DoD's $719M Lockheed Missiles & Space contract awarded via sole-source, spanning 14 years

Contract Overview

Contract Amount: $719,402,898 ($719.4M)

Contractor: Lockheed Missiles & Space Comp

Awarding Agency: Department of Defense

Start Date: 1983-03-15

End Date: 1997-09-15

Contract Duration: 5,298 days

Daily Burn Rate: $135.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: Defense

Place of Performance

Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $719.4 million to LOCKHEED MISSILES & SPACE COMP for work described as: Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. Long contract duration of over 14 years suggests a stable, long-term requirement but also potential for cost creep. 3. The contract type 'COST NO FEE' indicates that the contractor is reimbursed for allowable costs, with no profit, which is unusual and warrants further investigation into its implications. 4. Awarded by the Department of Defense, this contract likely supports critical national security functions. 5. The absence of competition suggests a unique capability or a situation where only one source could fulfill the requirement. 6. The significant dollar value indicates a major program with substantial resource allocation.

Value Assessment

Rating: questionable

The 'COST NO FEE' contract type is highly unusual and makes direct value-for-money assessment difficult without further context. Typically, cost-reimbursement contracts include a fee or profit component. The absence of fee suggests a unique arrangement, possibly related to non-profit entities or specific government-industry partnerships. Without comparable 'COST NO FEE' contracts for similar services or products, benchmarking is challenging. The total obligation of $719 million over 14 years averages to approximately $51 million annually, which needs to be evaluated against the specific deliverables and market rates for the services provided.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when a unique capability is required, or only one responsible source exists. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms. Without a competitive process, it is difficult to ascertain if the government received optimal value or if alternative solutions were overlooked.

Taxpayer Impact: Taxpayers may have paid a higher price due to the absence of competitive bidding. Sole-source awards reduce the pressure on contractors to offer competitive pricing, potentially leading to less efficient use of public funds.

Public Impact

This contract likely supports advanced missile and space systems, contributing to national defense capabilities. The primary beneficiaries are the Department of Defense and potentially other government agencies requiring specialized space and missile technology. Services delivered are expected to be in the areas of research, development, production, or sustainment of complex aerospace and defense systems. The geographic impact is primarily within California, where Lockheed Missiles & Space Company is located, but the ultimate impact is national security. Workforce implications include employment for highly skilled engineers, scientists, and technicians within the aerospace and defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
The 'COST NO FEE' contract type is atypical and requires deeper understanding to assess financial fairness.
Long contract duration increases the risk of cost overruns and potential for scope creep without adequate oversight.
Lack of detailed information on the specific services rendered makes it difficult to benchmark performance and value.

Positive Signals

Long-term contract indicates a sustained and critical need for the services provided by Lockheed Missiles & Space Company.
Award to a major defense contractor suggests access to specialized expertise and advanced technological capabilities.
The extensive duration may imply a stable and predictable operational environment for the program.

Sector Analysis

This contract falls within the Aerospace and Defense sector, a critical industry for national security. The market is characterized by high barriers to entry, significant R&D investment, and long product development cycles. Major players like Lockheed Martin dominate, often securing large, long-term government contracts. Spending in this sector is heavily influenced by geopolitical factors and defense budgets. Comparable spending benchmarks would involve analyzing other large-scale missile and space system development or sustainment contracts within the DoD.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a sole-source award to a large prime contractor, it is unlikely to have significant direct subcontracting opportunities for small businesses unless explicitly mandated or pursued by the prime. The focus is on a large prime contractor's capabilities, potentially limiting the direct ecosystem benefits for small businesses in this specific award.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), given its role in contract administration for the Department of Defense. Accountability measures would be defined within the contract terms, focusing on performance milestones and cost controls, though the 'COST NO FEE' structure presents unique oversight challenges. Transparency is limited due to the sole-source nature and the classified or sensitive aspects often associated with defense contracts.

Related Government Programs

Missile Defense Systems
Space Systems Development
Strategic Weapons Programs
Aerospace Research and Development
National Security Space Launch

Risk Flags

Sole-source award
Unusual contract type ('COST NO FEE')
Long contract duration
Lack of detailed service description

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $719.4 million to LOCKHEED MISSILES & SPACE COMP. See the official description on USAspending.

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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $719.4 million.

What is the period of performance?

Start: 1983-03-15. End: 1997-09-15.

What specific missile and space systems or services does this $719 million contract cover?

The provided data does not specify the exact missile and space systems or services covered under this $719 million contract awarded to Lockheed Missiles & Space Company. Given the contractor's expertise and the Department of Defense as the agency, it likely pertains to advanced technologies such as strategic missile programs, satellite development, space launch services, or related research and development. The 'COST NO FEE' contract type, awarded on a sole-source basis, suggests a highly specialized or unique requirement where detailed public disclosure might be restricted due to national security sensitivities. Further investigation into contract line item numbers (CLINs) or associated documentation would be necessary for precise details.

Why was this contract awarded on a sole-source basis instead of being competed?

The contract was awarded on a sole-source basis because, at the time of award, it was determined that only one responsible source, Lockheed Missiles & Space Company, could provide the required goods or services. Common justifications for sole-source awards include the existence of unique capabilities, proprietary technology, urgent and compelling needs where competition is impractical, or when the government has already made substantial investments in a particular system that only one contractor can support. Without specific justification documents from the Department of Defense at the time of award, the precise reason remains unstated in the provided data, but it implies a lack of viable alternatives or a strategic decision to proceed with a single provider.

What are the implications of the 'COST NO FEE' (PT) contract type for this large award?

The 'COST NO FEE' (PT) contract type is highly unusual, especially for a contract valued at $719 million over 14 years. Typically, cost-reimbursement contracts include a fee or profit margin for the contractor. A 'COST NO FEE' structure means the contractor is reimbursed only for allowable costs incurred in performing the contract, without any additional profit. This could indicate several scenarios: the contractor might be a non-profit entity, or the contract might be structured as a unique partnership where profit is not the primary incentive. It significantly alters the risk-reward balance for the contractor and makes standard benchmarking of contractor performance and value more complex, as there is no profit element to analyze. The government bears all the cost risk.

How does the 14-year duration (1983-1997) impact the assessment of value and risk?

The 14-year duration of this contract (from March 15, 1983, to September 15, 1997) is exceptionally long, suggesting a stable, long-term requirement for the services or products provided. From a risk perspective, such a long period increases the potential for cost escalation due to inflation, technological obsolescence, and changes in program requirements that may not have been foreseen at the outset. It also presents challenges in maintaining consistent oversight and ensuring the contractor remains efficient over time. For value assessment, it implies a significant, ongoing commitment by the Department of Defense. However, without knowing the specific deliverables and performance metrics, it's difficult to definitively assess whether the value received was commensurate with the prolonged expenditure, especially given the sole-source and 'COST NO FEE' nature.

What is the historical spending pattern for similar missile and space contracts within the DoD?

Historical spending patterns for similar missile and space contracts within the DoD are generally characterized by large, multi-year, high-value awards, often to a limited number of prime contractors due to the specialized nature of the work. These contracts frequently involve significant research and development components, leading to substantial upfront investment. Competition can be fierce for new programs, but once systems are established, follow-on production and sustainment contracts often become sole-source or limited competition due to integration and interoperability requirements. The total dollar amounts can range from hundreds of millions to billions of dollars, reflecting the complexity and strategic importance of these systems. The 'COST NO FEE' aspect of this particular contract is atypical compared to standard DoD procurement practices for such programs.

What is the track record of Lockheed Missiles & Space Company with large DoD contracts?

Lockheed Missiles & Space Company, now part of Lockheed Martin Space, has a long and extensive track record of performing large, complex contracts for the Department of Defense and other government agencies. They are a primary contractor for numerous critical national security programs, including strategic missile systems (like the Trident and Minuteman III), satellite programs (such as GPS, reconnaissance, and weather satellites), and space launch vehicles. Their history includes both highly successful, technologically advanced projects and, like many large defense contractors, instances of cost overruns or schedule delays on certain programs. The company is known for its deep expertise in aerospace engineering, materials science, and systems integration, making it a go-to source for the DoD's most demanding space and missile requirements.

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: COST NO FEE (S)

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 1111 LOCKHEED WAY, SUNNYVALE

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Timeline