DoD awards $165.6M to Lockheed Martin for Trident II SWS navigation, raising questions on competition and value

Contract Overview

Contract Amount: $165,574,360 ($165.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2017-12-20

End Date: 2020-10-30

Contract Duration: 1,045 days

Daily Burn Rate: $158.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: TRIDENT II STRATEGIC WEAPON SYSTEM (SWS) NAVIGATION SUBSYSTEM SHIPBOARD INTEGRATION INCREMENT 8 AND DREADNOUGHT NAVIGATION SUBSYSTEM DEVELOPMENT

Place of Performance

Location: UNIONDALE, NASSAU County, NEW YORK, 11553

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $165.6 million to LOCKHEED MARTIN CORPORATION for work described as: TRIDENT II STRATEGIC WEAPON SYSTEM (SWS) NAVIGATION SUBSYSTEM SHIPBOARD INTEGRATION INCREMENT 8 AND DREADNOUGHT NAVIGATION SUBSYSTEM DEVELOPMENT Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant investment in a critical strategic weapon system, indicating high national security importance. 3. Performance-based contract type (Cost Plus Incentive Fee) aims to align contractor incentives with government goals. 4. Long contract duration of 1045 days suggests a complex, multi-year effort. 5. No small business set-aside, raising concerns about broader economic participation. 6. Geographic concentration in New York for contract performance.

Value Assessment

Rating: questionable

The contract's value of $165.6 million for engineering services related to the Trident II SWS navigation subsystem is substantial. However, without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The Cost Plus Incentive Fee (CPIF) structure suggests an attempt to control costs, but the lack of competition inherently introduces risk of overpayment. Further analysis of the specific deliverables and the contractor's historical performance on similar programs would be needed for a more definitive value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Lockheed Martin Corporation, was solicited. This approach is typically justified when a unique capability or proprietary technology is required, or in cases of urgent need. The absence of competition means there was no opportunity for other qualified firms to bid, which can limit price negotiation leverage for the government and potentially lead to higher costs than if multiple bids were received.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that can arise from a competitive bidding environment. The government must rely on negotiation and oversight to ensure a fair price, which is inherently more challenging without market-driven price discovery.

Public Impact

The primary beneficiaries are the U.S. Navy and national security, through the continued development and integration of the Trident II Strategic Weapon System. Services delivered include engineering support for the navigation subsystem's shipboard integration and development for the DREADNOUGHT submarine. Geographic impact is concentrated in New York, where Lockheed Martin's operations are based. Workforce implications include specialized engineering and technical roles within Lockheed Martin and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source award limits transparency in pricing and value determination.
Reliance on a single contractor for a critical defense system poses potential supply chain risks.

Positive Signals

Award to a prime contractor with extensive experience in strategic weapon systems.
Use of CPIF contract type incentivizes contractor performance and cost control.
Focus on a critical national security program ensures continued investment in defense capabilities.

Sector Analysis

This contract falls within the Defense Engineering Services sector, a critical component of the broader aerospace and defense industry. This sector is characterized by high barriers to entry, significant R&D investment, and long-term government contracts. Spending in this area is driven by the need for advanced technological solutions to maintain military superiority. Comparable spending benchmarks are difficult to establish due to the unique nature of strategic weapon systems, but overall defense engineering services represent a substantial portion of the DoD's budget.

Small Business Impact

The contract data indicates that this was not competed with a small business set-aside (ss: false, sb: false). This suggests that small businesses were not specifically targeted for this particular award. While Lockheed Martin may utilize small business subcontractors, the primary contract award does not directly contribute to the small business ecosystem through a set-aside mechanism. Further investigation into subcontracting plans would be necessary to assess the impact on small businesses.

Oversight & Accountability

Oversight for this contract would likely be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with contract terms and performance standards. The Cost Plus Incentive Fee (CPIF) structure includes mechanisms for performance incentives, which serve as a form of accountability. Transparency is limited due to the sole-source nature of the award, but contract modifications and payment reports would be subject to standard government auditing and reporting requirements.

Related Government Programs

Trident II D5 Strategic Weapon System
Submarine Fleet Modernization Programs
Ballistic Missile Defense Systems
Naval Nuclear Propulsion Program
Defense Engineering Services Contracts

Risk Flags

Sole-source award lacks competitive pricing.
High contract value without clear benchmarks.
Critical defense system reliance on a single contractor.
Potential for cost overruns due to CPIF structure without strong oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $165.6 million to LOCKHEED MARTIN CORPORATION. TRIDENT II STRATEGIC WEAPON SYSTEM (SWS) NAVIGATION SUBSYSTEM SHIPBOARD INTEGRATION INCREMENT 8 AND DREADNOUGHT NAVIGATION SUBSYSTEM DEVELOPMENT

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $165.6 million.

What is the period of performance?

Start: 2017-12-20. End: 2020-10-30.

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

Lockheed Martin has been the prime contractor for the Trident II (D5) Strategic Weapon System (SWS) for decades, responsible for its development, production, and sustainment. Their long-standing involvement indicates a deep understanding of the system's complexities and a proven ability to deliver on critical defense requirements. The company has consistently been awarded follow-on contracts and sustainment efforts, demonstrating a strong performance history and a trusted relationship with the U.S. Navy for this vital program. This specific contract, Increment 8, builds upon previous efforts to integrate and develop the navigation subsystem, a crucial component for the system's accuracy and reliability.

How does the $165.6 million value compare to previous TRIDENT II SWS navigation subsystem contracts?

Direct comparison of the $165.6 million value to previous TRIDENT II SWS navigation subsystem contracts is challenging without access to historical contract databases detailing specific increments and phases. However, the Trident II program is a long-term, high-cost endeavor involving continuous upgrades and sustainment. Given the strategic importance and technological sophistication of the navigation subsystem, a contract value in the hundreds of millions over its lifecycle is not unexpected. The 'Increment 8' designation suggests this is part of a series of phased efforts, and its value should be assessed in the context of the overall program's multi-billion dollar lifecycle cost rather than in isolation.

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

The primary risks associated with a sole-source award for the TRIDENT II SWS navigation subsystem are related to cost and innovation. Without competition, there is a reduced incentive for the contractor to offer the lowest possible price, potentially leading to higher costs for taxpayers. Furthermore, the lack of alternative providers can stifle innovation, as there is less pressure to develop more efficient or advanced solutions. Dependence on a single supplier also creates supply chain vulnerabilities; any disruption to Lockheed Martin's operations could significantly impact the program's timeline and the Navy's strategic capabilities.

How effective is the Cost Plus Incentive Fee (CPIF) contract type in managing costs for complex defense systems like the TRIDENT II SWS?

The Cost Plus Incentive Fee (CPIF) contract type is designed to manage costs for complex projects where the final cost is uncertain, by incentivizing the contractor to control expenses. Under a CPIF contract, the final profit is adjusted based on whether the final cost is below or above a target cost, with a pre-defined sharing arrangement. This structure encourages the contractor to be efficient and cost-conscious. For the TRIDENT II SWS navigation subsystem, CPIF aims to balance the government's need for a critical capability with the contractor's need for fair compensation, aligning their interests towards achieving cost targets while maintaining performance standards.

What is the historical spending trend for the TRIDENT II SWS navigation subsystem over the past decade?

Historical spending trends for the TRIDENT II SWS navigation subsystem over the past decade are not explicitly detailed in the provided data. However, the Trident II program itself is a cornerstone of U.S. strategic deterrence and has seen consistent, significant investment over many years for sustainment, modernization, and upgrades. Given the long lifecycle of such systems, spending typically involves substantial annual outlays for research, development, testing, and evaluation (RDT&E), as well as procurement and sustainment. The 'Increment 8' contract, awarded in late 2017, represents a portion of this ongoing investment, likely reflecting continued efforts in integration and development.

Are there any specific performance metrics or Key Performance Indicators (KPIs) associated with this contract?

The provided data indicates the contract type is Cost Plus Incentive Fee (CPIF), which inherently includes performance incentives tied to cost targets. While specific Key Performance Indicators (KPIs) are not detailed in this summary, CPIF contracts typically establish target costs, target profits, and a ceiling cost. The incentive fee is earned based on the contractor's ability to achieve or exceed these targets. For a navigation subsystem integration and development contract, potential KPIs could relate to system accuracy, reliability, integration timelines, technical performance specifications, and successful testing outcomes. The DCMA would oversee adherence to these metrics.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0003018R0045

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Address: 55 CHARLES LINDBERGH BLVD, UNIONDALE, NY, 11553

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $166,388,424

Exercised Options: $166,388,424

Current Obligation: $165,574,360

Actual Outlays: $2,770,205

Subaward Activity

Number of Subawards: 77

Total Subaward Amount: $849,457,692

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline