Lockheed Martin awarded $27.1M for VLA MK54 AUR Components, a sole-source contract

Contract Overview

Contract Amount: $27,143,395 ($27.1M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2012-06-29

End Date: 2015-08-31

Contract Duration: 1,158 days

Daily Burn Rate: $23.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: VLA MK54 AUR COMPONENTS

Place of Performance

Location: AKRON, SUMMIT County, OHIO, 44315

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $27.1 million to LOCKHEED MARTIN CORPORATION for work described as: VLA MK54 AUR COMPONENTS Key points: 1. Contract awarded to a single, established provider, limiting price negotiation opportunities. 2. The contract's duration of over 3 years suggests a long-term need for these components. 3. Fixed-price contract type aims to control costs, but initial pricing requires scrutiny. 4. The specific components (VLA MK54 AUR) are critical for defense systems. 5. Geographic location of performance is Ohio, indicating regional economic impact. 6. No small business set-aside was applied, potentially impacting small business participation.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics or comparable contract data for VLA MK54 AUR components. The firm fixed-price structure suggests an attempt to control costs, but the sole-source nature means the government did not benefit from competitive bidding to ensure the lowest possible price. Further analysis would require understanding the market for these specialized components and whether the awarded price aligns with industry standards for similar technological items.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Lockheed Martin Corporation, was solicited. This approach is typically used when a unique product or service is required, or when only one responsible source is available. The lack of competition means the government did not explore alternative suppliers, which could potentially lead to higher prices than if multiple bids were considered. The justification for sole-source procurement would need to be robust to ensure taxpayer value.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage competition to drive down prices, potentially resulting in higher costs for taxpayers compared to competitively awarded contracts. This necessitates careful negotiation and oversight to ensure fair pricing.

Public Impact

The primary beneficiaries are the Department of Defense, which receives critical components for its VLA MK54 AUR systems. Services delivered include the manufacturing and supply of specialized ordnance components. The geographic impact is concentrated in Ohio, where the contract is being performed. Workforce implications may include skilled manufacturing and engineering jobs within Lockheed Martin's facilities in Ohio.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
Lack of competition may reduce incentives for contractor innovation and efficiency.
Contract duration and value warrant close monitoring for cost overruns or scope creep.

Positive Signals

Firm fixed-price contract type provides cost certainty for the government.
Award to a known entity (Lockheed Martin) suggests reliance on established capabilities.
Contract performance period is clearly defined, allowing for planning.

Sector Analysis

The defense sector relies heavily on specialized components for advanced weapon systems. Lockheed Martin Corporation is a major player in this industry, known for its extensive capabilities in aerospace, defense, and security. This contract for VLA MK54 AUR components fits within the broader category of ordnance manufacturing, a critical sub-sector. Spending in this area is often characterized by high R&D costs, long production cycles, and significant government oversight due to national security implications. Comparable spending benchmarks are difficult to establish due to the proprietary nature of such components.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. This means that opportunities for small businesses to participate in this specific procurement are limited. The prime contractor, Lockheed Martin, will likely fulfill the majority of the work internally or through its established supply chains, which may or may not include small business partners.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). Given it's a definitive contract with a fixed price, oversight would focus on ensuring timely delivery of compliant components and adherence to the contract terms. Transparency is generally limited for sole-source defense contracts due to security and proprietary concerns, but internal DoD oversight mechanisms and potentially Inspector General reviews would be in place to ensure accountability.

Related Government Programs

VLA MK54 Torpedo Program
Ordnance and Accessories Manufacturing
Department of Defense Procurement
Lockheed Martin Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for higher costs

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.1 million to LOCKHEED MARTIN CORPORATION. VLA MK54 AUR COMPONENTS

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $27.1 million.

What is the period of performance?

Start: 2012-06-29. End: 2015-08-31.

What is the historical spending pattern for VLA MK54 AUR components with Lockheed Martin?

The provided data indicates a single definitive contract awarded on June 29, 2012, with an end date of August 31, 2015, valued at $27,143,395.34. This suggests that this specific contract represents a defined period of procurement for these components. Without access to broader contract databases or historical procurement records for the VLA MK54 AUR program, it is difficult to ascertain a comprehensive historical spending pattern. However, this award signifies a significant investment during its performance period. Future spending would depend on program needs, budget allocations, and potential re-competitions or follow-on contracts.

How does the pricing of these VLA MK54 AUR components compare to similar defense articles?

Direct price comparison for specialized defense components like VLA MK54 AUR parts is challenging due to the proprietary nature of the technology and the lack of publicly available, directly comparable market data. Lockheed Martin, as a sole-source provider for this specific contract, likely set the pricing based on its internal cost structures, R&D investments, and profit margins. To assess value, one would need to benchmark against similar sub-systems within the defense sector, considering factors like technological sophistication, production volume, and supplier base. The absence of competition inherently limits the ability to establish a market-driven price point.

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

The provided data does not specify the key performance indicators (KPIs) for this contract. Typically, for defense component manufacturing, KPIs would include on-time delivery, adherence to technical specifications, quality control metrics (e.g., defect rates), and potentially cost control measures. As this was a definitive contract awarded in 2012 and completed in 2015, performance data would likely reside within the Department of Defense's contract administration records. Without access to these internal performance reports or contract close-out documentation, it's impossible to assess Lockheed Martin's performance against specific KPIs for this award.

What is the risk associated with relying on a sole-source provider for critical defense components like the VLA MK54 AUR?

Relying on a sole-source provider for critical defense components like the VLA MK54 AUR introduces several risks. Foremost is the potential for elevated costs due to the lack of competitive pressure, which can lead to reduced value for taxpayer money. There's also a risk of supply chain disruption if the sole provider faces production issues, financial instability, or geopolitical challenges. Furthermore, dependence on a single source can stifle innovation, as there may be less incentive for the contractor to invest in process improvements or alternative technologies when competition is absent. This necessitates robust government oversight and contingency planning.

What is the strategic importance of the VLA MK54 AUR components to the Department of Defense?

The VLA MK54 AUR (All-Up-Round) components are integral to the MK54 torpedo, a lightweight, anti-submarine warfare (ASW) weapon system used by the U.S. Navy and allied forces. The MK54 is deployed from surface ships, helicopters, and fixed-wing aircraft, making it a versatile tool for detecting and neutralizing submarine threats. The 'AUR' designation implies these are fully assembled, ready-to-use units. Therefore, the strategic importance of these components lies in their direct contribution to the Navy's ASW capabilities, which are crucial for maintaining maritime security, projecting power, and deterring potential adversaries in underwater domains.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Other Ordnance and Accessories Manufacturing

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0002411R6402

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 1210 MASSILLIN RD, AKRON, OH, 44315

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: $27,143,395

Exercised Options: $27,143,395

Current Obligation: $27,143,395

Subaward Activity

Number of Subawards: 18

Total Subaward Amount: $3,220,258

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline