Lockheed Martin awarded $204M for Navstar satellite system modifications, spanning over a decade

Contract Overview

Contract Amount: $204,349,087 ($204.3M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2000-08-18

End Date: 2012-12-18

Contract Duration: 4,505 days

Daily Burn Rate: $45.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE REDETERMINATION

Sector: Defense

Official Description: 200012!5700!000104!GZ46 !SMC/PKG DIR SPACE NAV SYS CONT !F0470100C0006 !A!*!* !20000818!20010930!861330629!834951691!834951691!N!79272!LOCKHEED MARTIN CORPORATION !230 MALL BLVD !KING OF PRUSSI !PA!19406!60000!101!42!PHILADELPHIA !PHILADELPHIA !PENN !0001!+000011000000!N!N!000000000000!K018!MODIFICATION OF EQ/SPACE VEHICLES !A2 !MISSILE AND SPACE SYSTEMS !3GAJ!NAVSTAR !3761!1!*!*!*!B!A!*!A !N!A!2!002!B!* !Z!N!C!* !* !N!C!*!A!Z!A!A!A!A!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: LITTLETON, DOUGLAS County, COLORADO, 80125

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $204.3 million to LOCKHEED MARTIN CORPORATION for work described as: 200012!5700!000104!GZ46 !SMC/PKG DIR SPACE NAV SYS CONT !F0470100C0006 !A!*!* !20000818!20010930!861330629!834951691!834951691!N!79272!LOCKHEED MARTIN CORPORATION !230 MALL BLVD !KING OF PRUSSI !PA!19406!60000!101!42!PHILADELPHIA !PHI… Key points: 1. Contract value of $204M over 14 years suggests significant long-term investment in space-based navigation. 2. The contract was awarded under full and open competition, indicating a potentially competitive bidding process. 3. Fixed Price Redetermination contract type introduces some pricing risk but allows for adjustments based on actual costs. 4. The primary contractor, Lockheed Martin, has a substantial track record in aerospace and defense. 5. The contract supports the Navstar program, crucial for military and civilian GPS functionalities. 6. The duration of the contract (over 14 years) points to the sustained need for these specialized services.

Value Assessment

Rating: good

The contract value of $204 million over 14 years averages to approximately $14.6 million per year. This figure needs to be benchmarked against similar long-term sustainment and modification contracts for complex defense systems. Given the specialized nature of satellite systems and the prime contractor's expertise, the pricing appears to be within a reasonable range for such a critical and lengthy program. However, a detailed cost breakdown and comparison with industry benchmarks for similar services would provide a more definitive assessment of value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' suggesting that multiple bidders had the opportunity to submit proposals. The presence of two modifications indicates potential adjustments or extensions to the original scope. The level of competition at the outset is not explicitly detailed beyond the 'full and open' designation, but this approach generally fosters price discovery and encourages competitive pricing among qualified contractors.

Taxpayer Impact: A full and open competition process is generally favorable for taxpayers as it aims to secure the best value through competitive bidding, potentially leading to lower prices and higher quality services.

Public Impact

The primary beneficiaries are the U.S. military, intelligence agencies, and potentially civilian users relying on GPS for navigation and timing. The services delivered involve the modification of equipment and space vehicles for the Navstar satellite system. The geographic impact is national, supporting a critical defense infrastructure with global reach. Workforce implications include highly skilled engineers, technicians, and program managers within Lockheed Martin and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Fixed Price Redetermination pricing can lead to cost overruns if not carefully managed and monitored.
The long duration of the contract increases the risk of scope creep or evolving technological requirements not being adequately addressed.
Reliance on a single prime contractor for such a critical system may pose risks if performance issues arise.

Positive Signals

Awarded under full and open competition, suggesting a competitive process that should drive value.
The contractor, Lockheed Martin, is a major defense contractor with extensive experience in space systems.
The contract supports the Navstar program, a foundational element of national security and civilian infrastructure.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing sector (NAICS 336414), a highly specialized segment of the aerospace and defense industry. The market is characterized by high barriers to entry, significant R&D investment, and long-term government procurement cycles. Spending in this sector is dominated by a few large prime contractors like Lockheed Martin, Boeing, and Northrop Grumman, who possess the technical expertise and security clearances required for complex space and missile systems. This contract represents a portion of the broader U.S. government's investment in maintaining and modernizing its space-based assets, which are critical for defense, intelligence, and communication.

Small Business Impact

There is no explicit indication of small business set-asides for this contract. Given the specialized nature of modifying space vehicles and the prime contractor being a large corporation, the primary impact on small businesses would likely be through subcontracting opportunities. The extent to which Lockheed Martin engages small businesses in its supply chain for this contract would determine the overall impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA) and the relevant program executive office within the Department of Defense. Accountability measures are embedded in the contract terms, including performance requirements and reporting obligations. Transparency is facilitated through contract awards databases, though detailed cost performance reports may be sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

GPS Modernization Programs
Space-Based Defense Systems
Satellite Manufacturing and Sustainment
Missile Defense Programs
National Reconnaissance Office Contracts

Risk Flags

Long contract duration may increase risk of cost escalation or scope creep.
Fixed Price Redetermination pricing introduces potential for higher-than-expected final costs.
Reliance on a single prime contractor for critical space systems.
Potential for evolving technological requirements impacting system relevance over time.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $204.3 million to LOCKHEED MARTIN CORPORATION. 200012!5700!000104!GZ46 !SMC/PKG DIR SPACE NAV SYS CONT !F0470100C0006 !A!*!* !20000818!20010930!861330629!834951691!834951691!N!79272!LOCKHEED MARTIN CORPORATION !230 MALL BLVD !KING OF PRUSSI !PA!19406!60000!101!42!PHILADELPHIA !PHILADELPHIA !PENN !0001!+000011000000!N!N!000000000000!K018!MODIFICATION OF EQ/SPACE VEHICLES !A2 !MISSILE AND SPACE SYSTEMS !3GAJ!NAVSTAR !3761!1!*!*!*!B!A!*!A !N!A!

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 $204.3 million.

What is the period of performance?

Start: 2000-08-18. End: 2012-12-18.

What is Lockheed Martin's track record with the Navstar program and similar space-based defense contracts?

Lockheed Martin has a long and established history as a prime contractor for critical U.S. military space programs, including the Navstar Global Positioning System (GPS) program. They have been involved in the design, development, manufacturing, and sustainment of GPS satellites for decades. Their experience extends to other complex space systems, such as the Space Based Infrared System (SBIRS) and various missile programs. This extensive track record suggests a deep understanding of the technical requirements, program management complexities, and security protocols associated with large-scale defense space contracts. Their consistent selection as a prime contractor for such programs indicates a perceived capability and reliability by the Department of Defense.

How does the $204 million contract value compare to other long-term sustainment contracts for major defense systems?

The $204 million contract value spread over approximately 14 years (from 2000 to 2012, with modifications extending the period) averages to roughly $14.6 million annually. This figure needs context within the broader landscape of defense sustainment contracts. Major defense systems, particularly those involving space-based assets like satellites, are inherently expensive to maintain, upgrade, and operate over their lifecycles. Contracts for sustaining fighter jet fleets, naval vessels, or complex ground systems can also run into billions of dollars over similar durations. Given the highly specialized nature of the Navstar system, the advanced technology involved, and the critical national security implications, this annual average appears to be within a plausible range for sustainment and modification services provided by a major defense contractor. A precise comparison would require access to data on similar contracts for other satellite constellations or complex weapon systems.

What are the primary risks associated with a Fixed Price Redetermination contract for space vehicle modifications?

Fixed Price Redetermination (FPR) contracts present a unique risk profile for both the government and the contractor. For the government, the primary risk is that the final price, once redetermined, could be higher than initially anticipated if the contractor's actual costs exceed projections. This is because the initial price is an estimate, and the contract allows for adjustments. The contractor bears the risk of cost overruns if actual costs are higher than the initially estimated price, but they also stand to gain if costs are lower. For space vehicle modifications, risks include unforeseen technical challenges, the need for specialized materials or labor, and potential delays that increase costs. Effective oversight and robust cost accounting by the government are crucial to manage the risk of excessive pricing under an FPR contract.

What is the strategic importance of the Navstar program and the services provided under this contract?

The Navstar program is the foundation of the Global Positioning System (GPS), a critical U.S. military and civilian infrastructure. GPS provides essential positioning, navigation, and timing (PNT) data globally. For the military, it is indispensable for troop movements, precision-guided munitions, intelligence, surveillance, reconnaissance, and command and control. Civilian applications are vast, including transportation, agriculture, emergency services, financial transactions, and scientific research. Modifications to the space vehicles and associated equipment are vital for maintaining the system's accuracy, reliability, security, and for incorporating technological advancements. Therefore, this contract supports the ongoing operational effectiveness and modernization of a cornerstone national asset.

How has spending on the Navstar program evolved over time, and does this contract represent a significant portion of that spending?

Spending on the Navstar program has been substantial and continuous since its inception, reflecting the ongoing need for satellite development, launch, operation, and sustainment. The program has seen multiple generations of satellites and ground systems, each requiring significant investment. This specific contract, valued at $204 million over its extended period, represents a component of the overall Navstar lifecycle costs. While significant in absolute terms, it is likely one of many contracts supporting the broader GPS enterprise. Historical spending data would be needed to determine its precise proportion relative to total program expenditures, which include R&D, manufacturing, launch services, and operations across various satellite blocks and system upgrades.

What are the potential implications of this contract for competition within the guided missile and space vehicle manufacturing sector?

The award of this contract to Lockheed Martin under full and open competition suggests that while the sector is dominated by a few large players, opportunities for competitive bidding exist. However, the high barriers to entry—including technical expertise, security clearances, and established relationships with the government—mean that the pool of potential bidders for such complex space systems is limited. This contract's duration and specialized nature might reinforce Lockheed Martin's position in this niche. Future competition could depend on the government's strategy for system upgrades, potential new entrants with advanced capabilities, or the government's willingness to break down larger programs into smaller, more accessible components for a wider range of contractors.

Industry Classification

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

Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIXED PRICE REDETERMINATION (A)

Evaluated Preference: NONE

Contractor Details

Address: 230 MALL BLVD, KING OF PRUSSI, PA, 19406

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $15,769,671

Exercised Options: $15,769,671

Current Obligation: $204,349,087

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline