DoD's $1.5B Lockheed Martin Contract for Long Lead Material Raises Concerns Over Competition
Contract Overview
Contract Amount: $1,533,695,409 ($1.5B)
Contractor: Lockheed Martin Corp
Awarding Agency: Department of Defense
Start Date: 2015-07-07
End Date: 2020-09-30
Contract Duration: 1,912 days
Daily Burn Rate: $802.1K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: LONG LEAD MATERIAL
Place of Performance
Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089
Plain-Language Summary
Department of Defense obligated $1.53 billion to LOCKHEED MARTIN CORP for work described as: LONG LEAD MATERIAL Key points: 1. Significant investment in long lead material for guided missiles. 2. Sole-source award to Lockheed Martin suggests limited competition. 3. Fixed Price Incentive contract type introduces potential cost overruns. 4. Long contract duration (2015-2020) may impact price competitiveness over time.
Value Assessment
Rating: questionable
The contract's value of $1.53 billion for long lead material is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to similar procurements.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to Lockheed Martin. This lack of competition limits price discovery and potentially leads to higher costs for the government.
Taxpayer Impact: The absence of competition in this large contract could result in taxpayers paying a premium for essential defense materials.
Public Impact
Taxpayers may be overpaying due to the lack of competitive bidding. Dependence on a single supplier for critical long lead materials poses a supply chain risk. The long duration of the contract could mean outdated technology or pricing by the end of its term.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Fixed Price Incentive contract
- Long contract duration
- Lack of small business participation
Positive Signals
- Procurement of critical long lead material
- Established contractor with relevant expertise
Sector Analysis
This contract falls under the Guided Missile and Space Vehicle Manufacturing sector, a critical area for national defense. Spending in this sector is often characterized by high R&D costs and long production cycles.
Small Business Impact
The data indicates no small business participation in this contract. This suggests a missed opportunity to foster small business growth within the defense supply chain.
Oversight & Accountability
The sole-source nature of this award warrants close oversight to ensure fair pricing and prevent potential cost creep. Robust justification for the lack of competition is essential.
Related Government Programs
- Guided Missile and Space Vehicle Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Lack of competition
- Potential for cost overruns (FPI contract)
- Long contract duration
- No small business participation
- Supply chain dependency on a single source
Tags
guided-missile-and-space-vehicle-manufac, department-of-defense, ca, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $1.53 billion to LOCKHEED MARTIN CORP. LONG LEAD MATERIAL
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 $1.53 billion.
What is the period of performance?
Start: 2015-07-07. End: 2020-09-30.
What was the justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?
The justification for a sole-source award typically involves unique capabilities, proprietary technology, or urgent national security needs that only one contractor can meet. Agencies must demonstrate that competition is not feasible or would be detrimental to national security. Without this information, it's impossible to fully assess the necessity of bypassing competitive processes and the potential impact on value for money.
How does the Fixed Price Incentive (FPI) contract structure mitigate risks associated with cost overruns for long lead materials?
An FPI contract establishes a target cost, target profit, and a ceiling price. The government and contractor share cost variances based on a predetermined formula. While FPI aims to incentivize cost control, the 'incentive' aspect can still lead to higher final costs if targets are not met or if the sharing formula is unfavorable to the government, especially with long lead times and potential material cost fluctuations.
What measures are in place to ensure the long lead material procured remains relevant and cost-effective throughout the contract's extended duration?
Ensuring relevance and cost-effectiveness over a long duration requires proactive contract management. This includes regular reviews of technological advancements, market price fluctuations, and potential obsolescence. Mechanisms like contract modifications for upgrades or price adjustments based on market indices might be employed, but the effectiveness depends heavily on the government's oversight and the contract's specific clauses.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing
Product/Service Code: NUCLEAR ORDNANCE
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0003015Q0100
Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE (L)
Evaluated Preference: NONE
Contractor Details
Address: 1111 LOCKHEED MARTIN WAY BLDG 157, SUNNYVALE, CA, 94089
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $2,711,027,648
Exercised Options: $1,544,206,681
Current Obligation: $1,533,695,409
Actual Outlays: $26,213,036
Subaward Activity
Number of Subawards: 530
Total Subaward Amount: $1,801,183,052
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2015-07-07
Current End Date: 2020-09-30
Potential End Date: 2020-09-30 00:00:00
Last Modified: 2023-08-09
More Contracts from Lockheed Martin Corp
- Federal Contract — $48.1B (Department of Energy)
- TAS::80 0124::TAS Design, Development, Test&evaluation of Project Orion — $15.5B (National Aeronautics and Space Administration)
- 200207!000021!5700!CZ62 !smc/Pkj LOS Angeles AFB !F0470102C0002 !A!N! !N! !20011116!20070630!872978978!196596688!834951691!n!lockheed Martin Corporation !1111 Lockheed Martin WAY !sunnyvale !ca!94089!77000!085!06!sunnyvale !santa Clara !california!+000012250000!n!n!000000000000!ar92!rdte/Space - Other - Applied Research !A2 !missile and Space Systems !3gfk!milstar !541710!E! !1! ! ! ! ! !99990909!B! ! !B! !d!n!j!2!001!n!2a!z!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! ! ! ! !0001! — $9.0B (Department of Defense)
- Next Generation Overhead Persistent Infrared Geosynchronous Earth Orbit Space Vehicle 1-3 Phase 1 — $7.3B (Department of Defense)
- Federal Contract — $7.3B (Department of Defense)
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)