Lockheed Martin receives $55.1M for missile compartment support, awarded via sole-source contract
Contract Overview
Contract Amount: $55,124,485 ($55.1M)
Contractor: Lockheed Martin Corp
Awarding Agency: Department of Defense
Start Date: 2010-07-08
End Date: 2015-07-31
Contract Duration: 1,849 days
Daily Burn Rate: $29.8K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: AWARD AND INCREMENTAL FUNDING FOR SYSTEMS ENGINEERING TECHNICAL AND PROGRAM MANAGEMENT SUPPORT FOR COMMON MISSILE COMPARTMENT/TRIDENT II INTEGRATION PROGRAM.
Place of Performance
Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089
Plain-Language Summary
Department of Defense obligated $55.1 million to LOCKHEED MARTIN CORP for work described as: AWARD AND INCREMENTAL FUNDING FOR SYSTEMS ENGINEERING TECHNICAL AND PROGRAM MANAGEMENT SUPPORT FOR COMMON MISSILE COMPARTMENT/TRIDENT II INTEGRATION PROGRAM. Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Significant duration of over 1800 days suggests a long-term need for these services. 3. Cost-plus-fixed-fee structure may incentivize cost overruns. 4. Focus on missile compartment and Trident II integration points to critical defense capabilities. 5. Contractor is a major defense industry player with extensive experience. 6. Geographic concentration in California for this significant award.
Value Assessment
Rating: fair
Benchmarking the value of this specific contract is challenging without detailed cost breakdowns and comparisons to similar sole-source engagements. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex R&D, can lead to higher final costs compared to fixed-price contracts if not managed tightly. The total award amount of $55.1 million over approximately five years suggests a substantial investment in specialized engineering and program management.
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 among multiple bidders. This approach is typically used when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. The lack of competition means that price discovery through market forces was not a primary factor in this award.
Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers as the government does not benefit from competitive bidding to drive down prices.
Public Impact
The primary beneficiaries are the U.S. Navy's strategic weapons programs, specifically the Trident II missile system. Services delivered include critical systems engineering, technical, and program management support. Geographic impact is concentrated in California, where Lockheed Martin's operations are based. Workforce implications include employment for specialized engineers and program managers within Lockheed Martin.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pressure on pricing.
- Cost-plus-fixed-fee contract type can lead to cost escalation if not rigorously managed.
- Lack of transparency in detailed cost elements due to sole-source nature.
Positive Signals
- Contractor is a highly experienced and established provider of defense systems.
- Focus on critical strategic missile systems indicates national security importance.
- Long contract duration suggests a stable, ongoing requirement for specialized expertise.
Sector Analysis
This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a highly specialized and critical area of the defense industrial base. The market is dominated by a few large, experienced contractors capable of handling complex, high-value programs. Spending in this sector is driven by national security requirements and technological advancements in missile systems. Comparable spending benchmarks would involve other major defense contracts for strategic weapon system development and sustainment.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Given the specialized nature of systems engineering and program management for strategic missile systems, it is unlikely that significant subcontracting opportunities for small businesses would be mandated or readily available within the core scope of this particular award. The prime contractor, Lockheed Martin, is a large business.
Oversight & Accountability
Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. Accountability measures would be embedded within the contract's terms and conditions, including performance metrics and reporting requirements. Transparency may be limited due to the sole-source nature and the sensitive defense context, but contract awards and basic funding information are generally publicly available.
Related Government Programs
- Trident II Missile Program
- Strategic Weapons Systems
- Defense Systems Engineering Support
- Naval Weapons Systems
Risk Flags
- Sole-source award
- Cost-plus-fixed-fee pricing structure
- Potential for cost overruns
- Limited price competition
Tags
defense, department-of-defense, department-of-the-navy, lockheed-martin-corp, guided-missile-and-space-vehicle-manufacturing, definitive-contract, sole-source, cost-plus-fixed-fee, systems-engineering, program-management, missile-compartment, trident-ii
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $55.1 million to LOCKHEED MARTIN CORP. AWARD AND INCREMENTAL FUNDING FOR SYSTEMS ENGINEERING TECHNICAL AND PROGRAM MANAGEMENT SUPPORT FOR COMMON MISSILE COMPARTMENT/TRIDENT II INTEGRATION PROGRAM.
Who is the contractor on this award?
The obligated recipient is LOCKHEED MARTIN CORP.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Navy).
What is the total obligated amount?
The obligated amount is $55.1 million.
What is the period of performance?
Start: 2010-07-08. End: 2015-07-31.
What is Lockheed Martin's track record with the Department of Defense on similar sole-source contracts?
Lockheed Martin Corporation is a major defense contractor with a long history of sole-source and competitively awarded contracts across various defense programs for the Department of Defense. Their track record includes extensive work on strategic missile systems, aerospace, and defense electronics. While specific performance metrics for individual contracts are often not public, their continued selection for critical programs suggests a perceived capability and reliability by the DoD. However, sole-source awards, by definition, bypass the competitive process, making direct comparisons of value and performance against alternatives difficult without internal DoD assessments.
How does the $55.1 million award compare to other systems engineering support contracts?
Comparing this $55.1 million award for systems engineering and program management support to other contracts requires careful consideration of scope, duration, and complexity. For large-scale strategic systems like the Trident II missile, this figure over a roughly five-year period appears within a reasonable range for specialized, high-level technical support. However, without detailed breakdowns of labor categories, overhead, and profit margins, a precise value-for-money assessment is difficult. Contracts for less complex systems or shorter durations would naturally be lower, while major platform development contracts could be orders of magnitude higher.
What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract for missile systems?
The primary risks associated with a sole-source, cost-plus-fixed-fee (CPFF) contract for missile systems include potential cost overruns and reduced incentive for efficiency. Since the contractor is reimbursed for allowable costs plus a fixed fee, there is less pressure to control expenses compared to fixed-price contracts. The sole-source nature eliminates competitive benchmarking, potentially allowing for higher pricing. For taxpayers, the risk is paying more than necessary for the services rendered. Effective oversight by the government is crucial to mitigate these risks by scrutinizing costs and ensuring performance standards are met.
How effective is the Department of the Navy in overseeing sole-source contracts of this magnitude?
The Department of the Navy employs various oversight mechanisms for sole-source contracts, including contract specialists, program managers, and Defense Contract Audit Agency (DCAA) reviews. For contracts of this magnitude ($55.1 million), rigorous oversight is expected, focusing on cost reasonableness, performance milestones, and adherence to contract terms. The effectiveness hinges on the resources allocated to oversight, the expertise of the personnel involved, and the transparency provided by the contractor. While CPFF contracts require diligent monitoring to prevent cost creep, the Navy has established processes to manage such agreements, though challenges in ensuring optimal value remain inherent.
What are the historical spending patterns for systems engineering and program management support for the Trident II program?
Historical spending patterns for systems engineering and program management support for the Trident II program would likely show consistent, significant investment over the system's lifecycle. As a critical component of the U.S. strategic deterrent, the Trident II (D5) missile has undergone numerous upgrades and sustainment efforts since its introduction. Funding for associated engineering and management support would fluctuate based on program phases (development, sustainment, modernization) but would generally represent a substantial portion of the overall program budget. This $55.1 million award is one component within a much larger, long-term investment in the Trident II system.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing
Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services
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
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: $65,967,688
Exercised Options: $65,967,688
Current Obligation: $55,124,485
Subaward Activity
Number of Subawards: 3
Total Subaward Amount: $266,665
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2010-07-08
Current End Date: 2015-07-31
Potential End Date: 2015-07-31 00:00:00
Last Modified: 2017-07-11
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