DoD Awards $1.13B Contract to Lockheed for THAAD Missile Defense Systems

Contract Overview

Contract Amount: $1,131,594,357 ($1.1B)

Contractor: Lockheed Missiles & Space Comp

Awarding Agency: Department of Defense

Start Date: 1996-11-06

End Date: 2000-11-30

Contract Duration: 1,485 days

Daily Burn Rate: $762.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 199703!2100!0070!SG60 !USA SPACE AND STRATEGIC DEF CDR !DASG6092C0101 !A!*!P00129 !19961106!19971003!009125535!009125535!834951691!N!23917!LOCKHEED MISSILES & SPACE COMP!1111 LOCKHEED MARTIN WAY !SUNNYVALE !CA!94089!77000!085!06!SUNNYVALE !SANTA CLARA !CALIFORNIA!0001!+000026450000!N!N!000000000000!AC23!RDTE/MISSILE AND SPACE SYSTEMS-ADV TECH DEV !A2 !MISSILE AND SPACE SYSTEMS !1CNX!THAAD-THEATER HIGH ALT AIR DEF!8731!3!*!*!D!B!A!*!A !N!U!2!003!B!* !Z!Y!Z!* !* !N!C!*!C!C!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $1.13 billion to LOCKHEED MISSILES & SPACE COMP for work described as: 199703!2100!0070!SG60 !USA SPACE AND STRATEGIC DEF CDR !DASG6092C0101 !A!*!P00129 !19961106!19971003!009125535!009125535!834951691!N!23917!LOCKHEED MISSILES & SPACE COMP!1111 LOCKHEED MARTIN WAY !SUNNYVALE !CA!94089!77000!085!06!SUNNYVALE !SANTA … Key points: 1. Significant investment in advanced missile defense technology. 2. Sole prime contractor, Lockheed Martin, dominates this specialized sector. 3. High cost and complexity present inherent program risks. 4. Focus on strategic defense aligns with national security priorities.

Value Assessment

Rating: good

The contract value of $1.13 billion is substantial for advanced missile defense. Benchmarking against similar complex R&D and defense systems suggests this is within a reasonable range, though specific performance metrics are not provided.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating multiple bidders likely vied for this significant defense contract. This competitive process should have driven price discovery and ensured a fair market price.

Taxpayer Impact: Taxpayer funds are allocated to a critical national security program, aiming to enhance defense capabilities.

Public Impact

Enhances national security by bolstering missile defense capabilities. Supports advanced technological development in the aerospace and defense sector. Creates high-skilled jobs in California and potentially other Lockheed Martin locations. Contributes to the strategic deterrence posture of the United States.

Waste & Efficiency Indicators

Waste Risk Score: 75 / 10

Warning Flags

High contract value increases financial risk.
Sole reliance on one contractor can limit future innovation.
Complexity of THAAD system may lead to cost overruns.

Positive Signals

Addresses a critical national security need.
Leverages established contractor expertise.
Awarded through competitive bidding.

Sector Analysis

This contract falls within the Research, Development, Test, and Evaluation (RDTE) category for Missile and Space Systems. Spending in this sector is typically high due to the advanced technology and long development cycles involved in defense programs.

Small Business Impact

While the prime contractor is Lockheed Martin, a large aerospace company, there is potential for subcontracting opportunities for small and medium-sized businesses within the supply chain for components and specialized services.

Oversight & Accountability

The Department of Defense, specifically the Missile Defense Agency, is responsible for overseeing this contract. Robust oversight is crucial given the program's complexity and cost to ensure effective execution and accountability.

Related Government Programs

Department of Defense Contracting
Missile Defense Agency Programs

Risk Flags

High contract value
Complex technology development
Long-term program duration
Potential for scope creep
Reliance on a single prime contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.13 billion to LOCKHEED MISSILES & SPACE COMP. 199703!2100!0070!SG60 !USA SPACE AND STRATEGIC DEF CDR !DASG6092C0101 !A!*!P00129 !19961106!19971003!009125535!009125535!834951691!N!23917!LOCKHEED MISSILES & SPACE COMP!1111 LOCKHEED MARTIN WAY !SUNNYVALE !CA!94089!77000!085!06!SUNNYVALE !SANTA CLARA !CALIFORNIA!0001!+000026450000!N!N!000000000000!AC23!RDTE/MISSILE AND SPACE SYSTEMS-ADV TECH DEV !A2 !MISSILE AND SPACE SYSTEMS !1CNX!THAAD-THEATER HIGH ALT AIR DEF!8731!3!*!*!D!B!A!*!A !N!U!2!0

Who is the contractor on this award?

The obligated recipient is LOCKHEED MISSILES & SPACE COMP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Missile Defense Agency).

What is the total obligated amount?

The obligated amount is $1.13 billion.

What is the period of performance?

Start: 1996-11-06. End: 2000-11-30.

What is the projected return on investment for the THAAD system in terms of threat mitigation?

The return on investment for the THAAD system is primarily measured in its effectiveness at intercepting and neutralizing incoming ballistic missile threats, thereby preventing potential damage and loss of life. Quantifying this in direct financial terms is challenging, but its strategic value in enhancing national security and deterring adversaries is considered substantial by defense analysts.

What are the primary technical risks associated with the THAAD system's development and deployment?

Key technical risks include the system's ability to reliably track, discriminate, and intercept a wide range of ballistic missile threats under diverse operational conditions. Challenges in sensor integration, interceptor guidance accuracy, and software reliability are critical areas requiring continuous testing and validation to mitigate potential failures during actual engagement scenarios.

How does the cost-plus-fixed-fee contract structure impact the overall cost-effectiveness of the THAAD program?

The Cost-Plus-Fixed-Fee (CPFF) structure allows for flexibility in R&D but can lead to cost overruns if not tightly managed, as the contractor is reimbursed for allowable costs plus a fixed fee. While it incentivizes completion, it places a greater burden on the government to meticulously monitor expenditures to ensure cost-effectiveness and prevent contractor inefficiencies from inflating the final price.

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 3

Pricing Type: COST PLUS FIXED FEE (U)

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 1111 LOCKHEED MARTIN WAY, SUNNYVALE, CA, 94089

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline