DoD Awards $563.8M Contract to Lockheed for Missile and Space Systems Maintenance

Contract Overview

Contract Amount: $563,837,930 ($563.8M)

Contractor: Lockheed Missiles & Space Comp

Awarding Agency: Department of Defense

Start Date: 1996-12-02

End Date: 2004-06-01

Contract Duration: 2,738 days

Daily Burn Rate: $205.9K/day

Competition Type: FOLLOW ON TO COMPETED ACTION

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 199703!5700!0005!GZ62 !SMC/PKJ !F0470192C0049 !A!*!P00107 !19961202!19991001!009125535!009125535!834951691!N!17077!LOCKHEED MISSILES & SPACE COMP!1111 LOCKHEED MARTIN WAY !SUNNYVALE !CA!94089!77000!085!06!SUNNYVALE !SANTA CLARA !CALIFORNIA!0001!+000000160490!N!N!000000000000!J099!MAINT & REPAIR OF EQ/MISCELLANEOUS EQUIPMENT !A2 !MISSILE AND SPACE SYSTEMS !3GFK!MILSTAR !3761!3!C!S!C!B!A!*!C !U!R!1!001!N!2A!C!Y!Z!* !* !N!C!*!A!A!A!A!A!*!* !*!N!A!A!N!*!*!*!*!*!

Place of Performance

Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $563.8 million to LOCKHEED MISSILES & SPACE COMP for work described as: 199703!5700!0005!GZ62 !SMC/PKJ !F0470192C0049 !A!*!P00107 !19961202!19991001!009125535!009125535!834951691!N!17077!LOCKHEED MISSILES & SPACE COMP!1111 LOCKHEED MARTIN WAY !SUNNYVALE !CA!94089!77000!085!06!SUNNYVALE !SANTA … Key points: 1. The contract is a follow-on to a competed action, suggesting a competitive history. 2. The total value of $563.8 million over approximately 7.5 years indicates significant long-term investment. 3. The 'Cost Plus Award Fee' pricing structure introduces potential for cost overruns if not managed effectively. 4. This spending falls within the Defense sector, specifically for missile and space systems.

Value Assessment

Rating: fair

The contract value of $563.8 million over nearly 8 years suggests a substantial investment. Benchmarking against similar 'Cost Plus Award Fee' contracts for complex defense systems is necessary to assess pricing efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract is a follow-on to a competed action, indicating that initial competition occurred. The specific pricing mechanism (Cost Plus Award Fee) can impact price discovery, as it incentivizes performance but may lead to higher costs if not carefully monitored.

Taxpayer Impact: The significant contract value means taxpayer funds are being allocated to maintain critical defense assets, with the efficiency of the award fee structure impacting the ultimate cost to taxpayers.

Public Impact

Supports national security by ensuring the maintenance of vital missile and space systems. Contributes to the aerospace and defense industry's economic activity. Potential for job creation within Lockheed Martin and its subcontractors. Ensures the operational readiness of advanced defense technologies.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Award Fee structure can lead to higher costs.
Long contract duration requires sustained oversight.
Complexity of missile and space systems maintenance.

Positive Signals

Follow-on to competed action suggests prior competition.
Contract supports critical national defense infrastructure.
Established contractor with experience in the sector.

Sector Analysis

This contract falls within the Defense sector, specifically for the maintenance and repair of missile and space equipment. Spending benchmarks for similar long-term, high-value defense maintenance contracts are typically in the hundreds of millions to billions of dollars.

Small Business Impact

While the primary contractor is Lockheed Martin, a large corporation, the contract may involve subcontracting opportunities for small businesses in specialized areas of maintenance and repair, though this is not explicitly detailed.

Oversight & Accountability

The 'Cost Plus Award Fee' structure necessitates robust oversight to ensure performance targets are met and costs are managed effectively. The Department of Defense and the Defense Contract Management Agency are responsible for monitoring this contract's execution.

Related Government Programs

Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Potential for cost overruns due to CPAF structure.
Long-term nature requires sustained oversight and management.
Complexity of maintaining advanced missile and space systems.
Reliance on a single large contractor may limit future flexibility.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $563.8 million to LOCKHEED MISSILES & SPACE COMP. 199703!5700!0005!GZ62 !SMC/PKJ !F0470192C0049 !A!*!P00107 !19961202!19991001!009125535!009125535!834951691!N!17077!LOCKHEED MISSILES & SPACE COMP!1111 LOCKHEED MARTIN WAY !SUNNYVALE !CA!94089!77000!085!06!SUNNYVALE !SANTA CLARA !CALIFORNIA!0001!+000000160490!N!N!000000000000!J099!MAINT & REPAIR OF EQ/MISCELLANEOUS EQUIPMENT !A2 !MISSILE AND SPACE SYSTEMS !3GFK!MILSTAR !3761!3!C!S!C!B!A!*!C !U!R!1!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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $563.8 million.

What is the period of performance?

Start: 1996-12-02. End: 2004-06-01.

What specific performance metrics are tied to the award fee, and how are they measured to ensure fair and objective evaluation?

The award fee structure is designed to incentivize contractor performance beyond minimum requirements. Specific metrics would likely include factors like on-time delivery of maintenance services, quality of repairs, system availability rates, and adherence to safety protocols. Objective measurement is crucial, often involving independent verification and data analysis to prevent subjective assessments and ensure taxpayer value.

How does the 'Cost Plus Award Fee' structure compare to other contract types in terms of overall cost efficiency for long-term defense system maintenance?

Cost Plus Award Fee (CPAF) contracts aim to balance cost control with performance incentives. While they can encourage higher quality and efficiency than simpler cost-plus contracts, they may still result in higher overall costs than fixed-price contracts if not managed rigorously. The award fee component allows for flexibility in rewarding exceptional performance, but requires careful definition of metrics to avoid excessive spending.

What is the projected impact of this contract on the operational readiness and lifespan of the MILSTAR system?

This contract is crucial for maintaining the operational readiness and extending the lifespan of the MILSTAR system. Regular and effective maintenance ensures that the system functions as intended, meeting its mission requirements. The quality of maintenance directly impacts the system's reliability, availability, and overall effectiveness in supporting national security objectives.

Competition & Pricing

Extent Competed: FOLLOW ON TO COMPETED ACTION

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

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

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline