DoD awards $49.9M contract for Minuteman III test sets, with Lockheed Martin as prime

Contract Overview

Contract Amount: $49,923,851 ($49.9M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2016-07-01

End Date: 2021-11-23

Contract Duration: 1,971 days

Daily Burn Rate: $25.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PRODUCE AND DELIVER TEST SETS FOR THE MINUTE MAN III.

Place of Performance

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

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $49.9 million to LOCKHEED MARTIN CORP for work described as: PRODUCE AND DELIVER TEST SETS FOR THE MINUTE MAN III. Key points: 1. Contract value appears reasonable for specialized defense instrumentation. 2. Full and open competition suggests a competitive bidding process. 3. Contract duration of nearly 2000 days indicates a long-term need. 4. Fixed-price contract type shifts risk to the contractor. 5. Focus on critical missile defense components highlights strategic importance.

Value Assessment

Rating: good

The contract value of approximately $49.9 million for producing and delivering test sets for the Minuteman III missile system appears to be within a reasonable range for specialized defense hardware. Benchmarking against similar contracts for complex testing equipment is challenging without more specific data, but the fixed-price nature of the award suggests that the contractor, Lockheed Martin, has assumed the primary cost risk. The duration of the contract (nearly 2000 days) also implies a significant scope of work that justifies the awarded amount.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The data shows two bids were received. While the number of bidders is relatively low, the full and open nature suggests that the government sought to maximize competition. The specific details of the bidding process and the evaluation criteria would provide further insight into the effectiveness of the competition in driving down costs.

Taxpayer Impact: A competitive bidding process, even with a limited number of bidders, generally benefits taxpayers by encouraging multiple companies to offer their best pricing and technical solutions to secure the contract.

Public Impact

The primary beneficiaries are the Department of Defense, ensuring the operational readiness of the Minuteman III intercontinental ballistic missile system. The contract delivers essential test sets required for the maintenance, calibration, and verification of critical missile components. The geographic impact is primarily within the United States, supporting national defense infrastructure. Workforce implications include specialized engineering, manufacturing, and quality assurance roles within Lockheed Martin and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen technical challenges arise, despite fixed-price contract.
Dependence on a single prime contractor for critical missile system components.
Risk of schedule delays if supply chain issues impact component delivery.
Limited visibility into the specific performance metrics of the test sets themselves.

Positive Signals

Fixed-price contract structure incentivizes contractor efficiency and cost control.
Full and open competition potentially led to a more favorable price.
Long contract duration allows for stable production and delivery planning.
Award to a major defense contractor like Lockheed Martin suggests established capability and reliability.

Sector Analysis

This contract falls within the Defense sector, specifically related to strategic missile systems and their maintenance. The market for specialized defense instrumentation and testing equipment is often characterized by high barriers to entry due to technical complexity and stringent security requirements. Spending in this area is driven by national security priorities and the lifecycle management of aging weapon systems like the Minuteman III. Comparable spending benchmarks would likely be found within other strategic weapons programs requiring similar levels of precision and reliability.

Small Business Impact

The data indicates that small business participation was not a specific set-aside requirement for this contract (ss: false, sb: false). While Lockheed Martin is the prime contractor, there is potential for subcontracting opportunities for small businesses within the defense industrial base. The extent of small business involvement would depend on Lockheed Martin's subcontracting plan and the availability of qualified small business suppliers for specific components or services.

Oversight & Accountability

Oversight for this contract would primarily be managed by the Department of Defense, likely through the Defense Contract Management Agency (DCMA), which is listed as the 'sa' (servicing agency). Accountability measures would be embedded in the contract terms, including delivery schedules, quality standards, and performance requirements. Transparency is facilitated through contract award databases, though detailed operational performance data may be restricted due to national security considerations. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Minuteman III Sustainment Program
ICBM Modernization Programs
Strategic Weapons Systems Maintenance
Aerospace Test Equipment Manufacturing
Defense Instrumentation Contracts

Risk Flags

Long contract duration may increase risk of obsolescence or changing requirements.
Limited number of bidders (2) in a full and open competition warrants monitoring.
Potential for supply chain disruptions impacting delivery schedules.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $49.9 million to LOCKHEED MARTIN CORP. PRODUCE AND DELIVER TEST SETS FOR THE MINUTE MAN III.

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $49.9 million.

What is the period of performance?

Start: 2016-07-01. End: 2021-11-23.

What is the specific technical capability and purpose of the test sets being produced under this contract?

The test sets produced under this contract are designed for the Minuteman III missile system, a component of the U.S. nuclear triad. Their specific purpose is for the 'Instrument Manufacturing for Measuring and Testing Electricity and Electrical Signals' (nd: 334515). This implies they are sophisticated diagnostic tools used to ensure the proper functioning and calibration of the missile's electronic and electrical systems. This includes verifying the performance of guidance, control, and communication subsystems, which are critical for the missile's reliability and operational readiness. The accuracy and reliability of these test sets are paramount, as any malfunction could lead to misdiagnosis of missile system issues or unnecessary maintenance actions.

How does the awarded amount of $49.9 million compare to the typical cost of similar defense instrumentation contracts?

Directly comparing the $49.9 million award to similar defense instrumentation contracts is challenging without access to a comprehensive database of comparable procurements. However, for highly specialized, mission-critical equipment like test sets for an intercontinental ballistic missile (ICBM) system, this figure appears within a plausible range. Such systems require advanced engineering, precision manufacturing, and rigorous testing, all of which contribute to higher costs. The fact that it was awarded under full and open competition with two bidders suggests that the price was scrutinized. To provide a more definitive benchmark, one would need to analyze contracts for test equipment for other strategic assets (e.g., other missile systems, advanced aircraft, naval systems) with similar complexity and production volumes.

What are the key performance indicators (KPIs) or metrics used to evaluate the success of this contract?

While the specific KPIs are not detailed in the provided data, typical performance indicators for such a defense contract would likely include: 1. On-time delivery: Meeting the established schedule for producing and delivering the test sets. 2. Quality and reliability: Ensuring the test sets meet all technical specifications and perform accurately and consistently over their intended lifespan. This would involve rigorous testing and validation of the delivered equipment. 3. Conformance to technical requirements: Verifying that the manufactured test sets precisely match the design and functional specifications outlined in the contract. 4. Cost control: For a fixed-price contract, adherence to the awarded price without significant cost overruns borne by the government. 5. Contractor performance: Overall assessment of Lockheed Martin's responsiveness, management, and adherence to contractual obligations.

What is Lockheed Martin's track record with the Minuteman III program or similar complex defense systems?

Lockheed Martin has a significant and long-standing track record with the Minuteman III program, serving as a prime contractor for its sustainment and modernization efforts. The company has been involved in various aspects of the ICBM system's life extension programs, including missile production, guidance system upgrades, and overall system integration. Their extensive experience with this specific platform suggests a deep understanding of its complexities and requirements. Furthermore, Lockheed Martin is a major player in the aerospace and defense industry, with a broad portfolio of experience in developing and manufacturing complex weapon systems, satellites, and advanced technologies for various military branches. This history indicates a high level of technical capability and program management expertise relevant to fulfilling this contract.

Are there any identified risks associated with the long duration (1971 days) of this contract?

The long duration of 1971 days (approximately 5.4 years) for this contract presents several potential risks. Firstly, technological obsolescence is a concern; while the contract is for test sets, the underlying technology of the Minuteman III itself is aging, and future upgrades or replacements could alter the requirements for test equipment. Secondly, economic and geopolitical factors could shift defense priorities, potentially impacting the need for or funding of the Minuteman III program, although its strategic importance makes this less likely. Thirdly, contractor performance stability over such an extended period can be a risk; key personnel may leave, or the company's focus might shift. Finally, maintaining consistent quality and managing supply chains effectively over nearly six years requires robust program management from both the contractor and the government oversight agencies to mitigate potential delays or quality degradation.

How does the 'Instrument Manufacturing for Measuring and Testing Electricity and Electrical Signals' category (NAICS 334515) typically perform in terms of competition and pricing?

The NAICS code 334515, 'Instrument Manufacturing for Measuring and Testing Electricity and Electrical Signals,' generally encompasses a specialized segment of the manufacturing industry. Companies in this sector often produce high-precision, technologically advanced equipment. Competition within this specific niche can vary; while some segments might be highly competitive, contracts for highly specialized defense applications, like those for the Minuteman III, often involve fewer bidders due to stringent technical requirements, security clearances, and existing relationships with defense agencies. Pricing in this sector tends to be higher than for more commoditized goods due to the complexity, R&D investment, and quality control involved. Fixed-price contracts are common to manage cost risks, but the initial pricing is critical. Government agencies often rely on competitive bidding processes, even if the number of bidders is limited, to ensure fair market value is obtained for these sophisticated instruments.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Instrument Manufacturing for Measuring and Testing Electricity and Electrical Signals

Product/Service Code: NUCLEAR ORDNANCE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: FA821415R0001

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 230 MALL BLVD, KING OF PRUSSIA, PA, 19406

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

Financial Breakdown

Contract Ceiling: $50,975,843

Exercised Options: $50,102,495

Current Obligation: $49,923,851

Subaward Activity

Number of Subawards: 47

Total Subaward Amount: $67,542,187

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline