DoD Awards $835M Contract to Lockheed for Strategic Systems Programs, Extending to 2017

Contract Overview

Contract Amount: $176,562,272 ($176.6M)

Contractor: Lockheed Missiles & Space Comp

Awarding Agency: Department of Defense

Start Date: 1997-03-04

End Date: 2017-05-19

Contract Duration: 7,381 days

Daily Burn Rate: $23.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: 199706!1700!A210!XSP01!STRATEGIC SYSTEMS PROGRAMS !N0003094C0094 !A!*!P00040 !19970304!19970930!009125535!009125535!834951691!N!23917!LOCKHEED MISSILES & SPACE COMP!1111 LOCKHEED MARTIN WAY !SUNNYVALE !CA!94089!77000!085!06!SUNNYVALE !SANTA CLARA !CALIFORNIA!0001!-000000285806!N!N!000000000000!1410!GUIDED MISSILES !A2 !MISSILE AND SPACE SYSTEMS !2CNJ!UGM-96 TRIDENT !3761!3!*!*!F!B!A!*!D !N!V!1!001!N!1A!Z!Y!Z!* !* !N!C!*!A!A!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: SUNNYVALE, SANTA CLARA County, CALIFORNIA, 94089

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $176.6 million to LOCKHEED MISSILES & SPACE COMP for work described as: 199706!1700!A210!XSP01!STRATEGIC SYSTEMS PROGRAMS !N0003094C0094 !A!*!P00040 !19970304!19970930!009125535!009125535!834951691!N!23917!LOCKHEED MISSILES & SPACE COMP!1111 LOCKHEED MARTIN WAY !SUNNYVALE !CA!94089!77000!085!06!SUNNYVALE !SANTA … Key points: 1. Significant contract value of $835 million awarded to Lockheed Missiles & Space Company. 2. Contract covers strategic systems programs, likely involving complex missile and space technology. 3. Extended performance period suggests long-term program needs and potential for cost overruns. 4. Sole-source or limited competition is a risk factor for price discovery and value. 5. Defense sector spending is substantial, requiring careful oversight for taxpayer funds.

Value Assessment

Rating: questionable

The contract value of $835 million is substantial. Without comparable contracts for similar strategic systems, it's difficult to assess if this represents excellent value. The extended duration and potential for cost-plus structures warrant scrutiny.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was not competed, indicating a limited competition scenario. This raises concerns about whether the government secured the best possible price and terms, as competitive pressure was likely absent.

Taxpayer Impact: The lack of full and open competition for a contract of this magnitude means taxpayers may not have received the most cost-effective solution.

Public Impact

Taxpayers fund critical defense programs, making efficient spending paramount. Long-term contracts can impact budget predictability and require sustained oversight. Investments in strategic systems are vital for national security but must be cost-conscious.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of Competition
Extended Contract Duration
Cost-Plus Fee Structure

Positive Signals

Strategic Importance of Program
Established Contractor Capability

Sector Analysis

This contract falls within the Defense sector, specifically focusing on strategic missile and space systems. Spending in this area is typically high due to national security requirements, but efficiency is crucial.

Small Business Impact

There is no indication that small businesses were involved in this contract, either as prime contractors or subcontractors. This suggests a focus on large, established defense contractors for this specific program.

Oversight & Accountability

The extended duration and cost-plus nature of this contract necessitate robust oversight from the Department of Defense and the Defense Contract Management Agency to ensure performance and control costs.

Related Government Programs

Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Lack of competition may lead to higher prices.
Extended contract duration increases risk of cost overruns and obsolescence.
Cost-plus fee structure can incentivize spending rather than cost savings.
Potential for contractor lock-in due to specialized nature of strategic systems.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $176.6 million to LOCKHEED MISSILES & SPACE COMP. 199706!1700!A210!XSP01!STRATEGIC SYSTEMS PROGRAMS !N0003094C0094 !A!*!P00040 !19970304!19970930!009125535!009125535!834951691!N!23917!LOCKHEED MISSILES & SPACE COMP!1111 LOCKHEED MARTIN WAY !SUNNYVALE !CA!94089!77000!085!06!SUNNYVALE !SANTA CLARA !CALIFORNIA!0001!-000000285806!N!N!000000000000!1410!GUIDED MISSILES !A2 !MISSILE AND SPACE SYSTEMS !2CNJ!UGM-96 TRIDENT !3761!3!*!*!F!B!A!*!D !N!V!1!0

Who is the contractor on this award?

The obligated recipient is LOCKHEED MISSILES & SPACE COMP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $176.6 million.

What is the period of performance?

Start: 1997-03-04. End: 2017-05-19.

What specific strategic systems are covered by this contract, and how do their capabilities justify the significant investment?

The contract data indicates it pertains to 'GUIDED MISSILES' and 'MISSILE AND SPACE SYSTEMS,' specifically mentioning 'UGM-96 TRIDENT.' These are critical components of the nation's strategic deterrence. The justification for the investment lies in maintaining and modernizing these vital national security assets, ensuring readiness and technological superiority in a constantly evolving threat landscape.

Given the 'NOT COMPETED' status, what steps were taken to ensure fair and reasonable pricing for this substantial contract?

When a contract is not competed, the government typically relies on detailed cost and technical analyses, including audits and negotiations, to ensure fair and reasonable pricing. However, the absence of competitive bids inherently limits the government's leverage in price discovery, making robust internal review and justification processes critical to mitigate potential overpricing.

How effectively has the extended contract duration (from 1997 to 2017) contributed to the overall success and cost-efficiency of the strategic systems program?

The extended duration suggests a long-term program requirement, potentially offering stability and allowing the contractor to amortize development costs over a longer period. However, it also increases the risk of scope creep, cost escalation, and reduced agility if program needs change. Measuring true cost-efficiency requires analyzing performance metrics and cost trends throughout the contract's lifecycle.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 1111 LOCKHEED MARTIN WAY, SUNNYVALE, CA, 94089

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline