DoD awards $884.7M contract to Lockheed Martin for Trident II missile engineering services

Contract Overview

Contract Amount: $88,469,000 ($88.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2006-01-26

End Date: 2009-09-30

Contract Duration: 1,343 days

Daily Burn Rate: $65.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200606!06A133!1700!N00030!STRATEGIC SYSTEMS PROGRAMS !N0003006C0005 !A!N! !Y! ! !20060126!20090930!075796037!075796037!834951691!N!LOCKHEED MARTIN CORPORATION !55 CHARLES LINDBERGH BLVD !UNIONDALE !NY!11553!47765!059!36!MITCHELL FIELD !NASSAU !NEW YORK !+000021640037!N!N!000000000000!J019!MAINT & REPAIR OF EQ/SHIPS-SML CRAFT-DOCKS !A2 !MISSILE AND SPACE SYSTEMS !178 !TRIDENT II MISSILE !541330!E! !3! ! ! ! ! !99990909!B! ! !A! !D!N!U!1!001!N!1A!A!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! !1700!N00030!0001! !

Place of Performance

Location: UNIONDALE, NASSAU County, NEW YORK, 11553

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $88.5 million to LOCKHEED MARTIN CORPORATION for work described as: 200606!06A133!1700!N00030!STRATEGIC SYSTEMS PROGRAMS !N0003006C0005 !A!N! !Y! ! !20060126!20090930!075796037!075796037!834951691!N!LOCKHEED MARTIN CORPORATION !55 CHARLES LINDBERGH BLVD !UNIONDALE !NY!11553!47765!059!36!MITCHELL FIELD !NASS… Key points: 1. Contract awarded for engineering services related to the Trident II missile system. 2. Significant portion of contract value allocated to maintenance and repair of equipment. 3. Contractor has extensive experience in missile and space systems. 4. Long-term contract duration suggests a critical and ongoing need for these services. 5. The contract's value places it within a substantial spending category for defense. 6. Sole-source award raises questions about potential cost efficiencies and market alternatives.

Value Assessment

Rating: fair

The contract value of $884.7 million over approximately 3.7 years for engineering services related to the Trident II missile system appears substantial. Benchmarking this against similar sole-source contracts for complex weapon systems is challenging due to unique requirements. However, the cost-plus-fixed-fee structure suggests that while the contractor's fee is fixed, the government bears the risk of cost overruns, which warrants careful monitoring of the final expenditure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when a specific contractor possesses unique capabilities or when urgency precludes a competitive process. The lack of competition means that the government did not benefit from price discovery through bidding, potentially leading to higher costs than if multiple firms had vied for the contract.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without alternative bids, it's difficult to ascertain if the negotiated price reflects the best possible value for the government.

Public Impact

The primary beneficiaries are the U.S. Navy's strategic deterrence capabilities, relying on the Trident II missile system. Services delivered include essential engineering, maintenance, and repair for a critical defense asset. The geographic impact is national, supporting strategic defense infrastructure, with specific operational bases likely in the US. Workforce implications include highly skilled engineers and technicians employed by Lockheed Martin and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Cost-plus-fixed-fee contract structure shifts cost overrun risk to the government.
Long contract duration could lead to scope creep or inefficiencies if not tightly managed.
Lack of transparency in sole-source justification requires scrutiny.
Potential for contractor lock-in due to specialized knowledge of the Trident II system.

Positive Signals

Contract awarded to a prime contractor with extensive experience in missile and space systems.
Services are critical for maintaining the operational readiness of a key strategic weapon system.
Long-term contract provides stability for essential engineering and maintenance support.
The contractor is a major defense industrial base supplier, ensuring continuity of support.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on missile and space systems. The market for such specialized engineering services is highly concentrated, with a few large defense contractors dominating. Spending in this area is driven by national security requirements and the lifecycle management of complex, high-value weapon systems. Comparable spending benchmarks are difficult to establish due to the unique nature of strategic missile programs.

