DoD's $1.47B R&D contract with Lockheed Martin for missile and space systems shows long-term investment

Contract Overview

Contract Amount: $388,643,719 ($388.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2006-01-27

End Date: 2015-09-30

Contract Duration: 3,533 days

Daily Burn Rate: $110.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS AWARD FEE

Sector: R&D

Official Description: 200608!000051!5700!FA8808!SMC/MLK !FA880806C0003 !A!N! !N! ! !20060127!20150930!147328210!147328210!834951691!N!LOCKHEED MARTIN CORPORATION !3130 ZANKER ROAD, LOCATION!SAN JOSE !CA!95134!68000!085!06!SAN JOSE !SANTA CLARA !CALIFORNIA!+000035716278!N!N!002023970194!AD21!RDTE/SERVICES-BASIC RESEARCH !A2 !MISSILE AND SPACE SYSTEMS !788 !MILSTAR !541710!E! !3! ! ! ! ! !99990909!B!A!N!A! !A!N!R!2!003!B! !Z!Y!Z! ! !N!C!N! ! ! !Z!Z!A!A!000!A!C!N! ! ! !Y! ! !0001! !

Place of Performance

Location: SAN JOSE, SANTA CLARA County, CALIFORNIA, 95134

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $388.6 million to LOCKHEED MARTIN CORPORATION for work described as: 200608!000051!5700!FA8808!SMC/MLK !FA880806C0003 !A!N! !N! ! !20060127!20150930!147328210!147328210!834951691!N!LOCKHEED MARTIN CORPORATION !3130 ZANKER ROAD, LOCATION!SAN JOSE !CA!95134!68000!085!06!SAN JOSE !SANT… Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. Significant investment in Research and Development for advanced missile and space systems. 3. Long contract duration of over 9 years indicates a sustained need for these capabilities. 4. The contract's value of over $1.47 billion highlights the scale of the program. 5. Focus on basic research within the physical, engineering, and life sciences sector. 6. Contractor, Lockheed Martin, is a major defense contractor with extensive experience.

Value Assessment

Rating: good

The contract value of $1.47 billion over nearly a decade for R&D in missile and space systems appears to be a substantial, long-term investment. Benchmarking this against similar large-scale R&D efforts in the defense sector would be necessary for a precise value-for-money assessment. However, the duration and scope suggest a critical capability development for the Department of Defense.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to compete. The presence of 3 bidders suggests a reasonable level of competition for this specialized R&D requirement. This competitive environment is generally expected to drive more favorable pricing and innovation.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure the best value for advanced defense technologies, potentially reducing costs through market forces.

Public Impact

Benefits the Department of Defense by advancing capabilities in missile and space systems. Services delivered include basic research and development in physical, engineering, and life sciences. Geographic impact is primarily national, supporting U.S. defense interests. Workforce implications include highly skilled engineers and scientists in the aerospace and defense industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long-term nature of R&D contracts can lead to cost overruns if not managed effectively.
Reliance on a single large contractor for critical defense technology development.
Potential for scope creep in research projects over an extended period.

Positive Signals

Awarded through full and open competition, indicating a robust selection process.
Contractor has a strong track record in defense and aerospace.
Focus on fundamental research can lead to breakthrough technologies.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. The North American Industry Classification System (NAICS) code 541710 represents Research and Development in the Physical, Engineering, and Life Sciences. This is a critical area for defense innovation, with significant government spending allocated annually to advance technological superiority in areas like missile and space systems.

Small Business Impact

The contract data does not indicate any specific small business set-aside provisions. Given the nature and scale of this R&D contract, it is likely that prime contractor Lockheed Martin would engage subcontractors. Analysis of subcontracting plans would be necessary to determine the extent of small business participation and its impact on the small business ecosystem.

Oversight & Accountability

Oversight for this Department of Defense contract would typically involve program managers within the Air Force, contracting officers, and potentially the Defense Contract Audit Agency (DCAA) for financial oversight. Inspector General offices within the DoD also provide oversight to ensure accountability and prevent fraud, waste, and abuse. Transparency is facilitated through contract award databases and reporting requirements.

Related Government Programs

Missile Defense Systems
Space Systems Development
Advanced Technology Research
Aerospace Engineering Services

Risk Flags

Long contract duration may increase risk of cost escalation.
Cost Plus Award Fee structure requires careful monitoring of performance metrics.
Reliance on a single large contractor for critical R&D.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $388.6 million to LOCKHEED MARTIN CORPORATION. 200608!000051!5700!FA8808!SMC/MLK !FA880806C0003 !A!N! !N! ! !20060127!20150930!147328210!147328210!834951691!N!LOCKHEED MARTIN CORPORATION !3130 ZANKER ROAD, LOCATION!SAN JOSE !CA!95134!68000!085!06!SAN JOSE !SANTA CLARA !CALIFORNIA!+000035716278!N!N!002023970194!AD21!RDTE/SERVICES-BASIC RESEARCH !A2 !MISSILE AND SPACE SYSTEMS !788 !MILSTAR !541710!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 $388.6 million.

What is the period of performance?

Start: 2006-01-27. End: 2015-09-30.

What is Lockheed Martin's track record with similar large-scale R&D contracts for the Department of Defense?

Lockheed Martin is a major defense contractor with a long history of performing large-scale research and development contracts for the Department of Defense. They are a primary contractor for numerous advanced programs, including fighter jets, missile systems, and space-based assets. Their track record includes significant contributions to national security initiatives. However, like many large defense contractors, they have also faced scrutiny regarding contract performance, cost overruns, and schedule delays on specific projects. A detailed review of their past performance on contracts with similar scope, duration, and technical complexity would be necessary to fully assess their suitability and reliability for this specific R&D effort.

How does the $1.47 billion contract value compare to other R&D spending in missile and space systems?

The $1.47 billion awarded to Lockheed Martin represents a significant investment in research and development for missile and space systems over a period of nearly a decade. To benchmark this value, one would need to compare it against the total annual R&D budgets allocated by the Department of Defense (DoD) to these specific areas, as well as against other major R&D contracts awarded to different contractors. The DoD consistently invests billions annually in R&D to maintain technological superiority. This particular contract's value, while substantial, needs to be contextualized within the broader landscape of defense R&D spending to determine if it represents a particularly high or efficient allocation of resources for the capabilities it aims to develop.

What are the primary risks associated with a Cost Plus Award Fee (CPAF) contract for R&D?

Cost Plus Award Fee (CPAF) contracts, like the one awarded here, involve the contractor being reimbursed for allowable costs plus a fee that is based on performance against specific criteria. For R&D, a primary risk is that the 'award' portion of the fee might incentivize the contractor to pursue certain outcomes that are not necessarily aligned with the government's ultimate strategic goals, or to inflate costs to increase the base for the fee. Another risk is the potential for subjective interpretation of performance metrics, leading to disputes over the award fee. Furthermore, the government bears the risk of cost overruns, as the contractor is reimbursed for allowable expenses, while the award fee adds an incentive component that can increase the total contract cost if performance is deemed exceptional.

What is the expected program effectiveness given the contract's focus on basic research?

The effectiveness of a contract focused on basic research is inherently long-term and less predictable than that of development or production contracts. Basic research aims to advance fundamental knowledge and understanding, which may or may not lead to immediate practical applications. The success of this contract will be measured by the scientific and technical advancements made, the quality of research findings, and the potential for these findings to form the basis of future technologies. While direct, immediate program effectiveness in terms of deployable systems is unlikely, its effectiveness lies in building the foundational knowledge necessary for future innovation in missile and space systems, contributing to long-term national security objectives.

How has federal spending in the 'Research and Development in the Physical, Engineering, and Life Sciences' (NAICS 541710) sector evolved over the past decade?

Federal spending within the NAICS code 541710, 'Research and Development in the Physical, Engineering, and Life Sciences,' has generally seen fluctuations but a consistent overall high level of investment, particularly driven by defense and health agencies. Over the past decade, there has been a growing emphasis on areas like artificial intelligence, cybersecurity, advanced materials, and biotechnology, reflecting evolving national priorities and technological advancements. Defense R&D, in particular, remains a significant portion of this sector's spending, aimed at maintaining military superiority. Economic conditions, geopolitical events, and shifts in administration priorities can influence year-to-year spending levels and the allocation of funds across different scientific disciplines within this broad category.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 3130 ZANKER ROAD, LOCATION, SAN JOSE, CA, 90

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: YES

Timeline