Lockheed Martin awarded $25.3M for Trident II missile system engineering and technical support

Contract Overview

Contract Amount: $25,267,617 ($25.3M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2010-03-31

End Date: 2014-11-29

Contract Duration: 1,704 days

Daily Burn Rate: $14.8K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: ENGINEERING AND TECHNICAL SUPPORT SERVICES FOR UK TRIDENT II MISSILE SYSTEM

Place of Performance

Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $25.3 million to LOCKHEED MARTIN CORP for work described as: ENGINEERING AND TECHNICAL SUPPORT SERVICES FOR UK TRIDENT II MISSILE SYSTEM Key points: 1. Contract awarded for critical engineering and technical support for the UK Trident II missile system. 2. The contract was not competed, raising questions about potential price discovery and value for money. 3. The duration of the contract (over 4 years) suggests a long-term need for these specialized services. 4. The contractor, Lockheed Martin, is a major defense contractor with extensive experience in missile systems. 5. The specific nature of the services (engineering and technical support) indicates a high degree of specialization. 6. The contract type (Cost Plus Fixed Fee) can lead to cost overruns if not closely managed.

Value Assessment

Rating: fair

Benchmarking the value for this specific contract is challenging due to its specialized nature and lack of competition. However, the Cost Plus Fixed Fee (CPFF) contract type inherently carries a risk of cost escalation. While a fixed fee provides some cost control, the government bears the risk of increased costs for labor and materials. Without comparable contract data or a competitive bidding process, it's difficult to definitively assess if the pricing reflects optimal value for the taxpayer.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not open to competition from other potential bidders. This approach is typically used when a specific contractor possesses unique capabilities or when urgent circumstances prevent a competitive process. The lack of competition means that the government did not benefit from the price discovery that typically occurs in a competitive bidding environment, potentially leading to higher costs.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure to drive down costs. The sole-source nature limits the government's ability to negotiate the best possible price.

Public Impact

The primary beneficiary is the United Kingdom, which relies on these services for the operational readiness of its Trident II missile system. The services delivered include essential engineering and technical support, crucial for maintaining the complex missile system. The geographic impact is primarily within the defense sector, supporting a key strategic alliance. Workforce implications include the employment of highly skilled engineers and technicians by Lockheed Martin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Cost Plus Fixed Fee contract type can incentivize cost overruns if not rigorously managed.
Lack of transparency in the procurement process due to sole-source award.
Potential for contractor lock-in due to specialized nature of services and contractor's existing role.

Positive Signals

Contractor (Lockheed Martin) has extensive experience and a proven track record in missile systems.
Services are critical for national security and a key alliance (UK Trident II program).
Definitive contract provides a clear framework for service delivery over a defined period.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on strategic missile systems. The market for such specialized engineering and technical support is highly concentrated, with a limited number of companies possessing the requisite expertise and security clearances. Comparable spending benchmarks are difficult to establish due to the unique nature of supporting a foreign allied nation's strategic deterrent, but overall defense spending on missile systems and associated support services represents a significant portion of national defense budgets globally.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Given the specialized and high-value nature of supporting a strategic missile system, it is unlikely that small businesses would be primary contractors. However, Lockheed Martin may engage small businesses as subcontractors for specific components or services, though this is not explicitly detailed in the provided data. The primary impact is on large defense contractors.

Oversight & Accountability

Oversight for this contract would likely be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance with contract terms. Accountability measures would be embedded within the CPFF structure, requiring detailed reporting and justification of costs. Transparency may be limited due to the sole-source nature and the sensitive, classified aspects of the Trident II program.

Related Government Programs

Trident II D5 Missile System
Strategic Weapons Systems
Missile Defense Systems
Foreign Military Sales (related concept)
Defense Engineering Services

Risk Flags

Sole-source procurement
Cost-plus contract type
Lack of public cost-benefit analysis
High contractor concentration in defense sector

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.3 million to LOCKHEED MARTIN CORP. ENGINEERING AND TECHNICAL SUPPORT SERVICES FOR UK TRIDENT II MISSILE SYSTEM

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 $25.3 million.

What is the period of performance?

Start: 2010-03-31. End: 2014-11-29.

What is Lockheed Martin's track record with the UK Trident II missile system program?

Lockheed Martin has a long-standing relationship with the UK's Trident II D5 missile program, serving as the prime contractor for the system. Their track record includes manufacturing, integration, and ongoing support services. The company has been instrumental in the development and sustainment of the Trident II system for both the US and UK navies. This specific contract builds upon that established relationship, focusing on essential engineering and technical support to ensure the continued operational readiness and effectiveness of the missile system. Their extensive experience in this highly specialized domain suggests a deep understanding of the system's complexities and requirements.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other contract types in terms of value for money for this type of service?

The Cost Plus Fixed Fee (CPFF) contract type is often used for research and development or complex services where the scope of work is not precisely defined at the outset, or where innovation is expected. For taxpayers, CPFF offers a degree of cost certainty through the fixed fee, but the government assumes the risk of cost overruns on the 'cost' portion. Compared to Firm-Fixed-Price (FFP) contracts, CPFF generally offers less potential for cost savings if the contractor is highly efficient, as the government bears the direct cost of labor and materials. However, in highly specialized areas like strategic missile support, where unforeseen technical challenges are common and competition is limited, CPFF can be a pragmatic choice to ensure necessary services are procured, albeit with a higher inherent risk of cost escalation than FFP.

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

The primary risks associated with a sole-source award for critical defense systems include a lack of competitive pricing, which can lead to inflated costs for taxpayers. Without competing bids, there is less incentive for the contractor to optimize efficiency or offer the lowest possible price. Furthermore, sole-source awards can create contractor dependency or 'lock-in,' making it difficult and costly to switch providers in the future, even if performance or pricing becomes unsatisfactory. There's also a reduced opportunity for innovation that might arise from a competitive environment where different approaches could be proposed. Transparency in the procurement process is also diminished, making it harder to justify the expenditure publicly.

What is the historical spending pattern for engineering and technical support services for the UK Trident II missile system?

Historical spending data for engineering and technical support services specifically for the UK Trident II missile system is not publicly available in a granular format. However, it is understood that such specialized support is a continuous requirement for maintaining a strategic deterrent. Spending would likely fluctuate based on the system's lifecycle, modernization efforts, and specific technical challenges encountered. Given the long-term nature of the Trident program and its critical importance to both the UK and US, consistent and significant investment in engineering and technical support is expected over decades. The $25.3 million awarded in this contract represents a portion of this ongoing, long-term investment.

How does the geographic location of the contractor (California) impact the delivery of services for a UK-based missile system?

While Lockheed Martin's operations are based in California, the delivery of engineering and technical support services for the UK Trident II missile system likely involves a combination of on-site support, remote collaboration, and potentially manufacturing or integration activities at various Lockheed Martin facilities. The nature of modern defense contracting often involves distributed teams and global collaboration. For a system as critical and sensitive as the Trident II, direct on-site support in the UK may also be a component, facilitated through secure communication channels and personnel deployment. The California location signifies the company's headquarters or a major operational hub, but the actual service delivery is likely multifaceted and geographically dispersed to meet the program's requirements.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

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: $26,413,779

Exercised Options: $26,413,779

Current Obligation: $25,267,617

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline