DoD's $835M missile and space systems R&D contract awarded to Lockheed Martin in 1997

Contract Overview

Contract Amount: $243,992,016 ($244.0M)

Contractor: Lockheed Missiles & Space Comp

Awarding Agency: Department of Defense

Start Date: 1997-09-30

End Date: 2005-01-31

Contract Duration: 2,680 days

Daily Burn Rate: $91.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 199712!5700!0068!GZ62 !SMC/PKJ !F0470197C0042 !A!*!* !19970930!19990930!009125535!009125535!834951691!Y!06887!LOCKHEED MISSILES & SPACE COMP!1111 LOCKHEED MARTIN WAY !SUNNYVALE !CA!94089!77000!085!06!SUNNYVALE !SANTA CLARA !CALIFORNIA!0001!+000000900000!N!N!000000000000!AC23!RDTE/MISSILE AND SPACE SYSTEMS-ADV TECH DEV !A2 !MISSILE AND SPACE SYSTEMS !3GFK!MILSTAR !3761!3!*!*!*!B!*!*!B !*!*!0!000!*!* !*!*!*!* !* !*!*!*!*!*!*!*!*!*!* !*!*!*!*!*!*!*!*!*!*!

Place of Performance

Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $244.0 million to LOCKHEED MISSILES & SPACE COMP for work described as: 199712!5700!0068!GZ62 !SMC/PKJ !F0470197C0042 !A!*!* !19970930!19990930!009125535!009125535!834951691!Y!06887!LOCKHEED MISSILES & SPACE COMP!1111 LOCKHEED MARTIN WAY !SUNNYVALE !CA!94089!77000!085!06!SUNNYVALE !SANTA … Key points: 1. Contract awarded for advanced technology development in missile and space systems. 2. Significant portion of spending allocated to research, development, testing, and evaluation. 3. Contractor has a long history of defense contracting, indicating established capabilities. 4. Awarded as a definitive contract, suggesting a long-term relationship for specific services. 5. The contract's duration and value indicate a substantial investment in strategic defense capabilities. 6. Geographic concentration of the contractor in California may imply regional economic impact.

Value Assessment

Rating: fair

The total award obligation of $834,951,691 for this contract is substantial, reflecting the complexity and scope of missile and space systems R&D. Benchmarking this against similar contracts is challenging without more specific details on the technological advancements sought. However, the Cost Plus Fixed Fee (CPFF) pricing structure suggests that while the contractor is reimbursed for costs, a fixed fee provides a degree of cost control for the government. The value for money is contingent on the successful development of the advanced technologies outlined in the contract.

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 among multiple vendors. This approach is typically used when a specific contractor possesses unique capabilities, proprietary technology, or is the only responsible source capable of meeting the government's requirements. The lack of competition means that price discovery through market forces was limited, and the government relied on negotiation to establish a fair price.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers compared to competitively bid contracts, as the government does not benefit from the price reductions that can arise from multiple bidders vying for the contract.

Public Impact

The primary beneficiaries are the Department of Defense and national security, through advancements in missile and space systems. Services delivered include research, development, testing, and evaluation of advanced technologies. The geographic impact is concentrated in Sunnyvale, California, where Lockheed Martin's facility is located, potentially supporting the local economy and workforce. Workforce implications include employment for highly skilled engineers, scientists, and technicians involved in cutting-edge defense projects.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Cost-plus-fixed-fee contracts can carry risks of cost overruns if not closely managed.
Long contract duration may require ongoing monitoring for evolving technological needs and market changes.
Concentration of work with a single large contractor could limit opportunities for smaller, innovative firms.

Positive Signals

Award to a prime contractor with extensive experience in missile and space systems suggests a high likelihood of technical success.
Definitive contract structure indicates a stable, long-term partnership for critical defense capabilities.
Focus on R&D for advanced technologies aligns with strategic defense modernization efforts.
The contract's significant value suggests a high level of trust and confidence in the contractor's ability to deliver.

Sector Analysis

This contract falls within the Research, Development, Testing, and Evaluation (RDTE) sector, specifically focusing on missile and space systems. This is a highly specialized and critical area within the broader aerospace and defense industry. The market is characterized by high barriers to entry due to technological complexity, significant capital investment, and stringent security requirements. Spending in this sector is driven by national security priorities and technological advancement. Comparable spending benchmarks would typically involve other large-scale, long-term R&D programs within the DoD for advanced weapon systems.

Small Business Impact

This contract does not appear to have a small business set-aside component, as it was awarded as a sole-source contract to Lockheed Martin, a large prime contractor. There is no explicit information regarding subcontracting plans for small businesses within the provided data. The focus on advanced R&D for missile and space systems may limit the direct applicability or subcontracting opportunities for small businesses unless they possess highly specialized niche capabilities.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), responsible for ensuring contractor compliance with terms and conditions, quality, and delivery schedules. The Cost Plus Fixed Fee structure necessitates rigorous financial oversight to monitor costs and ensure the fixed fee is appropriate. Transparency is generally limited for sole-source defense contracts due to national security considerations, but reporting requirements would exist within the contract's terms. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Missile Defense Systems
Space-Based Surveillance Systems
Advanced Technology Development Programs
Strategic Weapons Systems
Aerospace Research and Development

Risk Flags

Sole-source award limits price competition.
CPFF structure carries potential for cost overruns in R&D.
Lack of detailed technical scope in provided data hinders precise value assessment.
Contract duration extends beyond typical R&D cycles, requiring long-term oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $244.0 million to LOCKHEED MISSILES & SPACE COMP. 199712!5700!0068!GZ62 !SMC/PKJ !F0470197C0042 !A!*!* !19970930!19990930!009125535!009125535!834951691!Y!06887!LOCKHEED MISSILES & SPACE COMP!1111 LOCKHEED MARTIN WAY !SUNNYVALE !CA!94089!77000!085!06!SUNNYVALE !SANTA CLARA !CALIFORNIA!0001!+000000900000!N!N!000000000000!AC23!RDTE/MISSILE AND SPACE SYSTEMS-ADV TECH DEV !A2 !MISSILE AND SPACE SYSTEMS !3GFK!MILSTAR !3761!3!*!*!*!B!*!*!B !*!*!0!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 $244.0 million.

What is the period of performance?

Start: 1997-09-30. End: 2005-01-31.

What was the specific technological objective of this contract for missile and space systems R&D?

The provided data indicates the contract was for 'RDTE/MISSILE AND SPACE SYSTEMS-ADV TECH DEV' under the 'MISSILE AND SPACE SYSTEMS' category, with 'MILSTAR' as a program identifier. While the exact technological objectives are not detailed, MILSTAR was a U.S. military satellite constellation providing secure, jam-resistant communications. Therefore, this contract likely focused on research and development for advanced technologies related to the MILSTAR program or similar next-generation secure military satellite communication and space-based systems. This could encompass areas like improved satellite hardening, advanced payload development, enhanced communication protocols, or novel space-based sensor technologies.

How does the $835 million award compare to other R&D contracts in the missile and space sector during the late 1990s?

In the late 1990s, major defense contractors like Lockheed Martin were involved in numerous large-scale R&D programs. An $835 million award for advanced technology development in missile and space systems was substantial, reflecting the high cost and strategic importance of such projects. For context, other significant programs like the F-22 fighter jet development or ballistic missile defense initiatives also commanded multi-billion dollar R&D budgets. While this specific contract's value is significant, it aligns with the typical investment levels for cutting-edge, long-term defense technology programs during that era, especially those involving complex space and strategic missile capabilities.

What are the inherent risks associated with a Cost Plus Fixed Fee (CPFF) contract for advanced R&D?

Cost Plus Fixed Fee (CPFF) contracts, like the one awarded to Lockheed Martin, involve the government reimbursing the contractor for all allowable costs plus a predetermined fixed fee. For advanced R&D, the primary risk is that the 'cost' component can escalate if the research proves more complex or time-consuming than initially estimated. While the fixed fee provides some cost certainty for the contractor's profit, the government bears the risk of cost overruns. Effective oversight is crucial to ensure that all costs are reasonable, allocable, and necessary. If the R&D objectives are not clearly defined or if scope creep occurs, the government could end up paying significantly more than initially anticipated without a proportional increase in the value delivered.

What is the significance of the 'MILSTAR' program identifier in relation to this contract?

The 'MILSTAR' program identifier strongly suggests that this contract was directly related to the development, enhancement, or support of the MILSTAR satellite constellation. MILSTAR was a critical, albeit costly, program aimed at providing secure, survivable, and global communications for U.S. military forces, particularly during high-threat scenarios. Therefore, this contract likely funded research into advanced technologies that would improve MILSTAR's capabilities, such as enhanced encryption, increased bandwidth, improved resilience against jamming or nuclear effects, or the development of next-generation components for future iterations of the system. The substantial funding underscores the strategic importance of secure military satellite communications.

Given the sole-source nature, how was the government assured of fair pricing for this contract?

When a contract is sole-sourced, the government cannot rely on competitive bidding to ensure fair and reasonable pricing. Instead, the procuring agency must conduct a thorough price analysis. This involves evaluating the contractor's proposed costs and fee against various benchmarks, such as historical pricing for similar work, data from other government contracts, commercial price lists (if applicable), and independent cost estimates. For a complex R&D contract like this, the government likely engaged technical experts to validate the proposed research approach and cost elements. The negotiation process itself is critical, where contracting officers use the gathered data to negotiate the price down to what is deemed fair and reasonable, often requiring detailed justification and documentation.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

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

Timeline