Missile Defense Agency awards $433M R&D contract to Lockheed Martin for missile and space systems, with a 3373-day duration

Contract Overview

Contract Amount: $432,991,575 ($433.0M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2005-07-06

End Date: 2014-09-30

Contract Duration: 3,373 days

Daily Burn Rate: $128.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS AWARD FEE

Sector: R&D

Official Description: 200510!500546!9700!HQ0006!MISSILE DEFENSE AGENCY !HQ000604D0006 !A!N! !N!0008 ! !20050706!20051230!926784042!834951691!834951691!N!LOCKHEED MARTIN CORPORATION !12257 STATE HIGHWAY 121, L!LITTLETON !CO!80127!20000!031!08!DENVER !DENVER !COLORADO !+000006000000!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!Y!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 $433.0 million to LOCKHEED MARTIN CORP for work described as: 200510!500546!9700!HQ0006!MISSILE DEFENSE AGENCY !HQ000604D0006 !A!N! !N!0008 ! !20050706!20051230!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, suggesting a competitive bidding process. 2. Significant R&D focus indicates investment in advanced technological development. 3. Long contract duration of over 9 years implies a complex, multi-phase project. 4. The awardee, Lockheed Martin, is a major defense contractor with extensive experience. 5. The contract's value places it among substantial R&D investments within the defense sector. 6. The specific service category (Research and Development in Physical, Engineering, and Life Sciences) highlights the scientific and technical nature of the work.

Value Assessment

Rating: good

The contract value of approximately $433 million over a 9-year period 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 cost-plus-award-fee (CPAF) contract type suggests that performance incentives are tied to the contractor's ability to meet program objectives, which can be a mechanism for achieving value for money if well-managed. The absence of specific cost breakdowns makes a direct per-unit cost comparison difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 3 bids suggests a moderate level of competition for this significant R&D effort. While full and open competition is generally preferred for maximizing price discovery and innovation, the specific number of bidders (3) provides a limited view of the true competitive landscape for such specialized defense contracts.

Taxpayer Impact: Full and open competition, even with a limited number of bidders, generally benefits taxpayers by encouraging multiple companies to offer their best technical solutions and pricing, potentially leading to more cost-effective outcomes.

Public Impact

The primary beneficiary is the U.S. Department of Defense, specifically the Missile Defense Agency, in its mission to develop advanced missile defense capabilities. The contract supports the development and exploration of advanced technologies related to missile and space systems. The geographic impact is national, focusing on research and development activities, with potential implications for the defense industrial base across the country. Workforce implications include employment for highly skilled scientists, engineers, and technical personnel within Lockheed Martin and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-award-fee contracts can sometimes lead to cost overruns if not rigorously overseen, as the fee is tied to performance rather than strict cost control.
The long duration of the contract increases the risk of scope creep or evolving technological requirements that may not be fully anticipated at the outset.
Reliance on a single large contractor for such a critical R&D area could present risks if the contractor faces financial or operational challenges.

Positive Signals

Awarded under full and open competition, suggesting a structured procurement process.
Lockheed Martin's established track record in complex defense systems development provides a degree of confidence in execution capability.
The contract type (CPAF) incentivizes performance, potentially driving innovation and successful program outcomes.
The significant investment signals a commitment to advancing national security through technological superiority.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on advanced physical and engineering sciences related to missile and space systems. The market for such specialized R&D is dominated by large defense contractors with significant technical expertise and security clearances. Spending in this area is driven by national security priorities and the ongoing need to counter evolving threats. Comparable spending benchmarks would typically involve other large-scale, multi-year R&D contracts awarded by the Department of Defense for advanced technology development.

Small Business Impact

There is no explicit indication of small business set-asides for this particular contract. Given the nature of advanced missile and space systems R&D, the prime contract is likely awarded to a large defense contractor. However, large prime contractors are often required to subcontract a portion of their work to small businesses as part of their overall small business subcontracting goals. The specific impact on the small business ecosystem would depend on the subcontracting plan developed by Lockheed Martin.

Oversight & Accountability

Oversight for this contract would primarily reside with the Missile Defense Agency (MDA) and the Department of Defense. The Cost Plus Award Fee (CPAF) structure necessitates robust performance monitoring and evaluation to determine award fees. Transparency is typically managed through contract reporting requirements and program reviews. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse related to the contract.

Related Government Programs

Missile Defense Systems
Advanced Technology Development
Aerospace Research and Development
Department of Defense Research Contracts
Lockheed Martin Defense Contracts

Risk Flags

Long contract duration may increase risk of cost overruns or scope creep.
Cost-plus-award-fee structure requires diligent oversight to ensure value for money.
Concentration of R&D effort with a single large contractor carries inherent risks.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $433.0 million to LOCKHEED MARTIN CORP. 200510!500546!9700!HQ0006!MISSILE DEFENSE AGENCY !HQ000604D0006 !A!N! !N!0008 ! !20050706!20051230!926784042!834951691!834951691!N!LOCKHEED MARTIN CORPORATION !12257 STATE HIGHWAY 121, L!LITTLETON !CO!80127!20000!031!08!DENVER !DENVER !COLORADO !+000006000000!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! ! ! !202

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 $433.0 million.

What is the period of performance?

Start: 2005-07-06. End: 2014-09-30.

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

Lockheed Martin Corporation has a long and extensive history of working with the Missile Defense Agency (MDA) and the Department of Defense on various missile defense programs. They are a prime contractor for several key systems, including the Terminal High Altitude Area Defense (THAAD) system and components of the Aegis Ballistic Missile Defense System. Their track record includes development, testing, and sustainment of complex missile defense technologies. While specific R&D contract performance data is not publicly detailed here, their consistent role as a major player in MDA's portfolio suggests a significant level of experience and capability in executing such research and development efforts. Past performance reviews and contract awards from the MDA would provide further insight into their specific success rates and adherence to timelines and budgets on prior R&D initiatives.

How does the $433 million contract value compare to other R&D spending by the MDA?

The $433 million contract value represents a substantial investment, but its relative size within the Missile Defense Agency's (MDA) overall R&D budget can vary year to year. The MDA's budget typically runs into billions of dollars annually, encompassing a wide array of programs from early research to system deployment and sustainment. Contracts of this magnitude are common for major system development and advanced research efforts within the agency. To provide precise context, one would need to compare this specific award against the MDA's historical R&D appropriations and the value of other large R&D contracts awarded during the same fiscal periods. However, it is indicative of a significant, multi-year commitment to a specific area of missile defense technology development.

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

The primary risks associated with a Cost Plus Award Fee (CPAF) contract, especially one with a long duration like this (over 9 years), revolve around cost control and scope management. For CPAF contracts, the contractor is reimbursed for allowable costs plus a fee that consists of a fixed base amount and an award amount that is earned based on meeting or exceeding performance objectives. The risk for the government is that the 'cost plus' nature can incentivize spending if not tightly managed, as higher costs can sometimes lead to higher fees. The 'award' component aims to mitigate this by incentivizing performance, but defining and measuring these performance metrics objectively over a long period can be challenging. Scope creep is another significant risk; over a long duration, requirements can evolve, leading to contract modifications and increased costs if not carefully controlled. Robust oversight, clear performance metrics, and proactive contract management are crucial to mitigating these risks.

How does the 'full and open competition' designation impact taxpayer value for this contract?

The designation of 'full and open competition' is generally positive for taxpayer value. It means that the Missile Defense Agency (MDA) solicited proposals from all responsible sources, allowing for the widest possible range of potential solutions and competitive pricing. This process encourages offerors to submit their best technical approaches and most competitive prices to win the contract. While the data indicates only three bids were received, the principle of full and open competition still provides a baseline for price discovery and encourages innovation. It reduces the risk of awarding contracts without exploring potentially more cost-effective or technologically superior alternatives that might exist in the market, ultimately aiming to secure the best possible value for taxpayer dollars invested in critical defense R&D.

What are the implications of awarding a long-term R&D contract to a single entity like Lockheed Martin?

Awarding a long-term R&D contract to a single entity like Lockheed Martin has several implications. Positively, it allows for continuity and deep institutional knowledge to be built within the contractor organization, potentially leading to more efficient development and integration of complex technologies over time. It can foster a strong partnership between the agency and the contractor. However, it also carries risks. Over-reliance on a single contractor can reduce competitive pressure in subsequent phases or related procurements. It also concentrates risk; if the contractor encounters significant financial, technical, or management issues, the entire program could be jeopardized. Furthermore, it might limit the agency's exposure to potentially disruptive innovations or alternative approaches that could emerge from a more diverse supplier base. Therefore, strong government oversight and contingency planning are essential.

What specific types of 'Research and Development in Physical, Engineering, and Life Sciences' are likely covered by this contract?

Given the context of the Missile Defense Agency (MDA) and the awardee Lockheed Martin, the 'Research and Development in Physical, Engineering, and Life Sciences' likely pertains to advanced materials science, propulsion systems, guidance, navigation, and control (GNC) technologies, sensor development, high-energy physics relevant to countermeasures or interceptors, advanced computational modeling and simulation for system performance, and potentially aspects of human factors engineering for command and control systems. It could also involve research into novel interceptor designs, advanced kill vehicles, directed energy applications, or sophisticated threat detection and tracking algorithms. The broad classification allows for exploration across a wide spectrum of scientific and engineering disciplines critical to developing next-generation missile defense capabilities.

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

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HQ000604D0006

IDV Type: IDC

Timeline