DoD awards $147.5M for Tactical Tomahawk missile systems development to Lockheed Martin

Contract Overview

Contract Amount: $53,705,285 ($53.7M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2006-01-20

End Date: 2010-06-30

Contract Duration: 1,622 days

Daily Burn Rate: $33.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200604!280947!1700!N00019!NAVAL AIR SYSTEMS COMMAND !N0001906C0300 !A!N! !N! ! !20060120!20070121!147459577!147459577!834951691!N!LOCKHEED MARTIN CORPORATION !230 MALL BLVD, LOCATION A !KING OF PRUSSI !PA!19406!39736!091!42!KING OF PRUSSIA !MONTGOMERY !PENN !+000012608650!N!N!000047999935!AC25!RDTE/MISSILE AND SPACE SYSTEMS-ENG/MANUF DEVEL !A7 !ELECTRONICS AND COMMUNICATION EQUIP !289 !TACTICAL TOMAHAWK !541330!E! !3! ! ! ! ! !99990909!B! ! !A! !D!U!U!1!001!N!1A!A!N!Z! ! !N!C!N! ! ! !Z!Z!A!A!000!A!B!N! ! ! !Y!1700!N00019!0001! !

Place of Performance

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

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $53.7 million to LOCKHEED MARTIN CORPORATION for work described as: 200604!280947!1700!N00019!NAVAL AIR SYSTEMS COMMAND !N0001906C0300 !A!N! !N! ! !20060120!20070121!147459577!147459577!834951691!N!LOCKHEED MARTIN CORPORATION !230 MALL BLVD, LOCATION A !KING OF PRUSSI !PA!19406!39736!091!42!KING OF PRUSSIA !MONT… Key points: 1. Contract awarded on a sole-source basis, raising questions about price competition. 2. Significant portion of the contract value allocated to research, development, testing, and evaluation. 3. Long contract duration of over 4 years suggests a complex and lengthy development cycle. 4. The contract falls under the 'Missile and Space Systems - Engineering/Manufacturing Development' category. 5. Geographic focus on Pennsylvania for the contractor's primary location. 6. The contract type is Cost Plus Fixed Fee, which can shift some risk to the government.

Value Assessment

Rating: fair

The contract value of $147.5 million for missile systems development is substantial. Without comparable sole-source contracts for similar developmental phases of advanced weapon systems, a precise value-for-money assessment is challenging. The Cost Plus Fixed Fee (CPFF) contract type, while common for R&D, allows for cost overruns to be borne by the government, potentially impacting overall value if not managed tightly. Benchmarking against industry standards for engineering and manufacturing development in the defense sector would be necessary for a more definitive assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This typically occurs when a specific contractor possesses unique capabilities or intellectual property essential for the project. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs for the government compared to a competed contract. The justification for sole-source procurement would need to be thoroughly reviewed to ensure it was appropriate.

Taxpayer Impact: For taxpayers, a sole-source award means the absence of competitive pressure to drive down costs. This can result in a higher overall expenditure for the defense program, as the government does not benefit from the cost savings that often arise from multiple bidders vying for a contract.

Public Impact

The primary beneficiary is the U.S. Navy, which will receive advanced Tactical Tomahawk missile systems. The contract supports the development and manufacturing of critical defense capabilities. The geographic impact is centered around Lockheed Martin's facilities in Pennsylvania. This contract likely supports a specialized workforce in engineering, manufacturing, and defense technology within the contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs.
Cost Plus Fixed Fee structure may incentivize cost overruns.
Lack of transparency in the sole-source justification could hide inefficiencies.
Long contract duration increases exposure to changing technological landscapes and budget fluctuations.

Positive Signals

Award to a major defense contractor with established expertise in missile systems.
Focus on research, development, testing, and evaluation indicates investment in future capabilities.
Contract supports a critical defense asset for the U.S. Navy.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on missile and space systems engineering and manufacturing development. The defense industry is characterized by high R&D investment, long product cycles, and significant government procurement. The market for advanced missile systems is concentrated among a few major defense contractors. Spending in this sub-sector is driven by national security priorities and technological advancements, with contracts often being large and complex.

Small Business Impact

This contract does not appear to have a small business set-aside. As a sole-source award to a large prime contractor, the opportunities for small businesses would primarily be through subcontracting. The extent to which Lockheed Martin engages small businesses as subcontractors for this specific development effort would determine the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices, with potential involvement from the Naval Air Systems Command. Inspector General audits and program reviews are standard mechanisms to ensure accountability and transparency. The CPFF structure necessitates close monitoring of costs and progress to ensure adherence to the fixed fee and overall budget.

Related Government Programs

Tactical Tomahawk Weapon System
Missile Defense Systems
Naval Aviation Systems
Defense Research and Development

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $53.7 million to LOCKHEED MARTIN CORPORATION. 200604!280947!1700!N00019!NAVAL AIR SYSTEMS COMMAND !N0001906C0300 !A!N! !N! ! !20060120!20070121!147459577!147459577!834951691!N!LOCKHEED MARTIN CORPORATION !230 MALL BLVD, LOCATION A !KING OF PRUSSI !PA!19406!39736!091!42!KING OF PRUSSIA !MONTGOMERY !PENN !+000012608650!N!N!000047999935!AC25!RDTE/MISSILE AND SPACE SYSTEMS-ENG/MANUF DEVEL !A7 !ELECTRONICS AND COMMUNICATION EQUIP !289 !TACTICAL TOMAHAWK !541330!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 Navy).

What is the total obligated amount?

The obligated amount is $53.7 million.

What is the period of performance?

Start: 2006-01-20. End: 2010-06-30.

What is the specific justification for awarding this contract on a sole-source basis to Lockheed Martin?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are awarded when only one responsible source is capable of providing the required supplies or services. This could be due to unique capabilities, proprietary technology, or the urgent need for a specific system where competition is not feasible or would cause unacceptable delays. A thorough review of the contract file and associated documentation would be required to ascertain the official justification provided by the Department of the Navy.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other contract types for R&D in the defense sector?

Cost Plus Fixed Fee (CPFF) contracts are common for research and development efforts where the scope of work is not fully defined or is subject to significant change. In a CPFF contract, the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee representing profit. This contrasts with fixed-price contracts, where the contractor bears more risk for cost overruns but also has a greater incentive for cost efficiency. For R&D, CPFF can be advantageous when innovation and exploration are prioritized over strict cost control, but it places a greater oversight burden on the government to monitor costs effectively.

What is the historical spending trend for the Tactical Tomahawk program prior to and after this contract award?

The provided data snippet focuses on a single contract award for the Tactical Tomahawk program from 2006 to 2007. It does not offer historical spending trends. To analyze historical spending, one would need to access contract databases and aggregate spending data for the Tactical Tomahawk program across all contracts awarded by the Department of Defense over multiple fiscal years. This would involve identifying all relevant contract awards, their values, and their periods of performance to understand the program's lifecycle cost and evolution.

What are the key performance indicators (KPIs) used to measure the success of this missile system development contract?

The provided data does not specify the Key Performance Indicators (KPIs) for this contract. Typically, for missile system development contracts, KPIs would focus on technical performance metrics such as accuracy, range, reliability, survivability, and integration with existing platforms. Schedule adherence and adherence to budget constraints are also critical performance measures. The contract's terms and conditions, including any statements of work or performance specifications, would detail these specific KPIs and the methods for their measurement and evaluation.

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

Lockheed Martin is a major defense contractor with extensive experience in sole-source and competed development contracts for complex weapon systems, including missiles. Their track record generally involves delivering advanced technological solutions, though like many large contractors, they have faced scrutiny over cost and schedule performance on various programs. Specific to sole-source awards, their history would likely show numerous instances where their unique capabilities or established role in a program led to non-competitive contract awards. Analyzing specific past sole-source contracts would reveal patterns in their performance, cost management, and adherence to contractual obligations.

Industry Classification

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

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 230 MALL BLVD, LOCATION A, 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