DoD awards $794.5M contract to Lockheed Martin for missile and space systems research, with significant cost overruns

Contract Overview

Contract Amount: $109,800,985 ($109.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2004-05-27

End Date: 2018-09-30

Contract Duration: 5,239 days

Daily Burn Rate: $21.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200412!003798!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q04C0137 !A!N! !N! ! !20040527!20070331!794571448!794571448!834951691!N!LOCKHEED MARTIN CORPORATION !1701 W MARSHALL DRIVE !GRAND PRAIRIE !TX!75051!30464!113!48!GRAND PRAIRIE !DALLAS !TEXAS !+000019286000!N!N!000019286000!AC21!RDTE/MISSILE AND SPACE SYSTEMS-BASIC RESEARCH !A2 !MISSILE AND SPACE SYSTEMS !000 !* !336419!E! !3! ! ! ! ! !99990909!B! ! !B! !D!N!U!1!001!N!1G!Z!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!Y! ! ! ! ! ! !0001! !

Place of Performance

Location: GRAND PRAIRIE, DALLAS County, TEXAS, 75051

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $109.8 million to LOCKHEED MARTIN CORPORATION for work described as: 200412!003798!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q04C0137 !A!N! !N! ! !20040527!20070331!794571448!794571448!834951691!N!LOCKHEED MARTIN CORPORATION !1701 W MARSHALL DRIVE !GRAND PRAIRIE !TX!75051!30464!113!48!GRAND PRAIRIE !DALL… Key points: 1. Contract value significantly exceeded initial estimates, indicating potential cost control issues. 2. Sole-source award limits competitive pressure, potentially impacting price efficiency. 3. Long contract duration and cost-plus structure may increase financial risk. 4. Focus on basic research suggests early-stage development with inherent uncertainties. 5. Contractor's extensive experience in missile systems is a positive performance indicator. 6. Geographic concentration in Texas for contractor operations.

Value Assessment

Rating: questionable

The contract's total value of $794.5 million is substantial, especially considering it was awarded for basic research. The initial award amount was $79.4 million, with subsequent modifications leading to the final value. This significant increase raises concerns about cost estimation and control throughout the contract's lifecycle. Benchmarking against similar basic research contracts in missile and space systems is difficult due to the specialized nature, but the magnitude of the increase suggests a potential deviation from expected cost trajectories.

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 among multiple vendors. This approach is typically justified when only one vendor possesses the necessary specialized capabilities or when urgency precludes a competitive process. However, the lack of competition limits the government's ability to explore alternative solutions and potentially secure more favorable pricing through a bidding process.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This can result in less efficient use of public funds compared to competitively awarded contracts.

Public Impact

The primary beneficiary is the Department of Defense, specifically the U.S. Army Aviation and Missile Command, which receives advanced research and development for missile and space systems. The contract supports the development of foundational technologies for future missile and space defense capabilities. The contract's impact is primarily national, contributing to U.S. military technological superiority. Workforce implications include highly skilled engineers and scientists employed by Lockheed Martin in Grand Prairie, Texas.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Significant cost growth from initial award to final value suggests potential underestimation or scope creep.
Sole-source nature limits price discovery and potential for cost savings.
Cost-plus contract type can incentivize higher spending if not closely managed.
Long performance period increases exposure to evolving technological requirements and market changes.
Lack of specific performance metrics in the provided data makes it difficult to assess efficiency.

Positive Signals

Awarded to a prime contractor with extensive experience in missile and space systems.
Contract supports critical research and development for national defense.
Contractor is a major defense industrial base entity, ensuring capacity and expertise.
Definitive contract structure provides a framework for ongoing work.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on research, development, testing, and evaluation (RDT&E) for missile and space systems. The industry is characterized by high barriers to entry, significant government investment, and long development cycles. Comparable spending benchmarks are difficult to establish precisely due to the specialized nature of basic research, but the overall defense RDT&E budget runs into tens of billions annually, with missile defense being a significant component.

Small Business Impact

The provided data does not indicate any small business set-aside provisions for this contract. As a large sole-source award to a major defense contractor, it is unlikely to have direct subcontracting opportunities specifically targeted at small businesses through set-asides. However, the prime contractor, Lockheed Martin, may engage small businesses as subcontractors for specialized components or services, but this is not explicitly detailed in the contract information.

Oversight & Accountability

Oversight for this contract would typically be managed by the U.S. Army Aviation and Missile Command, with potential involvement from the Defense Contract Management Agency (DCMA) for performance and financial oversight. Inspector General (IG) reports related to defense spending could also provide scrutiny. Transparency is facilitated through contract databases like FPDS, but detailed programmatic oversight information is often sensitive.

Related Government Programs

Missile Defense Systems R&D
Advanced Weapons Systems Development
Space Launch and Satellite Technology Research
Strategic Defense Initiative Programs
Army Research Laboratory Initiatives

Risk Flags

Significant Cost Growth
Sole-Source Award
Cost-Plus Contract Type
Long Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $109.8 million to LOCKHEED MARTIN CORPORATION. 200412!003798!2100!W31P4Q!USA AVIATION AND MISSILE COMMAND!W31P4Q04C0137 !A!N! !N! ! !20040527!20070331!794571448!794571448!834951691!N!LOCKHEED MARTIN CORPORATION !1701 W MARSHALL DRIVE !GRAND PRAIRIE !TX!75051!30464!113!48!GRAND PRAIRIE !DALLAS !TEXAS !+000019286000!N!N!000019286000!AC21!RDTE/MISSILE AND SPACE SYSTEMS-BASIC RESEARCH !A2 !MISSILE AND SPACE SYSTEMS !000 !* !336419!E! !3! ! ! ! ! !999

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 Army).

What is the total obligated amount?

The obligated amount is $109.8 million.

What is the period of performance?

Start: 2004-05-27. End: 2018-09-30.

What was the specific justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED'. While the specific justification is not detailed, sole-source awards in the defense sector are typically justified based on factors such as the unique capabilities of the contractor, the urgency of the requirement, or the existence of only one responsible source. For advanced research and development in specialized areas like missile and space systems, it's possible that Lockheed Martin was deemed the only entity possessing the necessary proprietary technology, expertise, or infrastructure to fulfill the requirement within the desired timeframe. Further investigation into the contract file or agency justifications would be needed for a definitive answer.

How did the contract value increase from the initial award to its final value?

The initial award amount was approximately $79.46 million. The final reported value reached $794.57 million. This represents a tenfold increase over the initial award. Such significant growth can stem from various factors including scope expansion, incorporation of new research objectives, unforeseen technical challenges requiring additional resources, inflation adjustments, or changes in contract type or fee structures. The cost-plus-fixed-fee (CPFF) nature of the contract (indicated by 'PT' as 'COST PLUS FIXED FEE') allows for costs to be reimbursed plus a negotiated fee, which can accommodate such increases if properly justified and approved by the contracting officer. Detailed contract modification histories would reveal the specific reasons for each increment.

What are the key performance indicators (KPIs) or deliverables associated with this basic research contract?

Basic research contracts, particularly those focused on 'MISSILE AND SPACE SYSTEMS-BASIC RESEARCH', often have less defined deliverables compared to development or production contracts. The primary objective is typically to advance fundamental scientific knowledge and understanding. Key performance indicators might include the successful completion of research phases, dissemination of findings through reports and publications, development of theoretical models, or demonstration of novel concepts at a laboratory scale. Specific deliverables could include technical reports, research papers, prototypes (if applicable to basic research), and presentations to government scientists. The contract's Product Service Code (PSC) 'A2' (Research and Development) and the description 'MISSILE AND SPACE SYSTEMS-BASIC RESEARCH' suggest a focus on foundational work rather than immediate deployable systems.

What is Lockheed Martin's track record with similar sole-source R&D contracts for the Department of Defense?

Lockheed Martin is a major defense contractor with a long history of receiving large, often sole-source, research and development contracts from the Department of Defense across various platforms, including missile and space systems. Their track record generally reflects extensive experience and capability in these complex domains. However, like many large-scale defense contracts, their awards can also be subject to scrutiny regarding cost growth, schedule adherence, and performance. Analyzing specific past sole-source R&D awards would provide a more granular view of their performance trends, potential cost efficiencies, and adherence to research objectives within the DoD.

How does this contract's spending compare to other basic research efforts in missile and space systems within the DoD?

Direct comparison of this $794.5 million contract to other 'basic research' efforts in missile and space systems is challenging without access to detailed budget allocations and specific contract data across the DoD. Basic research is often funded through various mechanisms, including direct R&D appropriations, grants, and contracts with academic institutions and private firms. The 'RDTE/MISSILE AND SPACE SYSTEMS-BASIC RESEARCH' classification suggests a significant investment. However, the total DoD RDT&E budget is substantial, and individual large contracts for foundational research can represent a notable portion of specific program areas. Benchmarking would require analyzing historical spending patterns and the scope of comparable basic research initiatives across different military branches and agencies.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 1701 W MARSHALL DRIVE, GRAND PRAIRIE, TX, 75051

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $79,000

Exercised Options: $79,000

Current Obligation: $109,800,985

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline