DoD's $78M ICBM Fuze WSIC contract awarded to Lockheed Martin for engineering services

Contract Overview

Contract Amount: $78,366,116 ($78.4M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2020-01-29

End Date: 2026-01-28

Contract Duration: 2,191 days

Daily Burn Rate: $35.8K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: THE ICBM FUZE WSIC EFFORT WILL PROVIDE SUPPORT TO THE ICBM FUZE PROGRAM OFFICE IN ITS EFFORTS TO INTEGRATE, QUALIFY AND CERTIFY THE NEW SANDIA NATIONAL LAB MK21/W87 REPLACEMENT FUZE INTO THE MMIII WEAPON SYSTEM.

Place of Performance

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

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $78.4 million to LOCKHEED MARTIN CORP for work described as: THE ICBM FUZE WSIC EFFORT WILL PROVIDE SUPPORT TO THE ICBM FUZE PROGRAM OFFICE IN ITS EFFORTS TO INTEGRATE, QUALIFY AND CERTIFY THE NEW SANDIA NATIONAL LAB MK21/W87 REPLACEMENT FUZE INTO THE MMIII WEAPON SYSTEM. Key points: 1. Contract focuses on integrating and certifying a new fuze for the ICBM weapon system. 2. Sole-source award raises questions about potential price overruns and lack of competitive pressure. 3. Long contract duration (6 years) suggests a complex and critical integration effort. 4. Engineering services are essential for national security, but require careful oversight. 5. The contract's cost-plus-fixed-fee structure may incentivize cost escalation. 6. Performance context is tied to the critical ICBM modernization program.

Value Assessment

Rating: questionable

The contract's value is difficult to benchmark without comparable sole-source engineering service contracts for similar weapon system integrations. The cost-plus-fixed-fee (CPFF) pricing structure, while common for R&D and complex projects, carries inherent risks of cost overruns if not meticulously managed. Without competitive bidding, it's challenging to definitively assess if the fixed fee represents fair market value for the services rendered. The total award amount of $78.37 million over six years suggests a significant investment in a critical national security component.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, Lockheed Martin Corp, was considered. This approach is typically justified when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. However, the lack of competition limits price discovery and may result in higher costs for the government compared to a fully competed procurement. The justification for this sole-source award would need to be thoroughly reviewed to ensure it aligns with federal acquisition regulations.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings typically achieved through competitive bidding, potentially leading to a higher overall expenditure for this critical defense system.

Public Impact

The primary beneficiaries are the Department of Defense and the nation's strategic deterrence capabilities, through the modernization of the ICBM weapon system. Services delivered include integration, qualification, and certification of a new fuze, a critical component of the missile. The geographic impact is national, as it supports a key element of the U.S. nuclear triad. Workforce implications include specialized engineering and technical roles within Lockheed Martin and potentially 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-fixed-fee contract type can incentivize cost growth if not managed tightly.
Long contract duration increases exposure to potential scope creep or unforeseen challenges.
Lack of transparency inherent in sole-source procurements makes independent value assessment difficult.

Positive Signals

Award to a major defense contractor with extensive experience in weapon systems.
Focus on a critical national security program (ICBM modernization) indicates high strategic importance.
Engineering services are essential for ensuring the reliability and safety of the weapon system.

Sector Analysis

This contract falls within the Engineering Services sector, specifically supporting defense systems integration. The market for defense engineering services is substantial, driven by ongoing modernization efforts across military branches. Comparable spending benchmarks are difficult to establish precisely due to the specialized nature of ICBM components and the sole-source award. However, large-scale defense system integration projects often involve significant multi-year investments, with costs ranging from tens to hundreds of millions of dollars depending on complexity and scope.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). Given the sole-source nature and the specialized technical requirements, it is unlikely that significant subcontracting opportunities for small businesses would be mandated or readily available, unless specifically included in the contract terms by the prime contractor. This limits the direct impact on the small business ecosystem for this particular award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force and potentially the Air Force Sustainment Center, which manages ICBM programs. Accountability measures would be embedded in the contract's performance work statement and milestones. Transparency is limited due to the sole-source nature. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse related to the contract's execution.

Related Government Programs

ICBM Modernization Programs
Strategic Weapons Systems
Aerospace Engineering Services
Defense Contract Management Agency (DCMA) Oversight
National Nuclear Security Administration (NNSA) Programs

Risk Flags

Sole Source Justification
Cost-Plus-Fixed-Fee Risk
Long Contract Duration
Critical National Security Component

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $78.4 million to LOCKHEED MARTIN CORP. THE ICBM FUZE WSIC EFFORT WILL PROVIDE SUPPORT TO THE ICBM FUZE PROGRAM OFFICE IN ITS EFFORTS TO INTEGRATE, QUALIFY AND CERTIFY THE NEW SANDIA NATIONAL LAB MK21/W87 REPLACEMENT FUZE INTO THE MMIII WEAPON SYSTEM.

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORP.

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 $78.4 million.

What is the period of performance?

Start: 2020-01-29. End: 2026-01-28.

What is Lockheed Martin's track record with similar ICBM fuze integration or weapon system modernization contracts?

Lockheed Martin Corporation is a major defense contractor with extensive experience in developing and integrating complex weapon systems, including intercontinental ballistic missiles (ICBMs). They have been a key player in the Minuteman III program and are involved in the development of the Ground Based Strategic Deterrent (GBSD), which will replace the Minuteman III. Their track record includes numerous large-scale integration, sustainment, and modernization efforts for various missile systems. Specific details on past fuze integration projects would require deeper analysis of their contract history, but their overall portfolio suggests a strong capability in this domain. However, past performance does not guarantee future success, and rigorous oversight remains crucial.

How does the $78.37 million cost compare to similar sole-source engineering service contracts for critical defense system integration?

Benchmarking this $78.37 million sole-source contract against similar sole-source engineering service contracts for critical defense system integration is challenging due to the unique nature of ICBM components and the limited public data on comparable sole-source awards. Sole-source procurements inherently lack the transparency of competitive bids, making direct value-for-money comparisons difficult. However, large-scale integration and certification efforts for major weapon systems, especially those involving nuclear capabilities, typically represent significant investments. The six-year duration suggests a complex, multi-phase effort. Without access to the specific justification for the sole-source award and detailed cost breakdowns, it's hard to definitively state if this amount is high or low relative to potential alternatives or market rates.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract for ICBM fuze integration?

The primary risks associated with this sole-source, cost-plus-fixed-fee (CPFF) contract are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated pricing and reduced incentive for the contractor to seek cost efficiencies. Taxpayers may end up paying more than necessary. Secondly, the CPFF structure, while providing flexibility for evolving requirements, can incentivize the contractor to incur higher costs, as their fee is a percentage of those costs. This necessitates robust government oversight to scrutinize costs, prevent waste, and ensure the contractor remains focused on efficient project completion within the defined scope. Scope creep is also a significant risk over the contract's six-year duration.

How effective is the Department of the Air Force likely to be in overseeing this contract, given its sole-source nature?

The effectiveness of the Department of the Air Force's (DAF) oversight will depend heavily on the resources, expertise, and diligence dedicated to managing this specific contract. While the DAF has established contract management frameworks and personnel, overseeing a sole-source, CPFF contract for a highly specialized and critical system like an ICBM fuze presents unique challenges. Key oversight functions include rigorous cost analysis, performance monitoring against milestones, ensuring adherence to the Statement of Work, and managing any changes. The success hinges on the contracting officer's representatives (CORs) and program managers having deep technical understanding and sufficient authority to challenge contractor proposals and expenditures. Without competitive benchmarks, the DAF must rely on internal expertise and historical data to validate costs and performance.

What are the historical spending patterns for the ICBM Fuze Program Office or similar integration efforts?

Historical spending patterns for the ICBM Fuze Program Office or similar integration efforts are not readily available in the provided data. However, the ICBM program itself represents a significant and sustained investment within the DoD budget, reflecting the ongoing need for modernization and sustainment of strategic deterrent capabilities. Integration efforts for new components, especially those involving safety-critical or nuclear-certified hardware like fuzes, are typically complex, lengthy, and costly. Past modernization cycles for ICBMs have involved billions of dollars over decades. Specific spending on fuze integration would be a subset of these larger program costs, likely fluctuating based on program phase and specific technological advancements or challenges encountered.

What are the implications of the MK21/W87 replacement fuze integration for the overall MMIII weapon system's lifecycle and future modernization?

The integration of the MK21/W87 replacement fuze is a critical step in extending the lifecycle and ensuring the continued reliability and effectiveness of the MMIII weapon system. The W87 warhead is a key component of the U.S. nuclear triad, and its fuze is essential for its proper function. Replacing an aging fuze with a modern, potentially more reliable and certifiable design addresses obsolescence issues and ensures the weapon system can meet future operational requirements and safety standards. This integration effort is part of a broader strategy to maintain the credibility of the U.S. strategic deterrent posture. Successful integration paves the way for the MMIII's continued service life until its eventual replacement by the Ground Based Strategic Deterrent (GBSD).

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

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

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: $100,650,117

Exercised Options: $81,690,117

Current Obligation: $78,366,116

Subaward Activity

Number of Subawards: 71

Total Subaward Amount: $23,934,803

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA821419D0001

IDV Type: IDC

Timeline