Lockheed Martin awarded $65.3M contract for UK Fleet Ballistic Missile support, raising value-for-money questions
Contract Overview
Contract Amount: $65,304,421 ($65.3M)
Contractor: Lockheed Martin Corp
Awarding Agency: Department of Defense
Start Date: 2018-04-01
End Date: 2023-12-31
Contract Duration: 2,100 days
Daily Burn Rate: $31.1K/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)* IGF::OT::IGF
Place of Performance
Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089
Plain-Language Summary
Department of Defense obligated $65.3 million to LOCKHEED MARTIN CORP for work described as: UK FLEET BALLISTIC MISSILE (FBM)* IGF::OT::IGF Key points: 1. Contract awarded on a non-competitive basis, limiting price discovery and potentially increasing costs. 2. Long contract duration (2100 days) suggests a need for sustained support, but also carries long-term risk. 3. Cost-plus fixed fee structure may incentivize cost overruns, requiring robust oversight. 4. The contract supports a critical defense system, indicating high strategic importance. 5. Limited public information on performance metrics makes it difficult to assess value. 6. The sole contractor for a specialized system limits competitive pressure.
Value Assessment
Rating: questionable
The contract's value is difficult to benchmark due to its specialized nature and non-competitive award. The cost-plus fixed fee (CPFF) pricing structure, while common for complex R&D, can lead to higher costs if not managed tightly. Without comparable contracts or detailed cost breakdowns, assessing true value-for-money is challenging. The significant award amount suggests substantial resource allocation, necessitating scrutiny of efficiency and necessity.
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. This is often justified for highly specialized or unique requirements where only one contractor possesses the necessary expertise or technology. However, the lack of competition means the government did not benefit from potential price reductions or innovative solutions that multiple bidders might have offered.
Taxpayer Impact: Sole-source awards can lead to higher prices for taxpayers as the contractor faces less pressure to offer competitive rates. It also limits opportunities for other capable firms to secure government work.
Public Impact
Provides essential engineering and technical services for the UK's Fleet Ballistic Missile program. Supports a critical component of the UK's strategic nuclear deterrent. Ensures the continued operational readiness and effectiveness of the FBM system. Maintains specialized technical expertise within Lockheed Martin for this unique capability. Indirectly supports national security interests of both the UK and its allies.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to inflated costs.
- CPFF contract type can incentivize cost overruns.
- Long contract duration increases exposure to changing requirements and economic conditions.
- Limited transparency on performance metrics hinders value assessment.
- Dependence on a single contractor for a critical system poses supply chain risk.
Positive Signals
- Supports a critical national security program.
- Lockheed Martin is a recognized leader in defense systems.
- Contract ensures continuity of essential services for a vital capability.
Sector Analysis
This contract falls within the Engineering Services sector, specifically supporting defense systems. The market for specialized ballistic missile support is highly concentrated, with a few prime contractors dominating. Spending in this niche is driven by national security requirements and long-term strategic investments. Comparable spending benchmarks are difficult to establish due to the unique nature of the FBM system and its sole-source support structure.
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 work likely requires highly specific expertise typically found in larger, established defense contractors. This limits the direct impact on the small business ecosystem for this particular award.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. The cost-plus fixed fee structure necessitates rigorous financial oversight to monitor expenditures and ensure compliance with the contract terms. Transparency is limited by the non-competitive nature and the sensitive defense context, though Inspector General reviews may be applicable for fraud or waste.
Related Government Programs
- Ballistic Missile Defense Systems
- Strategic Weapons Systems
- Naval Nuclear Propulsion Program
- Foreign Military Sales (UK)
Risk Flags
- Sole-source award
- Cost-plus contract type
- Lack of performance metrics
- Critical defense system support
Tags
defense, department-of-the-navy, lockheed-martin-corp, sole-source, definitive-contract, cost-plus-fixed-fee, engineering-services, california, uk-fbm, strategic-deterrent
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $65.3 million to LOCKHEED MARTIN CORP. UK FLEET BALLISTIC MISSILE (FBM)* IGF::OT::IGF
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 $65.3 million.
What is the period of performance?
Start: 2018-04-01. End: 2023-12-31.
What is Lockheed Martin's track record with similar sole-source defense contracts?
Lockheed Martin has a long history of securing sole-source contracts for complex defense systems, particularly in areas like missile technology and aerospace. Their track record includes numerous large-scale, long-duration contracts with various government agencies, often stemming from unique technological capabilities or established program incumbency. While this incumbency can ensure continuity and leverage existing expertise, it also raises concerns about potential complacency and reduced pressure to innovate or optimize costs compared to a competitive environment. Audits and performance reviews are crucial for ensuring value and accountability on such awards.
How does the cost-plus fixed fee (CPFF) structure compare to other contract types for this type of service?
The Cost-Plus Fixed Fee (CPFF) contract type is often used when the scope of work is well-defined but the exact costs are uncertain, as is common in research, development, and complex engineering services. In a CPFF contract, the contractor is reimbursed for allowable costs plus a fixed fee representing profit. Compared to fixed-price contracts, CPFF offers less cost certainty for the government but can be more appropriate for high-risk or R&D efforts where cost estimation is difficult. However, it places a greater burden on the government to meticulously track and audit costs to prevent overruns and ensure the fixed fee remains a reasonable profit margin. Other structures like Cost Plus Incentive Fee (CPIF) could offer better cost control by linking profit to performance targets.
What are the primary risks associated with a sole-source award for critical defense infrastructure?
The primary risks associated with a sole-source award for critical defense infrastructure include lack of price competition, which can lead to higher costs for taxpayers. There's also a reduced incentive for the contractor to innovate or improve efficiency, as they face no direct competitive threat. Furthermore, over-reliance on a single supplier can create vulnerabilities in the supply chain and increase the impact of any performance issues or disruptions. The government may also have less leverage in negotiating terms and conditions. Mitigating these risks requires robust contract management, stringent oversight, and regular performance evaluations.
Can the performance of the UK Fleet Ballistic Missile program be directly linked to this contract's funding?
Yes, the performance of the UK Fleet Ballistic Missile (FBM) program is directly linked to this contract, as it provides essential engineering services. Lockheed Martin is contracted to support the FBM system, which is a critical component of the UK's strategic nuclear deterrent. The services rendered under this contract are intended to ensure the continued operational readiness, maintenance, and potential upgrades of the missile system. Therefore, the effectiveness and reliability of the FBM program are contingent upon the successful execution of the services provided by Lockheed Martin under this agreement.
What has been the historical spending trend for UK FBM support by the Department of the Navy?
Historical spending data for UK FBM support by the Department of the Navy is not readily available in the public domain due to the sensitive and specialized nature of the program, as well as its international cooperation aspect. Contracts related to strategic defense systems are often classified or have limited public disclosure. However, given the long lifecycle of ballistic missile systems and the continuous need for maintenance, upgrades, and technical support, it can be inferred that spending in this category has likely been consistent over time, reflecting the ongoing commitment to maintaining this critical capability. The $65.3 million awarded in this instance represents a significant, but potentially periodic, investment.
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: N0003018R0023
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: $65,304,421
Exercised Options: $65,304,421
Current Obligation: $65,304,421
Subaward Activity
Number of Subawards: 28
Total Subaward Amount: $4,841,624
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2018-04-01
Current End Date: 2023-12-31
Potential End Date: 2023-12-31 00:00:00
Last Modified: 2025-10-29
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