DoD awards $77M for advanced threat systems, with Lockheed Martin as prime contractor

Contract Overview

Contract Amount: $77,024,288 ($77.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2023-05-04

End Date: 2026-12-26

Contract Duration: 1,332 days

Daily Burn Rate: $57.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ADVANCED RANGE THREAT SYSTEM VARIANT 3 C-BAND

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93599

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $77.0 million to LOCKHEED MARTIN CORPORATION for work described as: ADVANCED RANGE THREAT SYSTEM VARIANT 3 C-BAND Key points: 1. Contract value represents a significant investment in advanced defense capabilities. 2. Sole-source award to Lockheed Martin suggests a reliance on specialized expertise or existing platforms. 3. Delivery order structure indicates phased execution and potential for future modifications. 4. Contract duration of over three years allows for sustained development and integration. 5. The 'Ammunition (except Small Arms) Manufacturing' NAICS code points to the production of specific ordnance components. 6. California location may indicate a concentration of defense manufacturing or R&D facilities.

Value Assessment

Rating: fair

The contract value of $77 million for an advanced threat system variant is substantial. Benchmarking this against similar specialized defense systems is challenging without more detailed technical specifications. However, the cost-plus-fixed-fee (CPFF) contract type suggests that costs are reimbursed plus a fixed fee, which can lead to cost overruns if not closely managed. The awarded amount appears to be within a reasonable range for complex defense systems, but a detailed cost breakdown and comparison to industry standards for similar systems would be necessary for a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The presence of two bidders suggests a competitive environment, though the specific details of the competition (e.g., number of proposals received, evaluation criteria) are not provided. Full and open competition generally promotes price discovery and can lead to more favorable pricing for the government.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it encourages multiple companies to vie for the contract, potentially driving down costs and improving the quality of the final product.

Public Impact

The Department of Defense benefits from enhanced threat simulation capabilities for training and testing. This contract supports the development and production of advanced ammunition components. The geographic impact is concentrated in California, where Lockheed Martin's facilities are likely located. Workforce implications include skilled labor in advanced manufacturing, engineering, and defense production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can incentivize contractors to incur higher costs to achieve a larger fee, requiring robust oversight.
The specific technical details of 'ADVANCED RANGE THREAT SYSTEM VARIANT 3 C-BAND' are not fully disclosed, making independent assessment of value difficult.
Reliance on a single prime contractor for complex systems can create dependencies and limit future flexibility.

Positive Signals

Awarded under full and open competition, suggesting a competitive process that should yield fair pricing.
The contract duration allows for sustained development and integration, potentially leading to a more robust final product.
The prime contractor, Lockheed Martin, is a well-established defense contractor with a proven track record.

Sector Analysis

The defense sector is characterized by high-value, complex contracts for advanced technologies. Spending in this area is driven by national security requirements and technological advancements. This contract for an advanced threat system variant fits within the broader category of defense procurement, specifically focusing on ordnance and simulation capabilities. Comparable spending benchmarks would typically involve other large-scale defense system development and manufacturing contracts, often in the hundreds of millions or billions of dollars.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the nature of advanced defense systems and the prime contractor, it is unlikely that significant subcontracting opportunities for small businesses will be mandated, though they may arise organically through the supply chain. Further analysis would be needed to determine if any specific small business subcontracting goals were established.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force, a component of the Department of Defense. The cost-plus-fixed-fee structure necessitates close monitoring of costs and performance to ensure value for money. Accountability measures would include contract milestones, performance reviews, and audits. Transparency is generally limited for classified or sensitive defense programs, but contract awards and basic details are publicly available through federal procurement databases.

Related Government Programs

Advanced Threat Systems
Ordnance Manufacturing
Defense Simulation and Training
Lockheed Martin Defense Contracts
Air Force Ammunition Procurement

Risk Flags

Cost-Plus-Fixed-Fee Contract Type
Potential for Cost Overruns
Limited Public Technical Detail

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $77.0 million to LOCKHEED MARTIN CORPORATION. ADVANCED RANGE THREAT SYSTEM VARIANT 3 C-BAND

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 $77.0 million.

What is the period of performance?

Start: 2023-05-04. End: 2026-12-26.

What is the specific technical capability of the 'ADVANCED RANGE THREAT SYSTEM VARIANT 3 C-BAND' and how does it advance current threat simulation technology?

The specific technical capabilities of the 'ADVANCED RANGE THREAT SYSTEM VARIANT 3 C-BAND' are not publicly detailed due to its nature as a defense system. However, the designation 'Advanced Range Threat System' suggests it is designed to simulate sophisticated enemy threats for military training and testing purposes. The 'Variant 3' indicates an iteration or upgrade from previous versions, likely incorporating improved features, performance, or fidelity. The 'C-Band' likely refers to its operational frequency range, which is crucial for radar and electronic warfare simulation. Such systems are vital for realistic training scenarios, allowing military personnel to practice against advanced adversaries without deploying actual assets. Advancements in this area typically focus on increasing the realism of electronic countermeasures, radar signatures, and maneuverability of simulated threats, thereby enhancing the effectiveness of training and the development of countermeasures.

How does the $77 million contract value compare to historical spending on similar advanced threat systems by the Department of Defense?

Comparing the $77 million contract value for the 'ADVANCED RANGE THREAT SYSTEM VARIANT 3 C-BAND' to historical spending on similar systems requires access to detailed historical procurement data and precise definitions of 'similar systems.' Defense procurement is highly variable, with costs influenced by technological complexity, production volume, and specific system functionalities. Large-scale development and production of advanced simulation systems can range from tens of millions to hundreds of millions of dollars. Without knowing the exact scope, capabilities, and production quantities of this specific variant, a direct comparison is difficult. However, $77 million for a specialized, advanced variant suggests a significant investment, likely for a system with sophisticated simulation capabilities, potentially involving advanced radar, electronic warfare, or target emulation features. Historical data on programs like the Advanced Medium-Range Air-to-Air Missile (AMRAAM) or various electronic warfare pods might offer some context, but direct parallels are scarce for bespoke threat simulation platforms.

What are the key performance indicators (KPIs) that will be used to assess the success of this contract, given its cost-plus-fixed-fee structure?

For a cost-plus-fixed-fee (CPFF) contract like this one, Key Performance Indicators (KPIs) are crucial for ensuring the government receives value and the contractor meets objectives. While specific KPIs are not publicly disclosed, they typically revolve around technical performance, schedule adherence, and cost control. Technical KPIs might include the fidelity of threat simulation (e.g., accuracy of radar signatures, effectiveness of electronic warfare emulation), system reliability (e.g., Mean Time Between Failures - MTBF), and integration capabilities with existing training infrastructure. Schedule KPIs would focus on meeting key milestones for design, development, testing, and delivery. Cost control KPIs, while inherently managed by the CPFF structure, would involve rigorous tracking of incurred costs against the estimated cost baseline and ensuring the fixed fee is earned through successful performance, not just cost incurrence. Robust reporting requirements, regular progress reviews, and independent verification and validation (IV&V) are essential oversight mechanisms.

What is Lockheed Martin's track record in delivering advanced defense systems, particularly those related to threat simulation or ammunition?

Lockheed Martin is a major global defense contractor with an extensive track record in developing and delivering a wide array of advanced defense systems. They are a primary supplier of fighter aircraft (like the F-35), missiles (including advanced air-to-air and air-to-ground munitions), radar systems, and electronic warfare capabilities. Their experience in threat simulation is demonstrated through various programs that support training and testing environments, often involving complex electronic warfare and radar signature generation. Regarding ammunition, Lockheed Martin is a significant producer of various munitions, including guided rockets and missiles. Their long history in the defense sector implies a deep understanding of military requirements, complex system integration, and large-scale manufacturing. While specific details on their past performance for 'ADVANCED RANGE THREAT SYSTEM VARIANT 3 C-BAND' are not available, their overall portfolio suggests a strong capability to undertake such a contract.

What are the potential risks associated with a cost-plus-fixed-fee contract for a complex defense system, and how are they mitigated?

The primary risk with Cost-Plus-Fixed-Fee (CPFF) contracts is the potential for cost overruns, as the contractor is reimbursed for all allowable costs plus a predetermined fee. This can incentivize less cost-conscious behavior if not managed properly. For the government, there's a risk of paying more than necessary if cost controls are weak. Another risk is scope creep, where the project expands beyond its original intent, increasing costs. Mitigation strategies employed by the government include stringent oversight, detailed cost accounting standards, regular audits, and clearly defined contract terms and conditions. Performance incentives, even within a CPFF structure, can be tied to meeting specific technical or schedule milestones. Robust Earned Value Management (EVM) systems are critical for tracking performance against cost and schedule baselines. The fixed fee itself acts as a ceiling on the contractor's profit, providing some incentive for efficiency, but the government bears the primary risk of cost escalation.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Ammunition (except Small Arms) Manufacturing

Product/Service Code: COMM/DETECT/COHERENT RADIATION

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 2

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 497 ELECTRONICS PKWY BLDG 5, LIVERPOOL, NY, 13088

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $338,116,050

Exercised Options: $101,810,173

Current Obligation: $77,024,288

Subaward Activity

Number of Subawards: 52

Total Subaward Amount: $12,084,618

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA865623DA017

IDV Type: IDC

Timeline