DoD awards $1.19B to Lockheed Martin for Trident missile production and support, a sole-source contract

Contract Overview

Contract Amount: $1,187,691,672 ($1.2B)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2021-08-10

End Date: 2026-09-30

Contract Duration: 1,877 days

Daily Burn Rate: $632.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: FY22 TRIDENT PRODUCTION AND DEPLOYED SYSTEMS SUPPORT

Place of Performance

Location: TITUSVILLE, BREVARD County, FLORIDA, 32780

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $1.19 billion to LOCKHEED MARTIN CORPORATION for work described as: FY22 TRIDENT PRODUCTION AND DEPLOYED SYSTEMS SUPPORT Key points: 1. Contract awarded to a single, established prime contractor with a history of missile system production. 2. Significant portion of contract value allocated to production, with a substantial remainder for deployed systems support. 3. Fixed-price incentive contract type suggests shared risk between government and contractor for cost overruns. 4. Contract duration extends over five years, indicating a long-term need for these strategic assets. 5. No small business set-aside noted, suggesting prime contractor will likely manage all aspects. 6. Geographic focus on Florida for contract performance.

Value Assessment

Rating: questionable

The contract value of $1.19 billion for Trident missile production and support is substantial. Without specific benchmarks for comparable missile system production and sustainment contracts, assessing value for money is difficult. The fixed-price incentive (FPI) structure implies that cost savings or overruns are shared, which can incentivize efficiency but also requires careful monitoring of performance against targets. The lack of competition inherently limits the government's ability to negotiate the best possible price.

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. This typically occurs when a specific contractor possesses unique capabilities, intellectual property, or is the sole provider of a critical component or system. For strategic assets like the Trident missile system, continuity of production and support from the original manufacturer is often prioritized, leading to non-competitive awards.

Taxpayer Impact: Sole-source awards limit opportunities for competitive bidding, potentially resulting in higher costs for taxpayers compared to a fully competed contract. The government must rely on negotiation and oversight to ensure fair pricing.

Public Impact

The U.S. Navy benefits from the continued production and sustainment of its strategic ballistic missile submarines. Services delivered include the manufacturing of Trident II D5 missiles and ongoing support for deployed systems. Geographic impact is primarily in Florida, where contract performance is scheduled. Workforce implications include employment at Lockheed Martin and its subcontractors involved in missile production and maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential cost savings for taxpayers.
Fixed-price incentive contract requires diligent oversight to ensure contractor performance meets targets and cost controls.
Long contract duration necessitates sustained government monitoring of program execution and evolving requirements.

Positive Signals

Award to a prime contractor with established expertise in strategic missile systems ensures continuity and technical proficiency.
Contract addresses critical national defense needs for strategic deterrence.
Fixed-price incentive contract type aligns contractor and government interests in achieving performance objectives.

Sector Analysis

The defense industrial base, specifically the guided missile and space vehicle manufacturing sector, is characterized by high barriers to entry, significant R&D investment, and a limited number of prime contractors. Contracts for strategic weapon systems like the Trident missile are typically awarded to large, established defense companies due to the complexity, security requirements, and specialized knowledge involved. Spending in this sector is driven by national security priorities and long-term modernization programs.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the nature of strategic missile production and support, it is likely that Lockheed Martin will perform the majority of the work in-house or subcontract to other large defense contractors. There may be opportunities for small businesses to participate as subcontractors, but this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract will likely be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with contract terms, quality standards, and delivery schedules. The fixed-price incentive nature of the contract requires robust financial oversight to track costs against targets and ensure fair pricing. Transparency is generally limited for classified or sensitive defense programs, but reporting requirements are typically defined within the contract.

Related Government Programs

Strategic Weapons Systems
Ballistic Missile Defense
Naval Weapons Systems
Aerospace Manufacturing
Defense Production Act Title III

Risk Flags

Sole-source award
Lack of competition
Fixed-price incentive requires close monitoring

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.19 billion to LOCKHEED MARTIN CORPORATION. FY22 TRIDENT PRODUCTION AND DEPLOYED SYSTEMS SUPPORT

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 $1.19 billion.

What is the period of performance?

Start: 2021-08-10. End: 2026-09-30.

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

Lockheed Martin has been the prime contractor for the Trident missile program for decades, responsible for its production, integration, and sustainment. They have a long-standing relationship with the U.S. Navy for this critical strategic weapon system. Their experience includes manufacturing the Trident II D5 missile, which has been deployed on U.S. Navy submarines since 1999. The company's extensive history with the program suggests a deep understanding of the system's complexities, performance requirements, and the stringent quality and security protocols necessary for its production and maintenance. This established track record is a key factor in the government's continued reliance on Lockheed Martin for these services.

How does the fixed-price incentive (FPI) contract type compare to other pricing arrangements for defense systems?

A Fixed-Price Incentive (FPI) contract is a type of cost-reimbursement contract where the contractor and the government share the costs and any savings or overruns based on a pre-negotiated formula. This differs from Firm-Fixed-Price (FFP) contracts, where the contractor bears all cost risk, and Cost-Plus-Fixed-Fee (CPFF) contracts, where the government bears all cost risk and pays a fixed fee. FPI contracts aim to balance risk, incentivizing the contractor to control costs while providing some protection against unforeseen expenses. For complex, long-term programs like missile production, FPI can encourage efficiency and collaboration between the government and contractor to meet both cost and performance targets.

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

The primary risk associated with a sole-source award for a major defense system is the lack of price competition. Without multiple bidders vying for the contract, the government may not achieve the lowest possible price, potentially leading to higher costs for taxpayers. Additionally, sole-source awards can reduce the incentive for the incumbent contractor to innovate or improve efficiency, as there is no direct competitive pressure. There's also a risk of vendor lock-in, where the government becomes heavily reliant on a single supplier, making it difficult and costly to switch providers in the future. Effective negotiation and robust oversight are crucial to mitigate these risks.

What is the significance of the 'Guided Missile and Space Vehicle Manufacturing' NAICS code?

The North American Industry Classification System (NAICS) code 336414, 'Guided Missile and Space Vehicle Manufacturing,' signifies the specific industry sector this contract falls under. This sector is highly specialized, involving the design, development, and manufacturing of missiles, rockets, and spacecraft. Companies operating within this code typically possess advanced technological capabilities, extensive research and development resources, and adhere to stringent government regulations and security standards. Contracts in this sector are often large, complex, and critical to national defense and space exploration initiatives, usually involving a limited number of highly capable prime contractors.

How does the contract duration of over 1800 days impact program management and cost?

A contract duration of 1877 days (approximately 5.1 years) for the Trident production and support program indicates a long-term commitment by the Department of Defense. This extended timeline allows for sustained production, integration, and sustainment activities, which is crucial for complex weapon systems that require ongoing maintenance and potential upgrades. From a cost perspective, a longer duration can provide cost stability and predictability, allowing for better long-term financial planning. However, it also necessitates continuous government oversight to manage evolving requirements, technological advancements, and potential cost escalations over the contract's life. It also implies a stable, ongoing need for the capability.

What are the potential implications of the contract being performed in Florida (ST: FL, SN: FLORIDA)?

The performance location in Florida suggests that Lockheed Martin's facilities in that state are likely involved in the production or support of the Trident missile systems. This could have economic implications for the region, supporting jobs and related industries in Florida's defense sector. It may also indicate the presence of specific infrastructure, supply chains, or skilled labor pools in Florida that are advantageous for this type of advanced manufacturing and technical support. For the government, performance in a specific location can influence logistics, oversight, and potentially travel costs for government personnel overseeing the contract.

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: N0003021Q0100

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Address: 1102 JOHN GLENN BLVD, TITUSVILLE, FL, 32780

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

Financial Breakdown

Contract Ceiling: $1,289,938,460

Exercised Options: $1,188,856,344

Current Obligation: $1,187,691,672

Actual Outlays: $435,790

Subaward Activity

Number of Subawards: 459

Total Subaward Amount: $351,636,450

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline