Navy awards $611.9M contract to Lockheed Martin for Trident missile system sustainment

Contract Overview

Contract Amount: $611,889,034 ($611.9M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2002-05-10

End Date: 2007-10-31

Contract Duration: 2,000 days

Daily Burn Rate: $305.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: 200208!00A192!1700!XSP01 !STRATEGIC SYSTEMS PROGRAMS !N0003002C0100 !A!N! !Y! !20020510!20020930!155109184!155109184!834951691!N!LOCKHEED MARTIN CORPORATION !1111 LOCKHEED WAY MARINE !SUNNYVALE !CA!94089!77000!085!06!SUNNYVALE !SANTA CLARA !CALIFORNIA!+000008727000!N!N!000000000000!J069!MAINT & REPAIR OF EQ/TRAINING AIDS & DEVICES !A2 !MISSILE AND SPACE SYSTEMS !2CNJ!UGM-96 TRIDENT !541330!E! !1! ! ! ! ! !99990909!B! ! !A! !C!U!V!1!001!N!1A!A!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001!

Place of Performance

Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $611.9 million to LOCKHEED MARTIN CORPORATION for work described as: 200208!00A192!1700!XSP01 !STRATEGIC SYSTEMS PROGRAMS !N0003002C0100 !A!N! !Y! !20020510!20020930!155109184!155109184!834951691!N!LOCKHEED MARTIN CORPORATION !1111 LOCKHEED WAY MARINE !SUNNYVALE !CA!94089!77000!085!06!SUNNYVALE !SANTA… Key points: 1. Contract awarded to a single, established prime contractor for a critical defense system. 2. Significant portion of contract value allocated to sustainment and maintenance activities. 3. Long-term contract duration suggests ongoing need for specialized support. 4. Contract type (Cost Plus Incentive Fee) aims to balance cost control with performance. 5. High dollar value indicates the strategic importance and complexity of the Trident program.

Value Assessment

Rating: good

The contract value of $611.9 million over its period of performance appears reasonable given the strategic nature of the Trident II (D5) missile system and the sole-source award to Lockheed Martin, the prime contractor. Benchmarking is difficult without more specific details on the scope of work, but sustainment of nuclear-capable strategic weapon systems typically involves high costs due to specialized expertise, security requirements, and the critical need for reliability. The Cost Plus Incentive Fee (CPIF) structure suggests an effort to incentivize performance while managing costs, which is a common approach for complex, long-term defense programs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, Lockheed Martin Corporation, was solicited. This is common for highly specialized defense systems where the original equipment manufacturer or a highly qualified entity with unique knowledge and capabilities is essential for sustainment and maintenance. The lack of competition means that price discovery through a competitive bidding process was not utilized, which can sometimes lead to higher costs compared to a fully competed contract.

Taxpayer Impact: For taxpayers, a sole-source award means that the government did not benefit from potential cost savings that could arise from a competitive bidding process. However, for a system as critical and specialized as the Trident missile, ensuring the highest level of technical expertise and reliability from the incumbent contractor may outweigh the potential cost savings from competition.

Public Impact

The primary beneficiaries are the U.S. Navy's strategic deterrence capabilities, ensuring the readiness of the Trident II (D5) missile system. Services delivered include maintenance, repair, and potentially upgrades or modifications to the missile system and associated training aids. Geographic impact is national, supporting a critical component of U.S. national security infrastructure. Workforce implications include the employment of highly skilled engineers, technicians, and support staff at Lockheed Martin facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source nature limits competitive pressure on pricing.
CPIF contract type can lead to cost overruns if not managed tightly.
Long-term sustainment contracts can become entrenched, making future competition difficult.

Positive Signals

Award to incumbent prime contractor ensures continuity and leverages existing expertise.
CPIF structure incentivizes contractor performance and cost efficiency.
Focus on sustainment is critical for maintaining the readiness of strategic assets.

Sector Analysis

This contract falls within the Aerospace and Defense sector, specifically supporting strategic missile systems. The market for such specialized defense sustainment is highly concentrated, with a few prime contractors dominating. Spending in this area is driven by national security requirements and the lifecycle management of complex weapon systems. Comparable spending benchmarks are difficult to establish due to the unique nature of strategic deterrents, but significant government investment is typical for maintaining such capabilities.

Small Business Impact

This contract does not appear to have a small business set-aside component, as it was awarded sole-source to Lockheed Martin Corporation. There is no explicit information regarding subcontracting plans for small businesses within this specific award notice. However, large prime contractors like Lockheed Martin typically have subcontracting programs that may involve small businesses for various components or services, though the extent of this contract's impact on the small business ecosystem is not directly detailed.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Navy's contracting and program management offices. Accountability measures are embedded within the Cost Plus Incentive Fee (CPIF) structure, which links contractor profit to performance metrics. Transparency is generally limited for sole-source defense contracts of this nature, though contract modifications and performance reports are subject to internal government review and potentially oversight by the Government Accountability Office (GAO) or the Inspector General if specific concerns arise.

Related Government Programs

Trident II (D5) Missile Program
Ballistic Missile Submarine Program
Strategic Weapons Systems
Naval Sea Systems Command (NAVSEA) Contracts
Department of Defense Sustainment Contracts

Risk Flags

Sole-source award limits competition.
Potential for cost growth under CPIF contract type.
Aging system requires ongoing sustainment investment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $611.9 million to LOCKHEED MARTIN CORPORATION. 200208!00A192!1700!XSP01 !STRATEGIC SYSTEMS PROGRAMS !N0003002C0100 !A!N! !Y! !20020510!20020930!155109184!155109184!834951691!N!LOCKHEED MARTIN CORPORATION !1111 LOCKHEED WAY MARINE !SUNNYVALE !CA!94089!77000!085!06!SUNNYVALE !SANTA CLARA !CALIFORNIA!+000008727000!N!N!000000000000!J069!MAINT & REPAIR OF EQ/TRAINING AIDS & DEVICES !A2 !MISSILE AND SPACE SYSTEMS !2CNJ!UGM-96 TRIDENT !541330!E! !1! ! ! ! ! !99990909!B

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 $611.9 million.

What is the period of performance?

Start: 2002-05-10. End: 2007-10-31.

What is the historical spending trend for the sustainment of the Trident II (D5) missile system by the Department of the Navy?

Historical spending data for the sustainment of the Trident II (D5) missile system prior to this specific $611.9 million award would require a deeper dive into historical contract databases. However, it is reasonable to infer that sustainment costs for such a critical and long-lifecycle strategic asset are substantial and ongoing. The Navy consistently allocates significant portions of its budget to maintaining the readiness and effectiveness of its strategic deterrent forces. This includes funding for depot-level maintenance, component replacements, technical support, and system upgrades. The longevity of the Trident II (D5) system, which has been in service for decades and is expected to remain so for many more, necessitates continuous investment in its sustainment. Therefore, annual spending on this program likely runs into hundreds of millions of dollars, reflecting the complexity and criticality of the system.

How does the Cost Plus Incentive Fee (CPIF) structure typically function in contracts of this nature, and what are its potential benefits and drawbacks?

A Cost Plus Incentive Fee (CPIF) contract is a type of cost-reimbursement contract where the contractor is reimbursed for all allowable costs and also receives an incentive fee. The fee is adjusted based on whether the final cost is below, at, or above a target cost. The target cost is established, and a target fee is set. If the final cost is less than the target cost, the contractor's fee increases, and if it's more, the fee decreases, according to a pre-negotiated formula. The benefits include incentivizing the contractor to control costs and improve performance, which can lead to better value for the government. However, drawbacks can include the complexity of negotiating and administering the incentive structure, and the potential for disputes over cost allowability or performance metrics. For a complex system like the Trident missile, CPIF aims to balance the government's need for cost control with the contractor's need for flexibility in addressing unforeseen technical challenges.

What are the specific performance metrics or key performance indicators (KPIs) that Lockheed Martin is expected to meet under this contract?

The specific performance metrics or Key Performance Indicators (KPIs) for this particular contract are not detailed in the provided data. However, for sustainment contracts of strategic weapon systems, KPIs typically revolve around system availability, reliability, maintenance turnaround times, and adherence to stringent quality and safety standards. For the Trident II (D5) missile system, critical metrics would likely include missile readiness rates, the successful execution of maintenance and repair tasks within specified timelines, and the effective management of spare parts inventory. The incentive fee structure within the CPIF contract would be directly tied to the achievement of these or similar pre-defined performance targets, ensuring that Lockheed Martin is motivated to maintain the highest operational standards for this vital national security asset.

What is Lockheed Martin's track record in managing large-scale defense sustainment contracts, particularly for strategic systems?

Lockheed Martin Corporation has an extensive and long-standing track record in managing large-scale defense sustainment contracts, particularly for strategic systems. As the prime contractor for numerous critical platforms, including the F-35 fighter jet, various missile defense systems, and space-based assets, the company possesses deep expertise in lifecycle support. Specifically for the Trident missile program, Lockheed Martin has been the incumbent contractor for decades, demonstrating a consistent ability to provide the necessary technical, engineering, and logistical support. Their experience encompasses managing complex supply chains, ensuring stringent security protocols, and meeting the demanding performance requirements inherent in strategic weapon systems. While specific performance details vary across contracts, their continued role as a prime contractor for such vital programs indicates a generally positive and reliable performance history in this domain.

Are there any known risks associated with the sustainment of aging strategic missile systems like the Trident II (D5)?

Yes, there are inherent risks associated with the sustainment of aging strategic missile systems like the Trident II (D5). These risks include the potential for component obsolescence, where parts or materials may no longer be manufactured or readily available, requiring costly redesigns or the use of alternative, potentially less reliable, components. Degradation of materials over time due to environmental factors or operational stress can also lead to increased maintenance needs and a higher risk of failure. Furthermore, as systems age, the original design knowledge may become less prevalent within the workforce, necessitating extensive knowledge transfer and training. Ensuring the continued reliability and safety of such complex systems requires ongoing investment in research, development, and rigorous testing to mitigate these aging-related risks and maintain operational effectiveness.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Address: 1111 LOCKHEED WAY MARINE, SUNNYVALE, CA, 94089

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $168,224

Exercised Options: $168,224

Current Obligation: $611,889,034

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline