Lockheed Martin awarded $86.1M contract for nuclear ordnance fusing and firing devices, with a 1,878-day duration

Contract Overview

Contract Amount: $15,750,925 ($15.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2004-08-09

End Date: 2009-09-30

Contract Duration: 1,878 days

Daily Burn Rate: $8.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200411!000072!5700!GE50 !OGDEN ALC/PKM/LMK !FA820404C0011 !A!N! !N! ! !20040809!20060530!861330629!861330629!834951691!N!LOCKHEED MARTIN CORPORATION !230 MALL BLVD !KING OF PRUSSI !PA!19406!39736!091!42!KING OF PRUSSIA !MONTGOMERY !PENN !+000008081925!N!N!000000000000!1135!FUSING AND FIRING DEVICES, NUCL ORDNANCE !A2 !MISSILE AND SPACE SYSTEMS !000 !* !334419!E! !3! ! ! ! ! !99990909!B! ! !A! !D!N!U!1!001!N!1A!A!Y!Z! ! !N!C!U! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: KING OF PRUSSIA, MONTGOMERY County, PENNSYLVANIA, 19406

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $15.8 million to LOCKHEED MARTIN CORPORATION for work described as: 200411!000072!5700!GE50 !OGDEN ALC/PKM/LMK !FA820404C0011 !A!N! !N! ! !20040809!20060530!861330629!861330629!834951691!N!LOCKHEED MARTIN CORPORATION !230 MALL BLVD !KING OF PRUSSI !PA!19406!39736!091!42!KING OF PRUSSIA !MONT… Key points: 1. Contract awarded for specialized nuclear ordnance components, indicating a critical defense supply chain role. 2. Long contract duration suggests a stable, long-term need for these specific components. 3. Sole-source award raises questions about competition and potential cost efficiencies. 4. The contract value is substantial, reflecting the high-stakes nature of nuclear ordnance. 5. Focus on manufacturing implies a need for robust quality control and adherence to strict safety protocols. 6. The specific nature of the components points to a niche market with limited suppliers.

Value Assessment

Rating: fair

The contract value of $86.1 million over approximately five years for fusing and firing devices appears to be within a reasonable range for specialized defense components. However, without direct comparable contracts for identical nuclear ordnance parts, a precise value-for-money assessment is challenging. The 'Cost Plus Fixed Fee' (CPFF) contract type carries inherent risks of cost overruns, as the contractor is reimbursed for allowable costs plus a fixed fee. Benchmarking against similar complex defense manufacturing contracts would be necessary for a more definitive evaluation of pricing and value.

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 typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the stringent requirements for specialized defense items like nuclear ordnance components. The lack of competition limits price discovery and may result in higher costs for the government compared to a fully competed procurement.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. The government relies on negotiation and oversight to ensure a fair price in sole-source situations.

Public Impact

The primary beneficiaries are entities within the Department of Defense requiring advanced nuclear ordnance capabilities. The contract delivers essential components for the assembly and maintenance of nuclear weapons systems. Geographic impact is likely concentrated around Lockheed Martin's manufacturing facilities and associated supply chains. Workforce implications include specialized manufacturing and engineering roles within Lockheed Martin and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs.
Cost-plus contract type can incentivize higher spending if not tightly managed.
The specialized nature of nuclear ordnance may create barriers to entry for new suppliers, limiting future competition.
Long contract duration could lead to complacency or reduced urgency in cost management.

Positive Signals

Award to a major defense contractor like Lockheed Martin suggests a high level of trust and proven capability.
The contract addresses a critical national security need, ensuring the availability of essential defense components.
Long-term contract provides stability for a specialized manufacturing capability vital to national defense.
The fixed fee component of the CPFF contract provides some level of cost predictability for the government.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on missile and space systems and related components. The market for nuclear ordnance components is highly specialized, characterized by stringent security requirements, advanced technology, and a limited number of qualified contractors. Spending in this niche is driven by national security imperatives and long-term strategic planning within defense agencies. Comparable spending benchmarks are difficult to establish due to the unique nature of the products and the classified aspects often associated with nuclear capabilities.

Small Business Impact

There is no indication of a small business set-aside for this contract. Given the specialized and sensitive nature of nuclear ordnance components, it is unlikely that small businesses would be primary awardees, though they may participate as subcontractors. The focus on a large, established prime contractor suggests that subcontracting opportunities for small businesses might exist within the broader supply chain, but direct set-aside provisions are not apparent.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. Given the nature of the product, additional oversight from agencies responsible for nuclear weapons safety and security, such as the Department of Energy or specific military oversight bodies, may also be involved. Transparency is likely limited due to national security concerns. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Missile and Space Systems Manufacturing
Nuclear Weapons Components
Defense Industrial Base
Ordnance Manufacturing
Aerospace and Defense Contracts

Risk Flags

Sole-source award
Cost-plus contract type
High-value contract
Long contract duration
Specialized defense components

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $15.8 million to LOCKHEED MARTIN CORPORATION. 200411!000072!5700!GE50 !OGDEN ALC/PKM/LMK !FA820404C0011 !A!N! !N! ! !20040809!20060530!861330629!861330629!834951691!N!LOCKHEED MARTIN CORPORATION !230 MALL BLVD !KING OF PRUSSI !PA!19406!39736!091!42!KING OF PRUSSIA !MONTGOMERY !PENN !+000008081925!N!N!000000000000!1135!FUSING AND FIRING DEVICES, NUCL ORDNANCE !A2 !MISSILE AND SPACE SYSTEMS !000 !* !334419!E! !3! ! ! ! ! !999

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $15.8 million.

What is the period of performance?

Start: 2004-08-09. End: 2009-09-30.

What is Lockheed Martin's track record with similar defense contracts, particularly those involving sensitive or nuclear-related components?

Lockheed Martin Corporation is a major global security and aerospace company with extensive experience in defense contracting. They have a long history of producing complex systems for the U.S. military, including fighter jets, missiles, satellites, and other advanced technologies. Their track record with sensitive and nuclear-related components is significant, as they are a key contractor for various strategic weapons systems. This includes work on intercontinental ballistic missiles (ICBMs) and other platforms that require specialized, high-reliability components. While specific details on nuclear ordnance fusing and firing devices may be classified, Lockheed Martin's overall performance in delivering complex, high-stakes defense systems suggests a capability to meet stringent requirements. However, like any large contractor, they have faced scrutiny and audits on various contracts over the years, underscoring the importance of ongoing oversight.

How does the $86.1 million contract value compare to historical spending on similar fusing and firing devices?

Direct historical spending comparisons for 'fusing and firing devices, nucl ordnance' are challenging due to the specialized and often classified nature of these components. Publicly available data rarely breaks down defense spending to this granular level for such niche items. The $86.1 million awarded to Lockheed Martin over approximately five years (2004-2009) represents an average annual expenditure of roughly $17.2 million. This figure needs to be considered within the context of the overall defense budget and the specific program requirements. Without access to classified procurement histories or detailed breakdowns of similar sole-source awards for comparable nuclear ordnance components, it is difficult to definitively benchmark this contract's value against past spending. The 'Cost Plus Fixed Fee' structure also means the final cost could vary.

What are the primary risks associated with this sole-source, cost-plus contract for nuclear ordnance components?

This contract presents several key risks. Firstly, the sole-source nature means the government lacks the benefit of competitive bidding, potentially leading to inflated prices and reduced pressure on the contractor to innovate or optimize costs. Secondly, the 'Cost Plus Fixed Fee' (CPFF) contract type, while reimbursing allowable costs, can incentivize the contractor to incur higher costs to achieve the fixed fee, especially if oversight is not rigorous. There's a risk of cost overruns beyond the initial estimates. Thirdly, the highly specialized and sensitive nature of nuclear ordnance components introduces risks related to supply chain security, quality control failures, and potential obsolescence if technology evolves rapidly. Finally, the long duration of the contract (1,878 days) could lead to a decrease in contractor urgency or adaptability over time.

How effective is the 'Cost Plus Fixed Fee' (CPFF) structure in ensuring value for money for specialized defense components like these?

The effectiveness of the CPFF structure in ensuring value for money for specialized defense components is a subject of ongoing debate and depends heavily on robust government oversight. On one hand, CPFF is often used when the scope of work is not precisely defined, or when innovation and research are required, allowing the contractor to be reimbursed for necessary costs while providing a predictable profit margin (the fixed fee). This can be suitable for complex, cutting-edge defense items where precise cost estimation is difficult. However, it carries a significant risk: the contractor is incentivized to incur costs, as these are reimbursed, and the fixed fee remains constant. This can lead to cost overruns if not managed tightly. For taxpayers, value for money is best achieved when the government's contracting officers exercise strong oversight, conduct thorough audits of costs, and negotiate the fixed fee appropriately based on risk and complexity. Without such oversight, CPFF contracts can be less cost-effective than fixed-price alternatives.

What are the implications of awarding this contract to Lockheed Martin for the broader defense industrial base and potential future competition?

Awarding this contract to Lockheed Martin, a dominant player in the defense industry, reinforces their position in the critical niche of nuclear ordnance components. This strengthens their capabilities and potentially their proprietary knowledge in this area. For the broader defense industrial base, it signifies the continued reliance on large, established contractors for highly specialized and sensitive defense needs. This can create barriers to entry for smaller, innovative firms seeking to compete in the future, as Lockheed Martin may possess unique tooling, expertise, or security clearances. The sole-source nature of this award further limits opportunities for new competitors to emerge or gain experience, potentially reducing long-term competition and increasing government dependence on a single supplier for these vital components.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: NUCLEAR ORDNANCE

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Contractor Details

Address: 230 MALL BLVD, KING OF PRUSSI, PA

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Timeline