Small Business Impact

This contract does not appear to have a specific small business set-aside component. Given the sole-source nature and the specialized requirements of strategic missile systems, it is unlikely that significant subcontracting opportunities for small businesses would be mandated within this specific award. However, Lockheed Martin, as a large prime contractor, may engage small businesses for various support services under its broader portfolio.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). Accountability measures would be embedded in the contract's terms, including performance metrics and reporting requirements. Transparency is limited due to the sole-source nature, but contract awards are generally reported in federal databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Trident II D5 Fleet Ballistic Missile Program
Strategic Weapons Systems
Naval Nuclear Propulsion Program
Defense Engineering Services
Missile Maintenance and Repair

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Long contract duration
Critical defense system sustainment

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $88.5 million to LOCKHEED MARTIN CORPORATION. 200606!06A133!1700!N00030!STRATEGIC SYSTEMS PROGRAMS !N0003006C0005 !A!N! !Y! ! !20060126!20090930!075796037!075796037!834951691!N!LOCKHEED MARTIN CORPORATION !55 CHARLES LINDBERGH BLVD !UNIONDALE !NY!11553!47765!059!36!MITCHELL FIELD !NASSAU !NEW YORK !+000021640037!N!N!000000000000!J019!MAINT & REPAIR OF EQ/SHIPS-SML CRAFT-DOCKS !A2 !MISSILE AND SPACE SYSTEMS !178 !TRIDENT II MISSILE !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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $88.5 million.

What is the period of performance?

Start: 2006-01-26. End: 2009-09-30.

What is Lockheed Martin's track record with the Trident II missile program and similar strategic systems?

Lockheed Martin has been the prime contractor for the Trident II (D5) missile program for decades, responsible for its development, production, and sustainment. Their extensive experience includes managing complex engineering, manufacturing, and integration efforts for this critical strategic weapon system. The company also has a broad portfolio of work in other strategic missile programs, space systems, and advanced defense technologies. This long-standing relationship and deep technical expertise with the Trident II system are likely key factors contributing to the sole-source award, as transitioning such a program to another contractor would be exceptionally complex and costly, potentially impacting national security readiness.

How does the cost-plus-fixed-fee (CPFF) pricing structure impact value for money in this contract?

The Cost-Plus-Fixed-Fee (CPFF) pricing structure means that Lockheed Martin is reimbursed for all allowable costs incurred in performing the contract, plus a predetermined fixed fee representing profit. While the fee is fixed, the government bears the risk of cost overruns if actual costs exceed estimates. This structure can incentivize contractors to perform the work efficiently to avoid cost overruns that might impact their ability to achieve their fixed fee. However, it also places a significant burden on the government to meticulously monitor and audit costs to ensure they are reasonable and allocable. For a complex, long-term program like the Trident II missile sustainment, CPFF is often used due to the inherent uncertainties in estimating costs for engineering and repair services over an extended period. The value for money is thus heavily dependent on robust government oversight and effective cost control measures.

What are the primary risks associated with a sole-source award for critical defense systems like the Trident II missile?

The primary risk associated with a sole-source award for critical defense systems like the Trident II missile is the lack of competitive pressure, which can lead to higher prices and reduced innovation. Without competing bids, the government may not achieve the best possible price for the services rendered. There's also a risk of contractor complacency or 'contractor lock-in,' where the incumbent contractor may leverage their unique knowledge and position to command higher prices or resist changes. Furthermore, sole-source awards can limit opportunities for new entrants or smaller businesses to gain experience and compete in the defense market. Ensuring robust oversight, clear performance metrics, and fair pricing negotiations becomes paramount to mitigate these risks.

What is the historical spending pattern for engineering and maintenance services related to the Trident II missile program?

Historical spending on engineering and maintenance services for the Trident II missile program has been substantial, reflecting the system's critical role in national security and its long operational lifecycle. While specific figures for this contract are $884.7 million over approximately 3.7 years, annual spending can fluctuate based on modernization efforts, sustainment needs, and depot-level maintenance cycles. Over the decades, cumulative spending on the Trident II program, including development, procurement, and sustainment, has amounted to many billions of dollars. This contract represents a significant, but likely recurring, component of the ongoing sustainment costs required to maintain the readiness and effectiveness of the U.S. strategic nuclear deterrent.

How does the geographic location of the contractor (Uniondale, NY) and its facilities impact contract performance and costs?

The contractor, Lockheed Martin Corporation, is headquartered in Bethesda, Maryland, but the contract data lists an address in Uniondale, New York (55 Charles Lindbergh Blvd, Uniondale, NY 11553). This specific location likely represents a facility involved in the contract's performance, possibly an engineering office or administrative hub. The geographic location of performance centers can influence costs related to labor rates, logistics, and travel. However, for a national strategic program like the Trident II missile, the actual engineering and maintenance work may be distributed across various specialized facilities nationwide, or even globally, depending on the specific task. The Uniondale address might not be the sole or primary performance site, and its direct impact on overall contract cost is likely managed within the broader cost structure negotiated under the CPFF terms.

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 FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 55 CHARLES LINDBERGH BLVD, UNIONDALE, NY, 11553

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline