Lockheed Martin awarded $55.6M contract for guided missile and space vehicle manufacturing by the Department of the Navy
Contract Overview
Contract Amount: $55,585,046 ($55.6M)
Contractor: Lockheed Martin Corp
Awarding Agency: Department of Defense
Start Date: 2018-02-28
End Date: 2026-02-28
Contract Duration: 2,922 days
Daily Burn Rate: $19.0K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: IGF::CT::IGF SP28 FLIGHT TEST EXPERIMENT PLANNING.
Place of Performance
Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089
Plain-Language Summary
Department of Defense obligated $55.6 million to LOCKHEED MARTIN CORP for work described as: IGF::CT::IGF SP28 FLIGHT TEST EXPERIMENT PLANNING. Key points: 1. Contract awarded via sole-source negotiation, raising questions about price discovery and potential for overpayment. 2. Long contract duration (8 years) suggests a need for ongoing support or development, but also increases long-term cost exposure. 3. The 'Cost Plus Fixed Fee' pricing structure can incentivize cost overruns if not closely monitored. 4. Focus on guided missile and space vehicle manufacturing indicates a critical defense capability. 5. The contract's value is substantial, requiring robust oversight to ensure taxpayer funds are used efficiently. 6. Lack of competition limits opportunities for innovation and cost savings from alternative providers.
Value Assessment
Rating: questionable
The contract's value of $55.6 million over eight years for guided missile and space vehicle manufacturing is significant. Without comparable sole-source contracts for similar services, it is difficult to benchmark the pricing effectively. The 'Cost Plus Fixed Fee' (CPFF) structure, while common for complex R&D, carries inherent risks of cost escalation. The fixed fee component needs to be rigorously justified against the estimated costs to ensure value for money. Further analysis of the cost breakdown and fee structure is warranted.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning the Department of the Navy did not conduct a competitive bidding process. This approach is typically used when only one responsible source can provide the required goods or services. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs than if multiple vendors had competed.
Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without a bidding process, there is less incentive for the contractor to offer the lowest possible price.
Public Impact
The primary beneficiaries are the Department of the Navy and potentially other defense agencies requiring advanced missile and space vehicle technology. The contract supports the development, testing, and manufacturing of critical defense systems. The geographic impact is primarily centered around Lockheed Martin's facilities in California, where the contract is managed. This contract supports a highly specialized workforce within the aerospace and defense industry.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pricing and potential cost savings.
- Cost Plus Fixed Fee structure can lead to cost overruns if not managed tightly.
- Long contract duration increases exposure to potential cost increases and technological obsolescence.
- Lack of transparency in the sole-source justification requires scrutiny.
- Potential for contractor to prioritize profit over efficiency due to fixed fee.
Positive Signals
- Award to a major defense contractor with established expertise in the field.
- Contract addresses a critical national security need for advanced missile and space vehicle technology.
- Long-term nature of the contract suggests a stable and predictable requirement.
- Fixed fee component provides some level of cost certainty for the government compared to pure cost-plus contracts.
Sector Analysis
The aerospace and defense sector is characterized by high R&D costs, long product development cycles, and significant government procurement. This contract falls within the guided missile and space vehicle manufacturing sub-sector, a critical area for national defense. The market is dominated by a few large, specialized contractors like Lockheed Martin. Comparable spending benchmarks are difficult to establish due to the proprietary nature of defense technologies and the often sole-sourced nature of these contracts.
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 guided missile and space vehicle manufacturing, it is unlikely that small businesses would be primary contractors. However, Lockheed Martin may engage small businesses as subcontractors, contributing to the broader small business ecosystem within the defense supply chain. The extent of subcontracting to small businesses would need further investigation.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The Inspector General for the Department of Defense would also have jurisdiction to investigate potential fraud, waste, or abuse. Transparency is limited due to the sole-source nature, but contract modifications, performance reports, and financial audits are standard oversight mechanisms. The 'Cost Plus Fixed Fee' structure necessitates close monitoring of expenditures against the estimated costs.
Related Government Programs
- Department of Defense Research, Development, Test, and Evaluation (RDT&E)
- Missile Defense Agency Programs
- Naval Air Systems Command Contracts
- Space Force Procurement
Risk Flags
- Sole-source award
- Cost Plus Fixed Fee pricing
- Long contract duration (8 years)
Tags
defense, department-of-defense, department-of-the-navy, guided-missile-manufacturing, space-vehicle-manufacturing, lockheed-martin-corp, definitive-contract, cost-plus-fixed-fee, sole-source, california, research-and-development, national-security
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $55.6 million to LOCKHEED MARTIN CORP. IGF::CT::IGF SP28 FLIGHT TEST EXPERIMENT PLANNING.
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 $55.6 million.
What is the period of performance?
Start: 2018-02-28. End: 2026-02-28.
What is the specific justification for awarding this contract on a sole-source basis to Lockheed Martin?
The provided data indicates the contract was 'NOT COMPETED' and is 'sole-source'. Typically, sole-source justifications are based on factors such as unique capabilities, proprietary technology, urgent need, or lack of alternative sources. For a contract related to guided missile and space vehicle manufacturing, it's plausible that Lockheed Martin possesses unique intellectual property, specialized manufacturing facilities, or critical expertise essential for the program's success that cannot be replicated by other firms within the required timeframe. A formal Justification for Other than Full and Open Competition (JOFOC) would contain the detailed rationale, which is not available in the provided snippet but would be a key area for further investigation.
How does the 'Cost Plus Fixed Fee' (CPFF) structure compare to other contract types for similar defense manufacturing?
The CPFF structure is common for complex development and production efforts where costs are difficult to estimate precisely upfront. In a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. This differs from 'Fixed Price' contracts, where the contractor bears more risk for cost overruns, and 'Cost Plus Incentive Fee' (CPIF) contracts, which offer incentives for meeting cost, schedule, or performance targets. While CPFF provides flexibility for evolving requirements, it places a significant burden on the government to meticulously track costs and ensure the fixed fee is reasonable relative to the effort. Compared to fixed-price contracts, CPFF generally offers less cost certainty for the government. Compared to CPIF, it lacks explicit financial incentives for cost control beyond the initial fee negotiation.
What are the potential risks associated with the 8-year duration of this contract?
An eight-year contract duration for guided missile and space vehicle manufacturing presents several risks. Firstly, technological obsolescence is a significant concern; advancements in materials, propulsion, or guidance systems could render the contracted technology outdated before the contract's end. Secondly, cost escalation risk increases over such a long period due to inflation, potential changes in labor costs, and unforeseen material price fluctuations. Thirdly, maintaining program oversight and contractor performance management over eight years requires sustained effort and resources. Finally, the government's long-term commitment might limit its flexibility to adapt to changing strategic needs or budget constraints. Regular reviews and potential break clauses could mitigate some of these risks.
What is the historical spending pattern for guided missile and space vehicle manufacturing within the Department of the Navy?
Historical spending on guided missile and space vehicle manufacturing by the Department of the Navy is substantial and has been a consistent priority. While specific figures for this exact sub-category fluctuate annually based on modernization programs, threat assessments, and strategic shifts, the Navy consistently allocates billions of dollars towards developing, procuring, and maintaining its missile and space-based capabilities. This includes programs for fleet defense missiles, strategic deterrent systems, and space-based intelligence, surveillance, and reconnaissance assets. Spending trends are influenced by geopolitical events, technological advancements, and budget allocations within the broader Department of Defense. This $55.6 million contract, while significant, represents a portion of the Navy's overall investment in these critical areas.
How does the contract value of $55.6 million compare to other major defense contracts for similar capabilities?
The contract value of $55.6 million for guided missile and space vehicle manufacturing is a moderate-sized award within the context of major defense procurements. Large-scale programs for developing new missile systems or significant upgrades can easily run into hundreds of millions or even billions of dollars. For instance, the development and procurement of a new class of strategic missile or a major upgrade to existing platforms often involve multi-year contracts exceeding $1 billion. Smaller, more focused contracts for specific components, testing services, or sustainment activities might fall within the tens of millions. Therefore, this $55.6 million contract appears to be for a specific, defined scope of work, possibly related to research, development, testing, or a limited production run, rather than a full-scale acquisition program.
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
Solicitation ID: N0003018R0014
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 1111 LOCKHEED MARTIN WAY, 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: $55,585,047
Exercised Options: $55,585,047
Current Obligation: $55,585,046
Subaward Activity
Number of Subawards: 49
Total Subaward Amount: $5,505,021
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2018-02-28
Current End Date: 2026-02-28
Potential End Date: 2026-02-28 00:00:00
Last Modified: 2025-11-24
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