DoD's $70M laser-guided training round contract awarded to Lockheed Martin without competition

Contract Overview

Contract Amount: $70,070,916 ($70.1M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2010-09-27

End Date: 2017-04-28

Contract Duration: 2,405 days

Daily Burn Rate: $29.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ENHANCED LASER GUIDED TRAINING ROUND

Place of Performance

Location: ARCHBALD, LACKAWANNA County, PENNSYLVANIA, 18403

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $70.1 million to LOCKHEED MARTIN CORP for work described as: ENHANCED LASER GUIDED TRAINING ROUND Key points: 1. Value for money is difficult to assess due to the lack of competitive bidding. 2. The sole-source nature of this award limits price discovery and potentially inflates costs. 3. Performance risk is moderate, given Lockheed Martin's established presence in defense contracting. 4. This contract falls within the defense sector, specifically for guided munitions components. 5. The absence of competition raises concerns about efficient use of taxpayer funds.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging as it was awarded sole-source. Without competitive bids, it's impossible to determine if the price paid reflects a fair market rate. Comparisons to similar contracts for training munitions are limited due to the unique nature of laser-guided systems and the lack of transparency in the sole-source negotiation process. The firm fixed-price structure offers some cost certainty, but the initial price may not have been optimized.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Lockheed Martin Corp, was solicited. The justification for this approach is not provided in the data, but it typically implies a lack of available alternatives or a critical need that could not be met through a competitive process. The absence of multiple bidders means there was no opportunity for price negotiation or innovation that often arises from a competitive environment.

Taxpayer Impact: Taxpayers may have paid a premium for this training munition due to the lack of competition. Without a bidding process, there's no assurance that the government secured the best possible price or terms.

Public Impact

The primary beneficiaries are the U.S. Department of Defense, which receives advanced training munitions. The contract delivers enhanced laser-guided training rounds, crucial for realistic combat simulations. Geographic impact is primarily within defense installations where training occurs. Workforce implications are likely within Lockheed Martin's manufacturing and engineering divisions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Lack of transparency in the procurement process hinders independent value assessment.
Contract duration of over 6 years (2405 days) without competition raises questions about long-term cost-effectiveness.

Positive Signals

Awarded to a major defense contractor with a proven track record.
Firm Fixed Price contract type provides cost certainty once negotiated.
Contract supports critical training needs for military personnel.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically manufacturing parts for guided missiles and space vehicles. The market for defense training systems is substantial, driven by ongoing military readiness requirements. Lockheed Martin is a dominant player in this sector, often securing large contracts due to its technological capabilities and established relationships with government agencies. Spending benchmarks for similar specialized training munitions are difficult to ascertain publicly, especially for sole-source awards.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the data does not specify any subcontracting plans for small businesses. The sole-source nature of the award to a large prime contractor like Lockheed Martin suggests limited direct opportunities for small businesses to participate in this specific contract, although they may be part of Lockheed's broader supply chain.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and procurement regulations. The Defense Contract Management Agency (DCMA) is listed as the 'sa' (servicing agency), indicating their role in contract administration and oversight. However, the specific oversight mechanisms for a sole-source award, particularly regarding price reasonableness, are less robust than for competitively procured contracts. Transparency is limited by the non-competitive nature of the award.

Related Government Programs

Guided Missile Manufacturing
Defense Training Systems
Aerospace and Defense
Munitions Components

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for inflated pricing
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $70.1 million to LOCKHEED MARTIN CORP. ENHANCED LASER GUIDED TRAINING ROUND

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $70.1 million.

What is the period of performance?

Start: 2010-09-27. End: 2017-04-28.

What is Lockheed Martin Corp's track record with similar sole-source defense contracts?

Lockheed Martin Corp, a major defense contractor, has a history of receiving both competitive and sole-source contracts from the U.S. Department of Defense. While specific data on all sole-source awards is not publicly aggregated, their extensive portfolio includes complex systems and components where sole-sourcing might be justified due to proprietary technology or unique capabilities. Analyzing their performance on past sole-source contracts would require a deep dive into individual award justifications and performance reviews. Generally, large defense contractors are expected to maintain high performance standards, but the lack of competition in sole-source awards means that cost efficiency is often a greater concern for oversight bodies compared to performance, which is usually well-established.

How does the $70 million contract value compare to market rates for similar training munitions?

Directly comparing the $70 million contract value to market rates for similar training munitions is challenging due to the sole-source nature of this award and the specialized 'Enhanced Laser Guided Training Round' designation. Without competitive bids, there is no market-driven price discovery to establish a benchmark. Market rates are typically derived from competitive solicitations where multiple vendors offer pricing. In a sole-source scenario, the government negotiates directly with the contractor, and the 'market rate' is essentially the negotiated price, which may or may not reflect true market value. Publicly available data on the per-unit cost or total value of comparable laser-guided training rounds from other manufacturers is scarce, especially when considering the specific technical requirements of this contract.

What are the primary risks associated with awarding a $70 million contract without competition?

The primary risks associated with awarding a $70 million contract without competition are financial and strategic. Financially, the government risks overpaying for the goods or services because there was no competitive pressure to drive down prices. Without competing bids, the negotiated price might be higher than what could have been achieved in an open market. Strategically, a sole-source award can stifle innovation by not encouraging other potential suppliers to develop competing technologies or offer alternative solutions. It can also create a dependency on a single supplier, potentially impacting long-term availability and pricing. Furthermore, it raises concerns about the efficient use of taxpayer funds and can lead to perceptions of favoritism or a lack of due diligence in procurement.

How effective are laser-guided training rounds in improving military readiness compared to other training methods?

Laser-guided training rounds are highly effective in improving military readiness by providing realistic simulation of combat scenarios involving precision-guided munitions. They allow pilots and ground crews to practice target acquisition, weapon employment, and engagement procedures in a safe, controlled environment without expending live ordnance. This realism is crucial for developing muscle memory and tactical proficiency. Compared to purely virtual simulators, these training rounds offer a more tangible experience, bridging the gap between simulation and actual combat. Their effectiveness lies in their ability to replicate the guidance systems and effects of live munitions, thereby enhancing the warfighter's ability to operate complex weapon systems accurately and efficiently under pressure, ultimately contributing to mission success and reduced risk in actual combat.

What has been the historical spending pattern for enhanced laser-guided training rounds by the Department of Defense?

Historical spending patterns for enhanced laser-guided training rounds by the Department of Defense are not easily discernible from the provided data alone, as it represents a single contract award. However, the DoD consistently invests significant resources in training and simulation technologies to maintain combat readiness. Spending on munitions, including training variants, is a substantial part of the defense budget. The trend over the years has been towards more sophisticated training tools that mimic real-world combat conditions, including guided munitions. Contracts for such items are often awarded to major defense contractors like Lockheed Martin, and their value can fluctuate based on technological advancements, geopolitical needs, and specific program requirements. Analyzing broader spending trends would require examining multiple contract awards across different fiscal years and potentially different branches of the military.

What is the significance of the 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' NAICS code (336419) in relation to this contract?

The NAICS code 336419, 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing,' is highly relevant as it precisely categorizes the type of product being procured under this contract: enhanced laser-guided training rounds. This code signifies that the contract is for components or auxiliary equipment related to guided missile and space vehicle systems, rather than the complete systems themselves. Companies operating under this code specialize in manufacturing specific parts, sub-assemblies, or specialized equipment that contribute to the overall functionality of larger defense platforms. For this contract, it indicates that Lockheed Martin is supplying critical components or the training rounds themselves, which are essential auxiliary equipment for training personnel on the use of laser-guided munitions.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001910R0049

Offers Received: 1

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: $70,177,329

Exercised Options: $70,177,029

Current Obligation: $70,070,916

Subaward Activity

Number of Subawards: 19

Total Subaward Amount: $2,843,463

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline