Missile Defense Agency awards $1.36B R&D contract to Lockheed Martin for missile and space systems, with 3 bids received

Contract Overview

Contract Amount: $136,252,745 ($136.3M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2004-11-29

End Date: 2010-12-31

Contract Duration: 2,223 days

Daily Burn Rate: $61.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS AWARD FEE

Sector: R&D

Official Description: 200502!500013!9700!HQ0006!MISSILE DEFENSE AGENCY !HQ000604D0006 !A!N! !N!0004 ! !20041129!20071208!926784042!834951691!834951691!N!LOCKHEED MARTIN CORPORATION !12257 STATE HIGHWAY 121, L!LITTLETON !CO!80127!20000!031!08!DENVER !DENVER !COLORADO !+000010878000!N!N!000000000000!1337!GUIDE MSL&SPACE VEH EXPLO UN, FUEL, COMP !A2 !MISSILE AND SPACE SYSTEMS !CAA !MDA SUPPORT !541710!E! !5!B!S! ! ! !20200930!B! ! !A! !A!N!R!2!003!B! !Z!N!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: DENVER, DENVER County, COLORADO, 80201

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $136.3 million to LOCKHEED MARTIN CORP for work described as: 200502!500013!9700!HQ0006!MISSILE DEFENSE AGENCY !HQ000604D0006 !A!N! !N!0004 ! !20041129!20071208!926784042!834951691!834951691!N!LOCKHEED MARTIN CORPORATION !12257 STATE HIGHWAY 121, L!LITTLETON !CO!80127!20000!031!08!DENVER !DENV… Key points: 1. Contract awarded via full and open competition, indicating a competitive bidding process. 2. Significant portion of contract value allocated to research and development in physical, engineering, and life sciences. 3. Contract duration of over 7 years suggests a long-term commitment to the project. 4. The contract is a delivery order under a larger contract, implying a phased approach to service delivery. 5. The contractor, Lockheed Martin Corporation, has a substantial presence in the aerospace and defense sector. 6. The contract's focus on missile and space systems aligns with critical national security objectives.

Value Assessment

Rating: good

The total award amount of $1.36 billion over approximately 7 years represents a significant investment in missile defense research and development. Benchmarking this against similar large-scale R&D contracts within the Department of Defense is challenging without more specific project details. However, the contract type (Cost Plus Award Fee) suggests that performance incentives are tied to achieving specific milestones, which can be a mechanism for value for money if well-managed. The relatively low number of bids (3) in a full and open competition might warrant further scrutiny to ensure optimal pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a full and open competition, meaning all responsible sources were permitted to submit a bid. Three bids were received, which suggests a moderate level of competition for this specialized R&D requirement. While three bidders indicate some level of market engagement, a higher number of bids could potentially lead to more aggressive pricing and a wider range of innovative solutions.

Taxpayer Impact: A full and open competition with multiple bidders generally benefits taxpayers by fostering a competitive environment that can drive down costs and improve the quality of services through innovation.

Public Impact

The primary beneficiaries are the U.S. military and national security apparatus, receiving advanced missile defense capabilities. Services delivered include research, development, and potentially integration of missile and space systems. The geographic impact is national, supporting U.S. defense infrastructure and technological advancement. Workforce implications include highly skilled engineers, scientists, and technicians employed by the contractor and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in Cost Plus Award Fee contracts if performance metrics are not rigorously defined and monitored.
Long contract duration could lead to scope creep or evolving requirements that may not be fully captured in the initial pricing.
Dependence on a single prime contractor for critical missile defense technology raises concerns about long-term vendor lock-in.

Positive Signals

Awarded through full and open competition, suggesting a robust process for selecting the best value.
Inclusion of award fees incentivizes contractor performance and achievement of program objectives.
Contractor's established expertise in missile and space systems provides a strong foundation for successful execution.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on missile and space systems, a critical area for national defense. The market for such specialized R&D is dominated by a few large aerospace and defense contractors. Spending in this sector is often characterized by long development cycles, high costs, and significant government oversight due to the strategic importance and complexity of the technologies involved. Comparable spending benchmarks would typically be found within other major defense R&D programs for advanced weapon systems.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (sb=false). While there is no direct information on subcontracting plans, large prime contractors like Lockheed Martin are often required to have small business subcontracting goals as part of their overall contract. The absence of a small business set-aside means that opportunities for small businesses would primarily be through subcontracting opportunities, rather than direct prime contracting.

Oversight & Accountability

Oversight for this contract is likely managed by the Missile Defense Agency (MDA) within the Department of Defense. Mechanisms would include regular program reviews, technical assessments, and financial audits to ensure compliance with contract terms and performance objectives. The Cost Plus Award Fee structure implies performance monitoring against defined metrics. Inspector General jurisdiction would apply for investigations into fraud, waste, or abuse.

Related Government Programs

Missile Defense Systems
Aerospace Research and Development
Advanced Weapon Systems
Department of Defense R&D Programs
Space Systems Development

Risk Flags

Cost Overrun Risk
Performance Metric Definition
Long-Term Technology Relevance
Vendor Lock-in Potential

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $136.3 million to LOCKHEED MARTIN CORP. 200502!500013!9700!HQ0006!MISSILE DEFENSE AGENCY !HQ000604D0006 !A!N! !N!0004 ! !20041129!20071208!926784042!834951691!834951691!N!LOCKHEED MARTIN CORPORATION !12257 STATE HIGHWAY 121, L!LITTLETON !CO!80127!20000!031!08!DENVER !DENVER !COLORADO !+000010878000!N!N!000000000000!1337!GUIDE MSL&SPACE VEH EXPLO UN, FUEL, COMP !A2 !MISSILE AND SPACE SYSTEMS !CAA !MDA SUPPORT !541710!E! !5!B!S! ! ! !20200

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Missile Defense Agency).

What is the total obligated amount?

The obligated amount is $136.3 million.

What is the period of performance?

Start: 2004-11-29. End: 2010-12-31.

What is Lockheed Martin Corporation's track record with the Missile Defense Agency on similar contracts?

Lockheed Martin Corporation has a significant and long-standing relationship with the Missile Defense Agency (MDA) and the Department of Defense (DoD) in developing and producing missile defense systems. They are a prime contractor for several key MDA programs, including the Terminal High Altitude Area Defense (THAAD) system and components of the Aegis Ballistic Missile Defense (BMD) system. Their historical performance on these complex, high-stakes programs indicates a deep understanding of the technical challenges and program management requirements involved. While specific performance metrics for past contracts are not detailed here, their continued selection for major defense initiatives suggests a generally positive track record and a trusted position within the defense industrial base for missile defense technologies.

How does the $1.36 billion award compare to typical R&D spending for missile defense systems?

The $1.36 billion award for research and development in missile and space systems is substantial and aligns with the significant investment required for advanced defense technologies. Large-scale R&D contracts for complex systems like missile defense often run into hundreds of millions or even billions of dollars over several years due to the intricate nature of the research, design, testing, and integration processes. For context, major missile defense programs managed by the MDA, such as the Ground-based Midcourse Defense (GMD) system or the development of new interceptors, have historically seen multi-year funding allocations in the billions. This specific contract, with a duration of over 7 years, represents a significant, but not necessarily outlier, investment within the broader landscape of U.S. missile defense R&D spending, reflecting the ongoing need for technological advancement in this critical security domain.

What are the primary risks associated with a Cost Plus Award Fee (CPAF) contract of this magnitude?

The primary risks associated with a Cost Plus Award Fee (CPAF) contract of this magnitude ($1.36 billion) revolve around cost control and the definition of performance metrics. In a CPAF structure, the contractor is reimbursed for allowable costs plus a fee that consists of a fixed base amount and an award amount that depends on meeting or exceeding performance objectives. The risk for the government is that if the performance criteria are not clearly defined, measurable, and rigorously monitored, the contractor may receive a substantial award fee even if performance is only marginally satisfactory, leading to higher-than-expected costs. There's also the inherent risk of cost overruns if the 'cost plus' component is not effectively managed through stringent oversight and auditing. For the contractor, the risk lies in not achieving the performance targets, thereby forfeiting the award fee.

What does the 'Research and Development in the Physical, Engineering, and Life Sciences' classification imply for the contract's objectives?

The classification 'Research and Development in the Physical, Engineering, and Life Sciences' (NAICS code 541710) indicates that this contract is focused on fundamental and applied research aimed at advancing scientific knowledge and capabilities within these broad scientific domains. For a missile defense contract, this typically means activities such as exploring new materials, developing advanced sensor technologies, designing innovative propulsion systems, improving guidance and control algorithms, and conducting simulations and experiments to understand complex physical phenomena related to missile trajectories and atmospheric interactions. It implies that the work is likely in the early to mid-stages of the technology development lifecycle, focusing on innovation and problem-solving rather than the production of fielded systems, though it may lead to prototypes or advanced designs.

How might the contract's duration (over 7 years) impact its overall value and risk?

A contract duration exceeding 7 years for a $1.36 billion R&D project presents both potential value and significant risks. On the value side, a long duration allows for sustained focus and investment in complex, long-term research objectives, potentially leading to more mature and effective technological solutions than shorter-term projects. It can also foster deeper collaboration and knowledge transfer between the government and the contractor. However, the risks are considerable. Over such an extended period, technological landscapes can shift rapidly, potentially rendering initial research objectives obsolete or requiring significant adaptation. There's an increased risk of scope creep, where requirements evolve beyond the original intent, leading to cost increases. Furthermore, maintaining consistent oversight and ensuring continued alignment with evolving strategic priorities over many years requires robust program management and adaptability from both the government and the contractor.

What is the significance of the contract being a 'Delivery Order' under a larger contract?

The designation of this award as a 'Delivery Order' under a larger contract signifies that it is not a standalone, new contract but rather a specific task or order placed against an existing indefinite-delivery/indefinite-quantity (IDIQ) or similar type of contract vehicle. This structure is common for large, complex programs where the government anticipates a need for various services or supplies over time but the exact quantity, timing, or specific nature of those needs may not be fully defined at the outset. For taxpayers, this means the overall contract ceiling might be higher than the $1.36 billion awarded here, and future delivery orders could be placed under the same parent contract. It allows for flexibility in acquiring necessary goods and services incrementally, potentially streamlining the procurement process for subsequent needs once the initial contract is established.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences

Product/Service Code: AMMUNITION AND EXPLOSIVES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 12257 STATE HWY, LITTLETON, CO, 80127

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $147,981,947

Exercised Options: $143,545,395

Current Obligation: $136,252,745

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HQ000604D0006

IDV Type: IDC

Timeline