DoD awards $489M for MK48 Torpedo Guidance & Control Systems to Lockheed Martin

Contract Overview

Contract Amount: $489,099,894 ($489.1M)

Contractor: Lockheed Martin Sippican, Inc.

Awarding Agency: Department of Defense

Start Date: 2016-05-24

End Date: 2026-09-30

Contract Duration: 3,781 days

Daily Burn Rate: $129.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MK48 MOD 7 G&C SECTION POM/FIRST ARTICLE

Place of Performance

Location: MARION, PLYMOUTH County, MASSACHUSETTS, 02738

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $489.1 million to LOCKHEED MARTIN SIPPICAN, INC. for work described as: MK48 MOD 7 G&C SECTION POM/FIRST ARTICLE Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. The contract is a firm-fixed-price type, which shifts cost risk to the contractor. 3. This award represents a significant investment in naval defense capabilities. 4. The duration of the contract spans over 10 years, indicating a long-term need. 5. The contractor, Lockheed Martin, is a major defense industry player. 6. The contract value is substantial, reflecting the complexity and importance of the systems.

Value Assessment

Rating: good

The contract value of $489 million over approximately 10 years for MK48 MOD 7 G&C SECTION POM/FIRST ARTICLE components suggests a significant but potentially reasonable investment for critical defense hardware. Benchmarking against similar complex weapon system components is challenging without more granular data on specific parts and labor. However, the firm-fixed-price structure indicates that the government has negotiated a set price, which can be advantageous if costs are well-managed by the contractor. The award amount appears to be in line with the scale of major defense procurement programs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of two bids suggests a degree of competition, though the exact number of interested parties and the nature of the proposals would provide a clearer picture of the competitive landscape. A competitive process is generally expected to drive better pricing and innovation.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it encourages multiple companies to vie for the contract, potentially leading to lower prices and better value for the government's investment.

Public Impact

The primary beneficiaries are the U.S. Navy, which will receive advanced torpedo guidance and control systems. These systems are crucial for the operational readiness and effectiveness of submarine and surface fleet anti-submarine warfare (ASW) capabilities. The contract supports advanced manufacturing and engineering roles within the defense industrial base. Geographic impact is likely concentrated where Lockheed Martin's relevant facilities are located, primarily Massachusetts based on the award data.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long-term contract duration could lead to vendor lock-in if not managed carefully.
Reliance on a single prime contractor for critical components necessitates robust oversight.
Potential for cost overruns if initial pricing assumptions prove inaccurate, despite fixed-price nature.

Positive Signals

Firm-fixed-price contract shifts cost risk to the contractor.
Awarded through full and open competition, promoting market-based pricing.
Contractor is a well-established defense manufacturer with relevant expertise.
Long-term award provides stability for production and supply chain.

Sector Analysis

This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, specifically related to advanced naval weaponry. The defense sector is characterized by high R&D investment, long product lifecycles, and significant government procurement. Spending in this area is driven by national security requirements and technological advancements in warfare. Comparable spending benchmarks would typically involve other major weapon system procurements, such as missile systems or advanced sonar equipment.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses (ss: false, sb: false). While Lockheed Martin is a large prime contractor, there may be opportunities for small businesses to participate as subcontractors within the supply chain. The extent of small business subcontracting would depend on Lockheed Martin's internal policies and any specific requirements mandated by the Department of Defense.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The firm-fixed-price nature implies that financial oversight focuses on contract milestones and deliverables rather than detailed cost accounting. Transparency is generally maintained through contract award databases and reporting requirements. The Inspector General for the Department of Defense would have jurisdiction for investigating fraud, waste, or abuse.

Related Government Programs

MK48 Torpedo Program
Naval Sea Systems Command (NAVSEA) Contracts
Submarine Warfare Systems
Advanced Ordnance Procurement

Risk Flags

Long contract duration
Sole source potential for future modifications
Critical defense system dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $489.1 million to LOCKHEED MARTIN SIPPICAN, INC.. MK48 MOD 7 G&C SECTION POM/FIRST ARTICLE

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN SIPPICAN, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $489.1 million.

What is the period of performance?

Start: 2016-05-24. End: 2026-09-30.

What is the historical spending trend for the MK48 MOD 7 G&C SECTION POM/FIRST ARTICLE program?

Analyzing historical spending trends for this specific component requires access to detailed contract history beyond the current award. Typically, major defense systems like the MK48 torpedo undergo various upgrade phases (MODs) and procurements over decades. Previous awards for earlier versions or different components of the MK48 program would provide context. Without specific prior award data for the MOD 7 G&C section, it's difficult to establish a precise trend. However, the substantial value of this current award suggests a consistent and significant investment in maintaining and upgrading the Navy's torpedo capabilities, reflecting ongoing modernization efforts and the enduring strategic importance of ASW.

How does the per-unit cost of the MK48 MOD 7 G&C SECTION compare to previous iterations or similar systems?

Determining a precise per-unit cost for the MK48 MOD 7 G&C SECTION is complex due to the nature of the contract (POM/First Article) and the likely inclusion of development, testing, and initial production costs within the $489 million award. Unit costs for defense systems often fluctuate based on production volume, technological advancements, and specific configuration requirements. Comparing this to previous iterations (e.g., MOD 6) would require access to historical unit cost data, which is often sensitive and not publicly detailed. Generally, advancements in technology and inflation would be expected to influence unit costs. The firm-fixed-price nature of this contract aims to stabilize costs, but the initial 'first article' aspect suggests it might encompass initial setup and validation costs that could be higher than subsequent mass production units.

What is Lockheed Martin's track record with the MK48 torpedo program and similar guidance systems?

Lockheed Martin, through its acquisition of Sikorsky and prior defense contracting experience, has a substantial track record in complex aerospace and defense systems, including guidance and control technologies. While specific details on their involvement with the MK48 program prior to this award would require deeper research, the company is a prime contractor for numerous advanced weapon systems for the U.S. military. Their expertise in areas like missile guidance, avionics, and control systems suggests a strong capability to fulfill this contract. The Department of Defense's decision to award this significant contract to Lockheed Martin implies confidence in their technical proficiency, manufacturing capacity, and past performance in delivering critical defense components.

What are the key performance metrics or deliverables expected under this contract?

Key performance metrics and deliverables under this contract would center on the successful design, development, testing, and production of the MK48 MOD 7 Guidance and Control (G&C) Section. This includes meeting stringent technical specifications for reliability, accuracy, and operational performance in demanding underwater environments. Deliverables would likely encompass detailed design documentation, test results, prototypes (for the 'first article' phase), and ultimately, production units of the G&C section that meet all specified requirements. Performance would be measured against adherence to schedule, cost (within the fixed-price framework), and quality standards, ensuring the G&C section functions as intended within the broader MK48 torpedo system.

What is the potential risk associated with the long duration (over 10 years) of this contract?

The primary risk associated with a long-duration contract like this (spanning from 2016 to 2026) is the potential for technological obsolescence and the contractor's ability to maintain production capabilities and cost-competitiveness over an extended period. Market conditions, geopolitical shifts, and evolving threats could render the technology less relevant or necessitate significant modifications. For the contractor, maintaining efficient operations and managing supply chain risks over a decade presents challenges. For the government, ensuring the contractor remains financially stable and continues to prioritize this program is crucial. However, the firm-fixed-price nature mitigates some financial risk for the government, provided the initial pricing was sound.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: WEAPONS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0002415R6400

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 497 ELECTRONICS PARKWAY, LIVERPOOL, NY, 13088

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: $536,637,529

Exercised Options: $489,099,894

Current Obligation: $489,099,894

Actual Outlays: $12,028,321

Subaward Activity

Number of Subawards: 824

Total Subaward Amount: $268,428,567

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline