DoD's $750M TRIDENT contract with Lockheed Martin for missile manufacturing shows questionable value and limited competition

Contract Overview

Contract Amount: $749,632,092 ($749.6M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2008-03-26

End Date: 2014-09-30

Contract Duration: 2,379 days

Daily Burn Rate: $315.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: TRIDENT

Place of Performance

Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $749.6 million to LOCKHEED MARTIN CORP for work described as: TRIDENT Key points: 1. The contract's cost-plus-incentive-fee structure may incentivize higher spending without guaranteed performance improvements. 2. Limited competition raises concerns about price discovery and potential overpayment. 3. The long duration and significant value indicate a substantial commitment of taxpayer funds. 4. The contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a critical defense area. 5. Lack of small business involvement suggests limited opportunities for smaller enterprises in this high-value contract.

Value Assessment

Rating: questionable

The $749.6 million total award for the TRIDENT contract, a cost-plus-incentive-fee type, raises concerns about value for money. Without detailed performance metrics and cost breakdowns, it's difficult to benchmark against similar contracts. The incentive fee structure, while intended to motivate performance, can also lead to cost overruns if not tightly managed. The absence of a competitive bidding process further complicates a direct assessment of pricing fairness.

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 approach is typically justified when only one contractor possesses the necessary unique capabilities or technology. However, it significantly limits the government's ability to explore alternative solutions or negotiate the best possible price through a competitive process.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the price reductions typically achieved through competitive bidding, potentially leading to higher costs for essential defense equipment.

Public Impact

The primary beneficiary is the Department of Defense, which receives critical missile systems. The contract supports the production and maintenance of the TRIDENT missile system, a key component of national security. The contract is geographically focused in California, impacting the local economy and workforce. It sustains specialized manufacturing jobs within the aerospace and defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs.
Cost-plus-incentive-fee contracts can be prone to cost overruns if not rigorously overseen.
Long contract duration increases exposure to potential risks and changing requirements.
Sole-source award limits transparency in pricing and vendor selection.

Positive Signals

Lockheed Martin is a major defense contractor with extensive experience in missile systems.
The TRIDENT system is a critical strategic asset for national defense.
The contract aims to ensure the continued availability of vital defense capabilities.

Sector Analysis

This contract falls within the Guided Missile and Space Vehicle Manufacturing industry, a highly specialized and critical segment of the defense sector. This market is characterized by high barriers to entry due to technological complexity, stringent regulatory requirements, and significant capital investment. Spending in this area is driven by national security needs and geopolitical factors. Comparable spending benchmarks are difficult to establish due to the unique nature of strategic weapon systems.

Small Business Impact

The contract indicates no small business set-aside (ss: false) and no indication of small business participation (sb: false). This suggests that the prime contract was not specifically targeted towards small businesses, and there's no explicit information on subcontracting plans. Consequently, opportunities for small businesses within this specific contract appear limited, potentially concentrating the economic benefits with a large prime contractor.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance. Accountability measures are inherent in the cost-plus-incentive-fee structure, which ties a portion of the contractor's profit to meeting specific performance targets. Transparency is limited due to the sole-source nature of the award, but contract modifications and performance reports would be subject to internal DoD review and potentially Inspector General oversight.

Related Government Programs

Strategic Missile Programs
Ballistic Missile Defense
Naval Weapons Systems
Aerospace Manufacturing Contracts

Risk Flags

Sole-source award
Cost-plus-incentive-fee structure
Lack of transparency in pricing
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $749.6 million to LOCKHEED MARTIN CORP. TRIDENT

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $749.6 million.

What is the period of performance?

Start: 2008-03-26. End: 2014-09-30.

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

Lockheed Martin, as one of the largest defense contractors globally, has a long history of securing significant sole-source contracts, particularly for complex and critical systems like missiles and aerospace platforms. Their track record often involves extensive experience and proprietary technology that justifies non-competitive awards. However, such awards also attract scrutiny regarding pricing and the potential for cost efficiencies that might be missed without competition. Analyzing past sole-source awards to Lockheed Martin for comparable systems, such as other missile programs or advanced defense platforms, would reveal patterns in contract value, duration, and profit margins, providing a basis for assessing the current TRIDENT contract's reasonableness.

How does the cost-plus-incentive-fee (CPIF) structure compare to other contract types for missile manufacturing?

The Cost-Plus-Incentive-Fee (CPIF) contract type used for the TRIDENT program is designed to share risks and rewards between the government and the contractor. In a CPIF contract, the final cost is determined by actual costs incurred plus a fee that is adjusted based on performance against target costs and other objectives. This contrasts with fixed-price contracts, where the contractor bears more risk for cost overruns but also has a stronger incentive for cost control. CPIF is often employed when the scope of work is not fully defined or involves significant technical uncertainties, as is common in advanced weapons development and manufacturing. While it can incentivize contractor efficiency towards specific goals, it requires robust government oversight to prevent potential cost escalation and ensure that incentives align with overall program objectives and taxpayer value.

What are the primary risks associated with a sole-source award for a critical defense system like TRIDENT?

The primary risks associated with a sole-source award for a critical defense system like TRIDENT include a lack of competitive pressure, which can lead to higher prices and reduced innovation. Without competing bids, the government may not achieve the most cost-effective solution. There's also a risk of vendor lock-in, where the government becomes overly reliant on a single supplier, potentially limiting future flexibility and negotiation power. Furthermore, the absence of a competitive process can reduce transparency in pricing and contractor selection, potentially raising concerns about fairness and value for taxpayer money. Effective risk mitigation requires stringent negotiation, robust performance monitoring, and clear justification for the sole-source determination.

What is the historical spending trend for the TRIDENT missile system or similar programs within the DoD?

Historical spending on the TRIDENT missile system and related programs within the Department of Defense (DoD) has been substantial, reflecting the strategic importance and complexity of these assets. The TRIDENT program itself, encompassing submarine-launched ballistic missiles, has seen continuous investment over decades for development, production, and sustainment. Spending trends are influenced by geopolitical factors, modernization requirements, and the lifecycle of the weapon systems. Analyzing past appropriations and contract awards for TRIDENT and comparable strategic weapon systems reveals a pattern of significant, long-term financial commitment. This includes research and development, procurement of new missiles, upgrades to existing systems, and ongoing maintenance and operational support, often involving multi-billion dollar figures spread across numerous contracts over many years.

How does the geographic concentration in California impact the broader defense industrial base?

The geographic concentration of significant defense contracts, such as the TRIDENT program in California, has a notable impact on the broader defense industrial base. California hosts a large portion of the US aerospace and defense industry, benefiting from substantial employment, specialized labor pools, and a network of supporting suppliers and research institutions. This concentration can foster innovation and efficiency within the region due to established infrastructure and expertise. However, it also presents risks, such as over-reliance on a single geographic area for critical capabilities, making the industrial base vulnerable to regional economic downturns or natural disasters. It also influences the distribution of defense spending and its economic ripple effects across the nation.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: QUALITY CONTROL, TEST, INSPECTION › OTHER QUALITY, TEST, INSPECT SVCS

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 MARTIN WAY BLDG 157, SUNNYVALE, CA, 94089

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $764,453,381

Exercised Options: $764,453,381

Current Obligation: $749,632,092

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline