Navy awards $1.03B contract for TRIDENT production and deployed systems support to Lockheed Martin

Contract Overview

Contract Amount: $1,028,083,764 ($1.0B)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2022-08-18

End Date: 2027-09-30

Contract Duration: 1,869 days

Daily Burn Rate: $550.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: FY23 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 $1.03 billion to LOCKHEED MARTIN CORPORATION for work described as: FY23 TRIDENT PRODUCTION AND DEPLOYED SYSTEMS SUPPORT Key points: 1. Contract awarded on a sole-source basis, limiting competitive price discovery. 2. Long-term contract duration (over 4 years) suggests a sustained need for these specialized services. 3. Fixed Price Incentive contract type aims to balance cost control with contractor performance. 4. High dollar value indicates significant investment in strategic defense capabilities. 5. Focus on production and deployed systems support suggests a critical role in maintaining operational readiness. 6. Geographic concentration in Florida for contract performance.

Value Assessment

Rating: fair

The contract's value of over $1 billion for TRIDENT production and support is substantial. Without specific benchmarks for similar sole-source contracts for strategic weapon systems, a direct value-for-money assessment is challenging. The Fixed Price Incentive (FPI) structure is designed to incentivize cost savings, but the effectiveness depends heavily on the negotiated targets and sharing arrangements. Given the specialized nature of TRIDENT systems, direct comparisons to commercial markets are not feasible. The lack of competition inherently reduces the pressure for optimal pricing.

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 used when a unique capability or specialized knowledge is required, often associated with national security systems like the TRIDENT program. The absence of competition means that the government did not benefit from a bidding process that could drive down prices through market forces. The justification for sole-source procurement would likely stem from the proprietary nature of the technology and the extensive, specialized expertise Lockheed Martin possesses in this area.

Taxpayer Impact: Taxpayers may face higher costs due to the lack of competitive bidding. Without alternative offers, the government relies on negotiation to secure a fair price, which can be less effective than a competitive process in ensuring optimal value for taxpayer funds.

Public Impact

The primary beneficiaries are the U.S. Navy and national security, ensuring the continued production and operational readiness of the TRIDENT submarine missile system. Services delivered include the manufacturing of TRIDENT missiles and ongoing support for deployed systems, crucial for strategic deterrence. Geographic impact is concentrated in Florida, where Lockheed Martin's facilities are located, potentially supporting local jobs and the defense industrial base in that state. Workforce implications include the need for highly skilled engineers, technicians, and manufacturing personnel within Lockheed Martin and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Long-term contract duration could lock in costs without opportunities for re-evaluation based on market changes.
Fixed Price Incentive contracts can lead to cost overruns if targets are not well-defined or if incentives are not structured effectively.
Reliance on a single contractor for such a critical defense system poses a strategic risk if performance issues arise.

Positive Signals

Fixed Price Incentive contract type aims to align contractor and government interests in cost control and performance.
Lockheed Martin's established expertise in the TRIDENT program suggests a high likelihood of successful technical execution.
Long-term contract provides stability and predictability for a critical defense capability.
Focus on both production and deployed systems support ensures a holistic approach to the weapon system lifecycle.

Sector Analysis

The contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a highly specialized and critical segment of the aerospace and defense industry. This sector is characterized by high barriers to entry due to complex technology, stringent quality requirements, and significant R&D investment. Spending in this area is driven by national security priorities and strategic deterrence needs. Comparable spending benchmarks are difficult to establish due to the unique nature of the TRIDENT program and its sole-source procurement status. The market is dominated by a few large, experienced defense contractors.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Given the specialized and high-value nature of TRIDENT production and support, it is unlikely that small businesses would be primary contractors. However, Lockheed Martin, as the prime contractor, may engage small businesses as subcontractors for specific components or services, contributing to the broader small business defense ecosystem. The extent of small business subcontracting would need further investigation.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy and the Department of Defense. Mechanisms likely include contract performance reviews, milestone tracking, and financial audits. Given the national security implications, oversight may also involve specific program protection measures and intelligence community oversight. Transparency is generally limited for sole-source defense contracts of this nature, with detailed information often classified or restricted. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

Ballistic Missile Defense Systems
Strategic Weapons Systems
Submarine Fleet Modernization
Aerospace Manufacturing
Defense Production Contracts

Risk Flags

Sole-source procurement
High contract value
Long contract duration
Strategic weapon system

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.03 billion to LOCKHEED MARTIN CORPORATION. FY23 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 (Department of the Navy).

What is the total obligated amount?

The obligated amount is $1.03 billion.

What is the period of performance?

Start: 2022-08-18. End: 2027-09-30.

What is Lockheed Martin's track record with the TRIDENT program and similar strategic weapon systems?

Lockheed Martin has a long and established history as the prime contractor for the TRIDENT II (D5) missile system, dating back decades. They are responsible for the production, sustainment, and modernization of these critical strategic weapons. Their track record includes successful development, testing, and deployment, as well as ongoing support services. The company possesses unique expertise and infrastructure essential for handling such complex and sensitive defense programs. Their performance on previous TRIDENT contracts and other major strategic systems, like the Trident D5 Life Extension program, indicates a high level of technical capability and program management proficiency, making them the incumbent and logical choice for continued support.

How does the pricing structure of this Fixed Price Incentive (FPI) contract compare to other sole-source defense contracts?

The Fixed Price Incentive (FPI) contract type is designed to share cost risks and rewards between the government and the contractor. In an FPI contract, the final price is determined by the negotiated target cost, target profit, and a ceiling price, with a predetermined sharing ratio for costs above or below the target. For sole-source contracts, especially in highly specialized defense areas like the TRIDENT program, pricing is heavily reliant on negotiation and historical cost data, as there is no direct market competition to benchmark against. While FPI aims for cost efficiency, its effectiveness hinges on the realism of the initial cost targets and the fairness of the sharing formula. Without access to specific target costs and sharing ratios, a direct comparison to other sole-source contracts is difficult, but the FPI structure generally offers more cost control potential than a simple cost-plus contract.

What are the primary risks associated with a sole-source award for critical defense systems like TRIDENT?

The primary risk of a sole-source award for critical defense systems like TRIDENT is the potential for inflated costs due to the absence of competitive pressure. Without competing bids, the government relies heavily on negotiation and the contractor's willingness to offer fair pricing, which can be less effective than a competitive process. Another significant risk is contractor complacency or reduced incentive for innovation and efficiency over the long term, as there is no direct threat of losing future business to competitors. Furthermore, sole-source arrangements can create dependency on a single supplier, posing supply chain risks if that supplier faces financial difficulties, operational disruptions, or strategic shifts. Ensuring robust oversight and performance management becomes paramount to mitigate these risks.

How effective is the TRIDENT production and support program in maintaining U.S. strategic deterrence capabilities?

The TRIDENT production and deployed systems support program is fundamental to maintaining U.S. strategic deterrence capabilities. The TRIDENT II (D5) missile, deployed on the Ohio-class submarines, forms a crucial leg of the nuclear triad. Ensuring the continuous production of new missiles and the reliable support of deployed systems is vital for maintaining the operational readiness and effectiveness of this strategic deterrent. The program's success directly impacts the U.S.'s ability to project strategic power and deter potential adversaries. The long-term nature of the contract and the focus on both production and sustainment underscore its critical role in ensuring the longevity and effectiveness of the U.S. strategic missile submarine force.

What are the historical spending patterns for TRIDENT production and support, and how does this award compare?

Historical spending on the TRIDENT program has been substantial over several decades, reflecting its status as a cornerstone of U.S. strategic deterrence. Annual expenditures have fluctuated based on production cycles, modernization efforts, and sustainment needs. While specific year-over-year figures for 'TRIDENT PRODUCTION AND DEPLOYED SYSTEMS SUPPORT' are not provided in the abbreviated data, the $1.03 billion awarded for the period of August 2022 to September 2027 represents a significant, multi-year investment. This award likely encompasses a substantial portion of the program's lifecycle costs during its term, aligning with the consistent, high-level funding typically allocated to strategic weapons systems to ensure readiness and technological relevance.

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: N0003022Q0100

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: $1,208,510,299

Exercised Options: $1,103,901,678

Current Obligation: $1,028,083,764

Actual Outlays: $429,099

Subaward Activity

Number of Subawards: 421

Total Subaward Amount: $323,350,819

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline