DoD awards $176M contract for Tomahawk missile systems to Lockheed Martin, raising value-for-money questions

Contract Overview

Contract Amount: $36,626,834 ($36.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2001-08-07

End Date: 2007-06-30

Contract Duration: 2,153 days

Daily Burn Rate: $17.0K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: 200111!001054!1700!AT717 !NAVAL AIR SYSTEMS COMMAND !N0001901C0027 !A!N!*!N! !20010807!20040810!176325579!176325579!834951691!N!LOCKHEED MARTIN CORPORATION !230 MALL BLVD !KING OF PRUSSI !PA!19406!39736!091!42!KING OF PRUSSIA !MONTGOMERY !PENN !+000020414896!Y!N!000000000000!1425!GUIDED MISSILE SYSTEMS, COMPLETE !A2 !MISSILE AND SPACE SYSTEMS !2CNY!BGM-109 TOMAHAWK !336414!*!*!1! ! ! !*!*!*!B!*!*!A! !B !Y!V!1!001!N!4A!A!N!Z! ! !N!C!N! ! ! !A!A!A!A!* !A!C!N! ! ! !Y! ! !0001!

Place of Performance

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

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $36.6 million to LOCKHEED MARTIN CORPORATION for work described as: 200111!001054!1700!AT717 !NAVAL AIR SYSTEMS COMMAND !N0001901C0027 !A!N!*!N! !20010807!20040810!176325579!176325579!834951691!N!LOCKHEED MARTIN CORPORATION !230 MALL BLVD !KING OF PRUSSI !PA!19406!39736!091!42!KING OF PRUSSIA !MONTG… Key points: 1. Contract awarded for a critical defense system, indicating ongoing need for advanced weaponry. 2. Sole-source nature of the award warrants scrutiny regarding potential price inflation. 3. Long contract duration suggests a sustained commitment to this missile platform. 4. The award falls within the broader defense sector, specifically missile and space systems. 5. Performance context is limited, but the nature of missile systems implies high stakes for reliability. 6. Risk indicators are moderate, primarily related to cost control in sole-source procurements.

Value Assessment

Rating: questionable

The contract value of $176,325,579 for Guided Missile Systems, specifically the BGM-109 Tomahawk, was awarded on a sole-source basis. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The cost-plus-incentive-fee (CPIF) contract type suggests that while there are incentives for cost control, the government bears a significant portion of the risk. Further analysis would be needed to determine if the final price reflects fair and reasonable value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed and was awarded directly to Lockheed Martin Corporation. The data indicates it was 'NOT AVAILABLE FOR COMPETITION'. This suggests that either only one source was capable of fulfilling the requirement, or there were other justifications for avoiding a competitive process, such as urgency or proprietary technology. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price.

Taxpayer Impact: The absence of competition means taxpayers may not be benefiting from the most cost-effective pricing that a competitive bidding process could have yielded. This could lead to higher overall expenditures for the Tomahawk missile system.

Public Impact

The primary beneficiaries are the U.S. Navy and potentially allied nations utilizing the Tomahawk missile system. Services delivered include the provision of complete guided missile systems, crucial for strategic defense capabilities. Geographic impact is national, supporting naval operations and defense readiness across various theaters. Workforce implications include sustained employment at Lockheed Martin facilities involved in missile production and support.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Cost-plus-incentive-fee structure places some cost risk on the government.
Long contract duration (over 2 years) may not reflect the most current technological advancements or cost efficiencies.

Positive Signals

Award to a known prime contractor (Lockheed Martin) suggests reliance on established expertise for a critical defense system.
The contract supports a key strategic weapon system, contributing to national security.
Incentive fee structure aims to align contractor performance with government objectives.

Sector Analysis

This contract falls within the Defense sector, specifically the 'Missile and Space Systems' sub-sector. The market for advanced missile systems is highly specialized, often dominated by a few large defense contractors. Lockheed Martin is a major player in this domain. Benchmarking spending in this niche requires comparison with other similar sole-source or competitively awarded contracts for advanced missile platforms, which are typically high-value and complex.

Small Business Impact

The provided data does not indicate any small business set-aside provisions for this contract. Given the specialized nature of guided missile systems and the prime contractor being Lockheed Martin, it is unlikely that small businesses would be the direct recipients of the prime contract. However, Lockheed Martin may engage small businesses as subcontractors, but this information is not detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with terms and conditions. The contract type (CPIF) implies performance monitoring and financial oversight to manage costs and incentives. Transparency is generally limited for sole-source defense contracts, but reporting requirements would be stipulated in the contract.

Related Government Programs

Tomahawk Weapon System
Naval Air Systems Command Contracts
Guided Missile Manufacturing
Department of Defense Procurement
Lockheed Martin Defense Contracts

Risk Flags

Sole-source procurement
Cost-plus contract type
Lack of detailed performance metrics in summary data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.6 million to LOCKHEED MARTIN CORPORATION. 200111!001054!1700!AT717 !NAVAL AIR SYSTEMS COMMAND !N0001901C0027 !A!N!*!N! !20010807!20040810!176325579!176325579!834951691!N!LOCKHEED MARTIN CORPORATION !230 MALL BLVD !KING OF PRUSSI !PA!19406!39736!091!42!KING OF PRUSSIA !MONTGOMERY !PENN !+000020414896!Y!N!000000000000!1425!GUIDED MISSILE SYSTEMS, COMPLETE !A2 !MISSILE AND SPACE SYSTEMS !2CNY!BGM-109 TOMAHAWK !336414!*!*!1! ! ! !*!*!*!B!*!*!A!

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $36.6 million.

What is the period of performance?

Start: 2001-08-07. End: 2007-06-30.

What is the historical spending trend for the BGM-109 Tomahawk missile system with Lockheed Martin?

Analyzing historical spending for the BGM-109 Tomahawk missile system with Lockheed Martin requires accessing a broader dataset of previous contracts. This specific award of $176,325,579 covers the period from August 7, 2001, to June 30, 2007. Without access to prior contract awards for the same system, it's challenging to establish a precise spending trend. However, the Tomahawk has been a long-standing weapon system in the U.S. Navy's arsenal, suggesting a history of consistent, albeit potentially fluctuating, investment over decades. Future analysis should aim to aggregate all awarded contract values for this system to identify patterns in annual spending, major upgrade cycles, and the overall lifecycle cost.

How does the per-unit cost of the Tomahawk missile under this contract compare to industry benchmarks?

Determining the per-unit cost requires knowing the total number of units procured under this $176.3 million contract. The provided data does not specify the quantity of BGM-109 Tomahawk missiles or associated systems being acquired. Therefore, a direct per-unit cost calculation and comparison to industry benchmarks is not feasible with the current information. Generally, advanced missile systems are complex and expensive, with costs influenced by factors such as technology, production volume, and specific configurations. Without the quantity, any per-unit cost derived would be speculative and lack a basis for meaningful comparison.

What are the specific performance metrics and Key Performance Parameters (KPPs) associated with this contract?

The provided data summary does not detail the specific Key Performance Parameters (KPPs) or performance metrics for this contract. Contracts for complex defense systems like the BGM-109 Tomahawk typically include stringent performance requirements related to range, accuracy, reliability, warhead effectiveness, and operational readiness. The 'Cost Plus Incentive Fee' (CPIF) contract type suggests that performance against certain objectives would be measured and could impact the final fee paid to the contractor. A thorough review of the full contract document would be necessary to identify these specific performance metrics and KPPs.

What is Lockheed Martin's track record with sole-source defense contracts of similar magnitude?

Lockheed Martin is a major defense contractor with extensive experience in sole-source procurements, particularly for highly specialized and critical systems where competition may be limited. The company has a long history of producing major defense platforms, including various missile systems. While this specific $176.3 million contract is significant, Lockheed Martin frequently engages in sole-source or limited-competition contracts for programs involving unique technologies, long-term sustainment, or urgent national security needs. Assessing their track record would involve examining past sole-source awards, their cost performance on those contracts, and any associated oversight findings or disputes.

What are the potential risks associated with the 'Cost Plus Incentive Fee' (CPIF) contract type for this missile system?

The Cost Plus Incentive Fee (CPIF) contract type, used here, aims to incentivize the contractor to control costs while meeting performance targets. The government agrees to pay the contractor's allowable costs plus a target fee, which is then adjusted based on whether the final costs are below or above a negotiated target cost. The primary risk for the government is that the final negotiated cost could exceed the target cost, leading to a higher total price than initially anticipated, even with the incentive structure. Additionally, defining the performance targets and cost objectives accurately is crucial; if poorly defined, the incentives may not effectively drive desired outcomes. There's also a risk of contractor focus shifting to maximizing fee rather than absolute cost reduction if targets are not stringent enough.

Are there any known issues or controversies related to the BGM-109 Tomahawk program or Lockheed Martin's performance on similar contracts?

Information regarding specific controversies or issues directly tied to this particular $176.3 million contract award for the BGM-109 Tomahawk is not readily available in the summarized data. However, major defense programs, especially long-standing ones like the Tomahawk, can face scrutiny regarding cost growth, schedule delays, or technical performance over their lifecycle. Lockheed Martin, as a large prime contractor, has been involved in numerous programs, and like any major entity, may have faced program-specific challenges or reviews in the past. A comprehensive review would require searching defense news archives, Government Accountability Office (GAO) reports, and Inspector General (IG) findings related to the Tomahawk program and Lockheed Martin's performance.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

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

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline