DoD's $20.8M contract for UK's Trident missile support awarded to Lockheed Martin amid limited competition

Contract Overview

Contract Amount: $20,789,340 ($20.8M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2014-04-01

End Date: 2017-01-31

Contract Duration: 1,036 days

Daily Burn Rate: $20.1K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: UK FLEET BALLISTIC MISSILE (FBM)*

Place of Performance

Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $20.8 million to LOCKHEED MARTIN CORP for work described as: UK FLEET BALLISTIC MISSILE (FBM)* Key points: 1. Value for money is difficult to assess due to the lack of competitive bidding and limited public data on comparable services. 2. Competition dynamics are heavily skewed towards a sole-source provider, potentially limiting price negotiation and innovation. 3. Risk indicators include the long-term reliance on a single contractor for critical defense systems. 4. Performance context is tied to the UK's independent nuclear deterrent, highlighting the strategic importance of this service. 5. Sector positioning places this contract within the highly specialized defense engineering and sustainment market.

Value Assessment

Rating: questionable

Assessing the value for money is challenging without competitive benchmarks. The contract's cost-plus-fixed-fee structure, while common for complex defense work, can lead to cost overruns if not meticulously managed. Given the sole-source nature, direct comparison to similar contracts is not feasible, making it difficult to determine if the pricing reflects market rates or a premium for specialized, non-competitive services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that only one contractor, Lockheed Martin Corp., was deemed capable of performing the required services for the UK's Fleet Ballistic Missile program. This approach is often taken for highly specialized or proprietary defense systems where only the original equipment manufacturer or a designated entity can provide the necessary expertise and support.

Taxpayer Impact: Sole-source awards limit opportunities for other companies to bid, potentially leading to higher costs for taxpayers if effective price negotiation is not prioritized. It also reduces the incentive for the incumbent contractor to offer the most competitive pricing.

Public Impact

The primary beneficiary is the United Kingdom's Ministry of Defence, ensuring the continued operational readiness of its submarine-based nuclear deterrent. Services delivered include critical engineering and technical support essential for the maintenance and sustainment of the Trident II D5 missile system. The geographic impact is primarily focused on supporting the UK's strategic defense capabilities, with potential implications for international security. Workforce implications involve highly skilled engineers and technicians specializing in complex missile systems, likely within Lockheed Martin's existing defense sector workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing and innovation.
Cost-plus-fixed-fee contract type can incentivize cost escalation if not tightly managed.
Long-term reliance on a single contractor for critical defense systems poses strategic risk.
Lack of transparency in pricing due to non-competitive nature hinders value assessment.

Positive Signals

Contract awarded to a highly experienced and established defense contractor with a proven track record in missile systems.
Focus on sustaining a critical national security asset for an allied nation demonstrates strong international partnership.
Engineering services are essential for maintaining the reliability and safety of a complex weapons system.

Sector Analysis

This contract falls within the defense sector, specifically focusing on strategic weapons systems sustainment and engineering services. The market for such specialized support is highly concentrated, dominated by a few large defense contractors like Lockheed Martin. Spending in this niche is driven by national security requirements and long-term strategic planning, often involving multi-year, high-value contracts that are less susceptible to market fluctuations than commercial sectors.

Small Business Impact

This contract does not appear to involve small business set-asides, nor is there information suggesting significant subcontracting opportunities for small businesses. The specialized nature of the UK's Fleet Ballistic Missile program likely requires highly specific expertise and clearances typically held by large, established defense corporations, limiting the direct participation of the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily reside within the Department of Defense and the UK Ministry of Defence. Accountability measures would be governed by the terms of the cost-plus-fixed-fee contract, including regular reporting and audits. Transparency is limited due to the sole-source nature and the sensitive, classified aspects of strategic weapons systems.

Related Government Programs

US Navy Ballistic Missile Submarine Programs
UK Trident Strategic Systems
Defense Engineering Services
Strategic Weapons Sustainment

Risk Flags

Sole Source Award
Critical Defense System
Cost-Plus Contract Type

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.8 million to LOCKHEED MARTIN CORP. UK FLEET BALLISTIC MISSILE (FBM)*

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 $20.8 million.

What is the period of performance?

Start: 2014-04-01. End: 2017-01-31.

What is Lockheed Martin's track record with the UK's Fleet Ballistic Missile program?

Lockheed Martin has a long-standing and integral role in the UK's Fleet Ballistic Missile (FBM) program, serving as the prime contractor for the Trident II D5 missile system. The company has been responsible for the development, production, and ongoing sustainment of these missiles for decades. This specific contract, valued at approximately $20.8 million, represents a continuation of that established relationship, focusing on engineering services. Given Lockheed Martin's deep historical involvement and expertise with the FBM system, their track record is intrinsically tied to the program's operational history and success. The company's extensive experience in managing complex, high-stakes defense programs provides a basis for confidence in their ability to deliver the required services, although the lack of competition means performance is assessed against contractual obligations rather than market alternatives.

How does the $20.8 million contract value compare to similar defense engineering services contracts?

Direct comparison of the $20.8 million contract value for the UK's Fleet Ballistic Missile (FBM) engineering services is challenging due to its specialized, sole-source nature and the specific strategic context. Defense engineering services contracts can range widely in value, from millions to billions of dollars, depending on the scope, duration, and complexity. Contracts for sustainment and engineering support of major strategic weapon systems, like the Trident, are typically high-value and long-term. While $20.8 million might seem modest in the context of overall defense spending, it represents a significant investment for specialized, ongoing technical support. Benchmarking against other sole-source, highly specialized defense sustainment contracts would be more appropriate, but such data is often classified or not publicly available, making a precise value-for-money assessment difficult without further context on the specific services rendered and their criticality.

What are the primary risks associated with this sole-source contract for critical defense infrastructure?

The primary risks associated with this sole-source contract stem from the lack of competition and the critical nature of the service. Firstly, there is a risk of 'vendor lock-in,' where the UK becomes overly dependent on Lockheed Martin, potentially leading to reduced negotiating leverage on future contracts and pricing. Secondly, without competitive pressure, there's a risk that costs could be higher than if the services were procured through a competitive bidding process. Thirdly, innovation may be stifled, as the incumbent contractor may have less incentive to develop more cost-effective or advanced solutions. Finally, any disruption in Lockheed Martin's ability to provide these services, whether due to financial instability, geopolitical issues, or internal operational problems, could pose a significant risk to the UK's strategic deterrent capabilities.

How effective is the cost-plus-fixed-fee (CPFF) contract type in managing costs for specialized defense services?

The Cost-Plus-Fixed-Fee (CPFF) contract type is often employed for complex research, development, and specialized services where the scope of work is not precisely defined at the outset, or where innovation and flexibility are paramount, as is often the case in defense. In this structure, the contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. While CPFF provides flexibility and encourages contractor engagement in uncertain projects, it carries inherent risks of cost escalation if cost controls are not rigorously applied by the procuring agency. The 'fixed fee' component aims to provide the contractor with an incentive to control costs, as the fee does not increase with higher costs. However, effective oversight, detailed cost tracking, and robust negotiation by the government are crucial to ensure that the total cost remains reasonable and that the fee adequately compensates the contractor for the risks undertaken.

What is the historical spending pattern for the UK's Fleet Ballistic Missile program support?

Historical spending patterns for the UK's Fleet Ballistic Missile (FBM) program support, particularly involving Lockheed Martin, indicate a consistent and long-term commitment to maintaining this strategic capability. While specific annual figures for this particular $20.8 million engineering services contract are not detailed, the overall sustainment and support costs for the Trident system are substantial and spread over decades. These costs encompass missile maintenance, refurbishment, technical support, and associated services. Given the program's inception and the long lifecycle of strategic weapons, spending has been characterized by multi-year commitments and significant investments in specialized engineering and logistical support. The nature of such programs means that spending tends to be stable, driven by operational requirements and the need for continuous readiness, rather than fluctuating market demands.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: TECHNICAL REPRESENTATIVE SVCS. › TECHNICAL REPRESENTATIVE SERVICES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0003014R0028

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: $20,789,340

Exercised Options: $20,789,340

Current Obligation: $20,789,340

Subaward Activity

Number of Subawards: 6

Total Subaward Amount: $337,104

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline