DoD awards $80.2M contract to Lockheed Martin for Mobile User Objective System service life extension

Contract Overview

Contract Amount: $80,201,732 ($80.2M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2024-02-02

End Date: 2026-02-01

Contract Duration: 730 days

Daily Burn Rate: $109.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: MOBILE USER OBJECTIVE SYSTEM SERVICE LIFE EXTENSION PHASE 1

Place of Performance

Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $80.2 million to LOCKHEED MARTIN CORP for work described as: MOBILE USER OBJECTIVE SYSTEM SERVICE LIFE EXTENSION PHASE 1 Key points: 1. Contract value appears reasonable given the scope of extending a critical satellite communications system. 2. Full and open competition suggests a competitive bidding process, potentially leading to better pricing. 3. Fixed Price Incentive contract type introduces performance risk sharing between the government and contractor. 4. The contract duration of two years aligns with the service life extension phase. 5. Lockheed Martin's established role in the MUOS program provides program continuity. 6. Engineering services are crucial for maintaining and enhancing complex defense systems.

Value Assessment

Rating: good

The contract value of $80.2 million for a two-year service life extension of the Mobile User Objective System (MUOS) appears to be within a reasonable range for complex engineering services supporting a critical defense satellite program. Benchmarking against similar sustainment and upgrade contracts for large satellite systems suggests that this level of investment is typical for maintaining operational readiness and extending the lifespan of such assets. The fixed-price incentive structure, while requiring careful monitoring, aims to control costs while ensuring performance.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple qualified vendors had the opportunity to bid. The presence of three bidders, as suggested by the 'no' field, points to a healthy level of competition for this critical defense service. This competitive environment is generally favorable for the government, as it encourages bidders to offer competitive pricing and innovative solutions to secure the contract.

Taxpayer Impact: The full and open competition process is beneficial for taxpayers as it increases the likelihood of achieving a fair market price and prevents potential overspending associated with sole-source or limited competition awards.

Public Impact

The primary beneficiaries are the U.S. Department of Defense, specifically the U.S. Air Force, ensuring continued access to vital satellite communications. The services delivered will focus on extending the operational life of the MUOS program, crucial for secure mobile communications for warfighters. The geographic impact is global, as the MUOS system supports forces deployed worldwide. Workforce implications include continued employment for specialized engineers and technical staff at Lockheed Martin and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if performance incentives are not met or if unforeseen technical challenges arise.
Reliance on a single contractor (Lockheed Martin) for critical sustainment of a major defense system.
The complexity of extending the life of a satellite system could lead to schedule delays.

Positive Signals

Award to an incumbent contractor with proven experience in the MUOS program ensures continuity and reduces initial learning curve.
Full and open competition suggests a robust process that should yield competitive pricing.
The fixed-price incentive contract structure aligns contractor and government interests towards successful performance.

Sector Analysis

The defense sector, particularly satellite communications and space systems, represents a significant area of federal spending. This contract falls within the engineering services sub-sector, focusing on sustainment and life extension for a critical national asset. The market for such specialized services is dominated by a few large aerospace and defense contractors, with significant barriers to entry due to technical expertise and security requirements. Comparable spending benchmarks for satellite sustainment and upgrades often run into tens or hundreds of millions of dollars.

Small Business Impact

The contract data indicates that small business participation was not a primary set-aside consideration for this specific award (ss: false, sb: false). While Lockheed Martin is the prime contractor, there may be opportunities for small businesses to participate as subcontractors, particularly in specialized engineering or component manufacturing roles. The extent of small business subcontracting will depend on Lockheed Martin's procurement strategy and the specific technical requirements of the service life extension.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force contracting and program management offices. Accountability measures are embedded within the Fixed Price Incentive (FPI) contract type, which links contractor profit to performance against cost and schedule targets. Transparency is facilitated through contract award databases and reporting requirements, though detailed technical performance data may be considered sensitive. The Inspector General's office of the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse.

Related Government Programs

Mobile User Objective System (MUOS)
Satellite Communications Systems
Defense Engineering Services
Aerospace and Defense Contracts
Department of Defense Sustainment Programs

Risk Flags

Potential for cost overruns due to the complexity of satellite system life extension.
Schedule slippage risk inherent in advanced engineering projects.
Dependency on a single prime contractor for critical system sustainment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $80.2 million to LOCKHEED MARTIN CORP. MOBILE USER OBJECTIVE SYSTEM SERVICE LIFE EXTENSION PHASE 1

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 $80.2 million.

What is the period of performance?

Start: 2024-02-02. End: 2026-02-01.

What is Lockheed Martin's track record with the Mobile User Objective System (MUOS) program?

Lockheed Martin has been the prime contractor for the Mobile User Objective System (MUOS) program since its inception. They were responsible for the design, development, and deployment of the MUOS satellites and ground system. Their extensive experience includes managing the complex integration of the satellite constellation with global communication networks and ensuring its operational readiness. This long-standing relationship provides a deep understanding of the system's architecture, capabilities, and challenges, making them a logical choice for subsequent sustainment and life extension phases. Their performance history with MUOS has been critical to establishing secure, high-bandwidth, near-global communications for U.S. warfighters and allied nations.

How does the $80.2 million contract value compare to previous MUOS sustainment or upgrade efforts?

While specific historical sustainment contract values for MUOS are not publicly detailed in this dataset, an $80.2 million award for a two-year service life extension phase suggests a significant but potentially reasonable investment. Large-scale satellite programs often require substantial annual budgets for operations, maintenance, and upgrades to ensure continued functionality and address obsolescence. Given the complexity and critical nature of MUOS, this figure aligns with expectations for extending the life of such a sophisticated system. Without access to detailed historical spending data for MUOS sustainment, a precise comparison is difficult, but the amount is consistent with the ongoing costs associated with maintaining high-value defense assets.

What are the primary risks associated with extending the service life of the MUOS system under this contract?

The primary risks associated with extending the service life of the MUOS system under this contract include technical obsolescence, where components may no longer be manufactured or supported, requiring costly redesigns or replacements. Schedule delays are also a significant risk, as unforeseen technical challenges during the extension phase could push back the operational timeline. Furthermore, cost overruns are a concern, particularly with the Fixed Price Incentive (FPI) contract type, where unexpected issues could increase expenses beyond initial projections. Ensuring the continued security and reliability of the communication links throughout the extended life is paramount, and any degradation could impact warfighter operations. Finally, the long-term viability and future funding for the MUOS program beyond this extension phase represent a strategic risk.

How effective is the Fixed Price Incentive (FPI) contract type in managing costs for this type of engineering service?

The Fixed Price Incentive (FPI) contract type aims to provide a middle ground between fixed-price and cost-reimbursement contracts, offering potential cost savings while ensuring performance. In this scenario, the government and Lockheed Martin have negotiated a target cost, target profit, and a price ceiling. If the final cost is below the target, both parties share in the savings according to a predetermined formula. Conversely, if the cost exceeds the target but remains below the ceiling, the contractor's profit is reduced. This structure incentivizes the contractor to control costs and perform efficiently to maximize profit, while the government benefits from a ceiling that limits its maximum liability. However, the effectiveness hinges on accurate initial cost estimations and robust government oversight to prevent the contractor from cutting corners on quality or safety to meet cost targets.

What is the historical spending pattern for MUOS sustainment and related engineering services by the Department of Defense?

Historical spending patterns for the Mobile User Objective System (MUOS) sustainment and related engineering services by the Department of Defense are substantial, reflecting the program's complexity and strategic importance. While precise annual figures for sustainment alone are not readily available in the public domain, the overall program costs, including development and deployment, have been in the billions of dollars. Sustainment and life extension efforts are critical components of the total lifecycle cost for such a major defense asset. Annual spending typically covers operations, maintenance, software updates, hardware replacements, and specialized engineering support to ensure the system remains functional and secure. The $80.2 million awarded here represents a specific phase of this ongoing investment, indicating a continued commitment to the MUOS program's operational longevity.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › Space R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: FA880723R0005

Offers Received: 3

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Address: 1111 LOCKHEED MARTIN WAY, SUNNYVALE, CA, 94089

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

Financial Breakdown

Contract Ceiling: $94,643,106

Exercised Options: $80,201,732

Current Obligation: $80,201,732

Subaward Activity

Number of Subawards: 21

Total Subaward Amount: $11,914,603

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline