-scale production contract like the $76 million award to Lockheed Martin, which spanned approximately 23 months (from August 2015 to June 2017), the lead time for individual kits would be integrated into the overall delivery schedule. Typically, defense contractors aim for efficient production lines, but complex manufacturing processes and quality assurance steps mean that lead times can range from several months to over a year for substantial orders. Specific lead times are usually detailed within the contract's delivery requirements.
What is the role of the PAVEWAY II LGB in the broader context of U.S. Air Force munition strategy?
The PAVEWAY II LGB plays a foundational role in the U.S. Air Force's munition strategy, representing a key component of its precision-guided munitions (PGM) inventory. While newer, more advanced systems like the Joint Direct Attack Munition (JDAM) and Small Diameter Bomb (SDB) offer enhanced capabilities (e.g., GPS guidance, all-weather operation, smaller footprint), the PAVEWAY II LGB provides a cost-effective solution for many tactical scenarios. It serves as a reliable option for engaging fixed targets where laser designation is feasible. Its continued procurement and production indicate that it complements, rather than is entirely replaced by, more advanced munitions, offering a balance of capability, cost, and availability within the Air Force's diverse munition portfolio.
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: $76,050,158
Exercised Options: $76,050,158
Current Obligation: $76,050,158
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: FA821311D0007
IDV Type: IDC
Timeline
Start Date: 2015-08-17
Current End Date: 2017-06-30
Potential End Date: 2017-06-30 00:00:00
Last Modified: 2017-06-15
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