DoD awards $69M sole-source contract for LGTR (USN) BDU-59C/B production to Lockheed Martin Corp

Contract Overview

Contract Amount: $69,045,748 ($69.0M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2024-01-02

End Date: 2028-02-28

Contract Duration: 1,518 days

Daily Burn Rate: $45.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FISCAL YEAR 2024 PRODUCTION OF LGTR (USN) BDU-59C/B

Place of Performance

Location: ARCHBALD, LACKAWANNA County, PENNSYLVANIA, 18403

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $69.0 million to LOCKHEED MARTIN CORP for work described as: FISCAL YEAR 2024 PRODUCTION OF LGTR (USN) BDU-59C/B Key points: 1. Contract awarded on a sole-source basis, limiting competitive pricing benefits. 2. Firm Fixed Price contract type suggests cost certainty for the government. 3. Long contract duration of 1518 days may indicate a stable, long-term need. 4. The contract is for production, implying an existing or proven requirement. 5. Awarded by the Department of the Navy, indicating a specific military application. 6. The specific item, LGTR (USN) BDU-59C/B, suggests a specialized ordnance component.

Value Assessment

Rating: questionable

Benchmarking the value for this specific LGTR (USN) BDU-59C/B is challenging without comparable contract data. The firm fixed price structure provides cost predictability, but the sole-source nature prevents direct price comparison against competitors. The total award value of $69 million over approximately five years suggests a significant investment in this particular ordnance. Further analysis would require understanding the unit cost and comparing it to historical pricing or similar ordnance systems.

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. This approach is typically used when a unique capability or proprietary technology is required, or in cases of urgent need where competition is not feasible. The lack of competition means that the government did not benefit from a bidding process that could drive down prices through market forces.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without competing offers, there is less assurance that the price reflects the lowest possible cost for the required goods.

Public Impact

The primary beneficiaries are the U.S. Navy, which will receive the produced LGTR (USN) BDU-59C/B units. The contract ensures the continued supply of a specific ordnance component essential for naval operations. Production will occur in Pennsylvania, potentially supporting local jobs and the regional economy. The workforce implications include skilled labor in manufacturing and ordnance production at Lockheed Martin facilities.

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 justification for sole-source procurement.
Long contract duration could mask inefficiencies if not actively managed.
Specific nature of the ordnance (BDU-59C/B) may limit alternative solutions or suppliers.

Positive Signals

Firm Fixed Price contract provides cost certainty for the government.
Award to a known contractor (Lockheed Martin) suggests a potentially reliable supplier.
Production in Pennsylvania may offer regional economic benefits.
Contract supports a specific, likely critical, defense requirement.

Sector Analysis

The defense sector, particularly ordnance manufacturing, is characterized by high barriers to entry, specialized technology, and significant government oversight. Contracts for such items are often awarded to established prime contractors like Lockheed Martin, which possess the necessary expertise and facilities. The market size for specialized ordnance can be substantial, driven by military readiness and modernization programs. This contract fits within the broader category of defense manufacturing, supplying components for naval aviation or other platforms.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the contractor, Lockheed Martin Corp., is a large business. There is no explicit information regarding subcontracting plans for small businesses within this award. The impact on the small business ecosystem is likely minimal unless Lockheed Martin voluntarily engages small businesses for specific components or services not detailed in this award notice.

Oversight & Accountability

Oversight for this contract will primarily fall under the Department of the Navy's contracting and program management offices. As a definitive contract with a firm fixed price, accountability measures are tied to delivery schedules and specifications. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse, but specific proactive oversight mechanisms beyond standard contract management are not detailed.

Related Government Programs

Department of Defense Ordnance Procurement
Naval Aviation Support Equipment
Lockheed Martin Defense Contracts
Ordnance Manufacturing Contracts
Fiscal Year 2024 Defense Spending

Risk Flags

Sole-source award
Lack of competitive pricing
Potential for higher costs
Limited transparency in procurement justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $69.0 million to LOCKHEED MARTIN CORP. FISCAL YEAR 2024 PRODUCTION OF LGTR (USN) BDU-59C/B

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 Navy).

