DoD awards $763M for Trident missile production, with Lockheed Martin as sole contractor

Contract Overview

Contract Amount: $763,491,130 ($763.5M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2013-09-17

End Date: 2018-11-30

Contract Duration: 1,900 days

Daily Burn Rate: $401.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: FY14 TRIDENT PRODUCTION LONG LEAD MATERIAL

Place of Performance

Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $763.5 million to LOCKHEED MARTIN CORP for work described as: FY14 TRIDENT PRODUCTION LONG LEAD MATERIAL Key points: 1. Contract value represents significant investment in strategic defense capabilities. 2. Sole-source award indicates limited market options or specific technological requirements. 3. Long lead time material procurement suggests a multi-year production cycle. 4. Fixed-price incentive contract structure aims to balance cost control with performance. 5. This contract is a key component of the U.S. submarine-launched ballistic missile program. 6. Geographic concentration of awardee in California may have regional economic implications.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its specialized nature and sole-source award. The $763 million for long lead time material for Trident production is a substantial sum, reflecting the complexity and strategic importance of the system. Without competitive bids or publicly available cost breakdowns, a precise value-for-money assessment is difficult. However, the fixed-price incentive structure suggests an attempt to manage costs while ensuring production continuity. Comparisons to similar sole-source defense procurements would be necessary for a more robust analysis.

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 potential suppliers. This approach is typically employed when a single contractor possesses unique capabilities, proprietary technology, or is the sole source for essential components. The lack of competition means that price discovery through market forces was absent, and the government relied on negotiation and oversight to ensure a fair price. The duration and value suggest a critical need that outweighed the benefits of a competitive process.

Taxpayer Impact: A sole-source award limits opportunities for taxpayer savings that could arise from competitive bidding. The government must rely heavily on its negotiation expertise and cost analysis to prevent overpayment.

Public Impact

The U.S. Navy benefits through the continued production of critical strategic deterrence assets. This contract supports the maintenance and modernization of the U.S. nuclear triad. The award sustains high-tech manufacturing jobs within Lockheed Martin's facilities, primarily in California. It ensures the operational readiness of the U.S. submarine fleet equipped with Trident missiles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source nature limits price competition and potential taxpayer savings.
Long lead time material procurement can be susceptible to supply chain disruptions.
High value of contract necessitates rigorous oversight to ensure cost control.
Dependence on a single contractor for critical defense components poses strategic risk.

Positive Signals

Award supports a critical national security program with proven technology.
Fixed-price incentive contract aims to align contractor and government interests on cost and performance.
Contractor (Lockheed Martin) has extensive experience in missile production.
Long-term nature of the contract provides production stability for a vital defense system.

Sector Analysis

The defense sector, particularly missile manufacturing, is characterized by high barriers to entry, significant R&D investment, and long production cycles. Contracts are often awarded to a limited number of prime contractors due to the specialized nature of the technology and national security requirements. The Trident missile program represents a significant portion of spending within the strategic weapons systems category. Comparable spending benchmarks are difficult to establish due to the unique nature of strategic missile production, but this contract aligns with the substantial investments typically made in maintaining and modernizing nuclear deterrent capabilities.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Given the sole-source nature and the specialized, high-value production of strategic missile components, it is unlikely that small businesses would be primary awardees. However, Lockheed Martin, as the prime contractor, may engage small businesses as subcontractors for specific parts or services, contributing to the broader defense industrial base. The extent of small business subcontracting would require further investigation into the contractor's subcontracting plan.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, with potential involvement from the Naval Sea Systems Command (NAVSEA). Given the significant value and strategic importance, multiple layers of oversight are expected, including contract performance monitoring, financial audits, and quality assurance inspections. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse. Transparency may be limited due to the classified nature of some aspects of the Trident program.

Related Government Programs

Strategic Weapons Systems
Ballistic Missile Production
Submarine Programs
Long Lead Time Material Procurement
Fixed Price Incentive Contracts

Risk Flags

Sole-source award
High contract value
Critical defense system
Long production lead times

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $763.5 million to LOCKHEED MARTIN CORP. FY14 TRIDENT PRODUCTION LONG LEAD MATERIAL

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 $763.5 million.

What is the period of performance?

Start: 2013-09-17. End: 2018-11-30.

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

Lockheed Martin has been the prime contractor for the Trident missile system for decades, demonstrating a long-standing and established relationship with the Department of Defense. They are responsible for the production, sustainment, and modernization of the Trident II D5 missile. Their extensive experience includes managing complex supply chains, integrating advanced technologies, and meeting stringent performance requirements for this critical strategic weapon. The company's historical performance on this program has been integral to maintaining the U.S. submarine-launched ballistic missile capability, suggesting a high degree of technical proficiency and program management expertise.

How does the pricing structure of this fixed-price incentive contract compare to other defense contracts?

Fixed-price incentive (FPI) contracts are common in defense procurement where there is a degree of uncertainty in costs but a need to incentivize contractor efficiency. In an FPI contract, the final price is adjusted based on the contractor's performance against target cost and target profit goals. If the contractor achieves lower costs than targeted, both the contractor and the government share in the savings. Conversely, if costs exceed targets, the contractor's profit is reduced, and in some cases, the government may share in the overruns up to a ceiling. This structure aims to provide more cost certainty than cost-plus contracts while allowing for flexibility compared to firm fixed-price contracts, especially for complex, long-duration procurements like missile production.

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

The primary risks of a sole-source award for critical defense systems include a lack of price competition, which can lead to higher costs for taxpayers. It also creates a dependency on a single supplier, increasing vulnerability to supply chain disruptions, production issues, or the contractor's financial instability. Furthermore, without competitive pressure, there may be less incentive for the sole-source provider to innovate or improve efficiency beyond what is contractually required. The government must rely heavily on robust negotiation, stringent oversight, and detailed cost analyses to mitigate these risks and ensure fair pricing and reliable delivery.

How effective has the Trident missile program been in meeting its strategic deterrence objectives?

The Trident missile program, specifically the Trident II D5 variant, has been highly effective in meeting its strategic deterrence objectives. As the cornerstone of the U.S. sea-based nuclear deterrent, it provides a survivable and credible second-strike capability. The missile's reliability, accuracy, and payload capacity have been consistently demonstrated through numerous test launches. Its deployment on Ohio-class and soon Columbia-class submarines ensures a persistent and undetectable strategic presence. The program's longevity and continuous modernization efforts underscore its sustained effectiveness in deterring potential adversaries and maintaining global strategic stability.

What are the historical spending patterns for Trident missile production and related long lead time materials?

Historical spending on Trident missile production and associated long lead time materials has been substantial, reflecting the program's strategic importance and technological complexity. Annual outlays fluctuate based on production schedules, modernization efforts, and sustainment requirements. Over the past decade, significant investments have been made to ensure the continued readiness and upgrade of the D5 missile fleet, supporting both existing submarine platforms and the development of future systems like the Columbia-class submarines. While specific annual figures vary, the overall trend indicates consistent, high-level federal investment in maintaining this critical component of the nation's nuclear triad.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

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: $815,761,477

Exercised Options: $767,678,034

Current Obligation: $763,491,130

Subaward Activity

Number of Subawards: 181

Total Subaward Amount: $448,053,117

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline