DoD Awards Lockheed Martin $4.98B for Navy Ship Building and Repair, Highlighting Fixed Price Incentive Contract
Contract Overview
Contract Amount: $4,980,508,595 ($5.0B)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2010-12-29
End Date: 2026-12-31
Contract Duration: 5,846 days
Daily Burn Rate: $852.0K/day
Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Number of Offers Received: 2
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: BASIC AWARD
Place of Performance
Location: MIDDLE RIVER, BALTIMORE County, MARYLAND, 21220
State: Maryland Government Spending
Plain-Language Summary
Department of Defense obligated $4.98 billion to LOCKHEED MARTIN CORPORATION for work described as: BASIC AWARD Key points: 1. Significant contract value of $4.98 billion awarded to a single, major defense contractor. 2. Competition method indicates a move towards full and open competition after initial exclusions. 3. Fixed Price Incentive (FPI) contract type suggests shared risk between government and contractor. 4. The sector is dominated by large, established players like Lockheed Martin. 5. Long contract duration of over 5 years implies a substantial, ongoing need.
Value Assessment
Rating: good
The $4.98 billion award over approximately 5 years suggests a significant investment. Benchmarking against similar large-scale shipbuilding contracts is crucial to assess if the pricing reflects fair market value and incorporates appropriate incentives for cost control.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating a complex procurement history. While competition was eventually sought, the initial exclusion of sources may have limited the breadth of initial proposals and potentially impacted price discovery.
Taxpayer Impact: The large contract value means taxpayer funds are significantly committed. Ensuring competitive pricing and effective cost controls through the FPI structure is vital to maximize the value for taxpayers.
Public Impact
Impacts naval readiness and shipbuilding capacity. Supports jobs within the defense industrial base. Potential for technological advancements in ship design and construction. Long-term commitment of significant federal resources.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns with FPI contracts if not managed closely.
- Reliance on a single large contractor for critical naval assets.
- Complexity of 'exclusion of sources' in competition history.
Positive Signals
- Clear definition of scope for ship building and repair.
- Incentive structure aims to align contractor and government interests.
- Long-term award provides stability for planning and execution.
Sector Analysis
This contract falls within the Defense sector, specifically Ship Building and Repair. This is a capital-intensive industry with high barriers to entry, often characterized by long-term, large-value contracts awarded to a few major defense contractors.
Small Business Impact
The contract is awarded to Lockheed Martin Corporation, a large prime contractor. There is no explicit mention of small business participation in the provided data, suggesting that small businesses may be involved as subcontractors rather than prime awardees.
Oversight & Accountability
The Department of the Navy is the awarding agency, with the Department of Defense overseeing the broader strategic context. Oversight will be critical to monitor performance, costs, and adherence to the FPI terms throughout the contract's duration.
Related Government Programs
- Ship Building and Repairing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- High contract value concentrated with one large entity.
- Fixed Price Incentive (FPI) contracts can lead to cost overruns if not managed diligently.
- History of 'exclusion of sources' raises questions about initial competition.
- Long contract duration increases exposure to changing economic conditions and technological obsolescence.
- Lack of explicit small business prime participation.
Tags
ship-building-and-repairing, department-of-defense, md, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $4.98 billion to LOCKHEED MARTIN CORPORATION. BASIC AWARD
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 $4.98 billion.
What is the period of performance?
Start: 2010-12-29. End: 2026-12-31.
What specific shipbuilding or repair services are covered under this $4.98 billion award, and how do the performance metrics align with naval operational requirements?
The contract covers 'Ship Building and Repairing' under NAICS code 336611. Specific services would detail the types of vessels, modernization efforts, or repair schedules. Performance metrics likely focus on delivery timelines, quality standards, and adherence to technical specifications critical for naval readiness. The FPI structure suggests incentives tied to achieving these performance targets while managing costs.
How will the 'exclusion of sources' in the competition history be monitored to ensure fair pricing and prevent potential anti-competitive effects throughout the contract lifecycle?
Monitoring will involve scrutinizing any future modifications or sole-source extensions. Regular reviews of market conditions and potential new entrants are necessary. The agency must ensure that the initial exclusion was justified and that the subsequent 'full and open' competition truly allowed for robust price discovery and a competitive outcome, mitigating risks of inflated costs due to limited initial options.
What are the key cost drivers and potential risk areas within this Fixed Price Incentive contract, and what mitigation strategies are in place to control expenditures?
Key cost drivers likely include labor, materials, specialized components, and overhead. Risks involve potential cost overruns if targets are missed or scope creep occurs. Mitigation strategies under an FPI contract typically involve establishing clear target costs, ceiling prices, and sharing formulas. Robust program management, regular cost reviews, and strong government oversight are essential to manage these risks effectively.
Industry Classification
NAICS: Manufacturing › Ship and Boat Building › Ship Building and Repairing
Product/Service Code: SHIPS, SMALL CRAFT, PONTOON, DOCKS
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: N0002410R2301
Offers Received: 2
Pricing Type: FIXED PRICE INCENTIVE (L)
Evaluated Preference: NONE
Contractor Details
Address: 2323 EASTERN BLVD, BALTIMORE, MD, 21220
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: $5,825,866,872
Exercised Options: $4,988,222,237
Current Obligation: $4,980,508,595
Actual Outlays: $206,092,074
Subaward Activity
Number of Subawards: 1208
Total Subaward Amount: $48,290,431,189
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2010-12-29
Current End Date: 2026-12-31
Potential End Date: 2026-12-31 00:00:00
Last Modified: 2025-12-08
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