What is the total obligated amount?

The obligated amount is $69.0 million.

What is the period of performance?

Start: 2024-01-02. End: 2028-02-28.

What is the specific function and operational context of the LGTR (USN) BDU-59C/B?

The LGTR (USN) BDU-59C/B refers to a specific type of ordnance, likely a bomb or munition component, used by the U.S. Navy. 'LGTR' could stand for 'Lightweight Guided Training Round' or a similar designation, and 'BDU' often denotes 'Bomb Dummy Unit' or a training variant. The 'USN' clearly indicates its use by the U.S. Navy. These types of components are crucial for training pilots and aircrews in weapon delivery systems without expending live ordnance, ensuring readiness and proficiency. The specific designation BDU-59C/B suggests a particular model or configuration within a series of training munitions.

What is the historical spending pattern for this specific ordnance item or similar items by the Department of the Navy?

Analyzing historical spending for the LGTR (USN) BDU-59C/B requires access to detailed procurement databases beyond the provided data. However, general trends in ordnance procurement by the Department of the Navy show consistent investment in training munitions and operational weapons. Spending fluctuates based on modernization programs, operational tempo, and budget allocations. Contracts for such items are often multi-year to ensure supply chain stability. Without specific historical data for the BDU-59C/B, it's difficult to ascertain if this $69 million award represents an increase, decrease, or stable level of spending compared to previous periods. However, the sole-source nature suggests a continued reliance on this specific item.

What is the justification provided by the Department of the Navy for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED,' which is the basis for a sole-source award. Typically, government agencies must justify sole-source procurements under specific circumstances outlined in the Federal Acquisition Regulation (FAR). Common justifications include the existence of only one responsible source capable of providing the supplies or services, urgent and compelling needs that preclude full and open competition, or when the contract is a follow-on to a competitively awarded contract where only the original contractor can provide the necessary supplies or services due to unique capabilities or compatibility requirements. A detailed justification document would normally be required and publicly accessible for such awards.

What are the potential risks associated with a sole-source contract for ordnance production?

The primary risk associated with a sole-source contract for ordnance production is the lack of competitive pricing, potentially leading to higher costs for the government and taxpayers. Without competing bids, there is less incentive for the sole contractor to optimize efficiency or offer the most cost-effective solution. Additionally, sole-source awards can create vendor lock-in, making it difficult and costly to switch to alternative suppliers in the future. There's also a potential risk of reduced innovation if the contractor faces no competitive pressure to improve their products or processes. Oversight becomes critical to ensure fair pricing and performance.

How does the firm fixed price (FFP) contract type mitigate risks for the government in this ordnance procurement?

A Firm Fixed Price (FFP) contract type is generally advantageous for the government as it shifts the majority of the cost risk to the contractor. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of their actual costs. This provides budget certainty for the government and incentivizes the contractor to manage their costs efficiently to maximize profit. For ordnance production, where material costs and manufacturing processes can be complex, the FFP structure helps prevent cost overruns that might occur under cost-reimbursement contracts, provided the initial price is negotiated appropriately.

What is Lockheed Martin Corp.'s track record in producing ordnance and similar defense components for the U.S. military?

Lockheed Martin Corporation is one of the largest defense contractors globally, with a long and extensive track record in producing a wide array of defense systems, including missiles, aircraft, naval systems, and various ordnance components. They are a major supplier to the U.S. Department of Defense and allied nations. Their experience encompasses complex manufacturing, advanced technologies, and large-scale production. While specific details on their performance for the LGTR (USN) BDU-59C/B are not provided here, their overall standing as a prime defense contractor suggests a significant capacity and established processes for delivering such military hardware.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Small Arms, Ordnance, and Ordnance Accessories Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001923R0103

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, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $69,830,208

Exercised Options: $69,045,748

Current Obligation: $69,045,748

Subaward Activity

Number of Subawards: 43

Total Subaward Amount: $8,015,126

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline