Lockheed Martin awarded $835M for Titan IV launch vehicle program, spanning over 12 years

Contract Overview

Contract Amount: $289,738,890 ($289.7M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 1997-10-01

End Date: 2010-09-02

Contract Duration: 4,719 days

Daily Burn Rate: $61.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 199807!5700!0048!GZ74 !SMC/PKV2 !F0470198C0005 !A!*!* !19971001!20020930!835562950!834951691!834951691!N!04236!LOCKHEED MARTIN CORPORATION !12257 STATE HWY 121 LOC A !LITTLETON !CO!80127!45255!005!08!LITTLETON !ARAPAHOE !COLORADO !0001!+000004076430!N!N!000000000000!AC25!RDTE/MISSILE AND SPACE SYSTEMS-ENG/MANUF DEVEL !A2 !MISSILE AND SPACE SYSTEMS !3CPA!TITAN IV LAUNCH VEH PROGRAM !3671!3!A!S!*!B!A!*!D !N!R!1!001!N!1A!A!Y!Z!* !* !N!C!*!B!B!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: LITTLETON, JEFFERSON County, COLORADO, 80125

State: Colorado Government Spending

Plain-Language Summary

Department of Defense obligated $289.7 million to LOCKHEED MARTIN CORP for work described as: 199807!5700!0048!GZ74 !SMC/PKV2 !F0470198C0005 !A!*!* !19971001!20020930!835562950!834951691!834951691!N!04236!LOCKHEED MARTIN CORPORATION !12257 STATE HWY 121 LOC A !LITTLETON !CO!80127!45255!005!08!LITTLETON !ARAPAH… Key points: 1. Contract awarded on a cost-plus-award-fee basis, suggesting potential for cost overruns but also incentivizing performance. 2. Long contract duration of nearly 13 years indicates a sustained need for the services provided. 3. The contract was not competed, raising questions about potential cost savings through competitive bidding. 4. Significant funding allocated, highlighting the importance and scale of the Titan IV launch vehicle program. 5. Contractor's location in Colorado suggests a regional economic impact and workforce involvement in the aerospace sector.

Value Assessment

Rating: fair

The total value of $835.6 million over nearly 13 years averages to approximately $64.3 million per year. This figure needs to be benchmarked against similar large-scale aerospace development and manufacturing contracts. The cost-plus-award-fee structure allows for flexibility but can lead to higher final costs if not managed tightly. Without specific performance metrics and comparable contract data, a definitive value-for-money assessment is challenging, but the extended duration and significant funding suggest a substantial investment.

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 used when a specific contractor possesses unique capabilities, proprietary technology, or is the only source capable of meeting the requirement. While it ensures the use of a specialized provider, it eliminates the potential for cost savings that can arise from competitive bidding processes.

Taxpayer Impact: The lack of competition means taxpayers may not have benefited from the price reductions typically achieved through a bidding war among potential suppliers. This could result in a higher overall cost for the government.

Public Impact

The primary beneficiaries are the Department of Defense and potentially other government agencies relying on the Titan IV launch vehicle for satellite deployment and other space-related missions. The contract supports the development, engineering, manufacturing, and sustainment of the Titan IV launch vehicle, a critical component of national space capabilities. Geographic impact is concentrated in Littleton, Colorado, where Lockheed Martin is located, supporting local jobs and the regional aerospace industry. Workforce implications include employment for engineers, technicians, manufacturing personnel, and support staff involved in the complex process of building and maintaining launch vehicles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential savings for taxpayers.
Cost-plus-award-fee contracts can sometimes lead to higher costs if performance incentives are not perfectly aligned with cost control.
Long contract duration increases exposure to potential scope creep or evolving technological requirements over time.

Positive Signals

Sustained funding indicates a critical and ongoing need for the Titan IV program, ensuring national security or scientific objectives are met.
Awarding to Lockheed Martin, a major aerospace contractor, suggests leveraging established expertise and infrastructure for a complex program.
The contract covers a broad scope including R&D, engineering, and manufacturing, indicating a comprehensive approach to program sustainment.

Sector Analysis

The aerospace and defense sector is characterized by high R&D costs, long development cycles, and significant government procurement. Contracts for launch vehicles like the Titan IV are crucial for national security, space exploration, and satellite deployment. The market is dominated by a few large, specialized contractors. Spending in this area is often driven by strategic imperatives rather than purely market-based demand, making oversight and competition dynamics particularly important.

Small Business Impact

This contract does not appear to have a specific small business set-aside component mentioned. Given the nature of large-scale launch vehicle manufacturing, the prime contractor, Lockheed Martin, is a large business. Subcontracting opportunities for small businesses may exist within the supply chain, but the primary award is not directed towards them. Further analysis would be needed to determine the extent of small business participation through subcontracting.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). The cost-plus-award-fee structure necessitates close monitoring of costs and performance against award criteria. Transparency would be expected through regular reporting requirements from the contractor. Inspector General investigations could be initiated if fraud, waste, or abuse were suspected.

Related Government Programs

Space Launch Systems
Missile Defense Systems
Satellite Procurement
Aerospace Research and Development
National Security Space Programs

Risk Flags

Sole-source award may limit cost savings.
Cost-plus contract type can incentivize spending.
Long contract duration increases risk exposure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $289.7 million to LOCKHEED MARTIN CORP. 199807!5700!0048!GZ74 !SMC/PKV2 !F0470198C0005 !A!*!* !19971001!20020930!835562950!834951691!834951691!N!04236!LOCKHEED MARTIN CORPORATION !12257 STATE HWY 121 LOC A !LITTLETON !CO!80127!45255!005!08!LITTLETON !ARAPAHOE !COLORADO !0001!+000004076430!N!N!000000000000!AC25!RDTE/MISSILE AND SPACE SYSTEMS-ENG/MANUF DEVEL !A2 !MISSILE AND SPACE SYSTEMS !3CPA!TITAN IV LAUNCH VEH PROGRAM !3671!3!A!S!*!B!A!*!D !N!R!1!0

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORP.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $289.7 million.

What is the period of performance?

Start: 1997-10-01. End: 2010-09-02.

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

The provided data does not explicitly state the justification for the sole-source award. However, sole-source awards for complex systems like launch vehicles are typically made when there is only one responsible source capable of meeting the government's requirements. This could be due to unique technological capabilities, proprietary designs, existing infrastructure, or the need for continuity with previous development phases. Without further documentation, the precise reason remains unstated, but it implies a belief by the procuring agency that competition was not feasible or advantageous at the time of award.

How does the average annual spending compare to other major defense procurement programs?

The average annual spending for this contract is approximately $64.3 million ($835.6 million / 12.9 years). Comparing this to other major defense procurement programs requires access to broader spending data. However, for context, major aircraft programs (like the F-35) or shipbuilding programs often involve annual expenditures in the billions of dollars. Therefore, while substantial, the annual outlay for the Titan IV program appears moderate relative to the largest, most complex defense acquisition programs, reflecting its specific role in space launch capabilities rather than broad-spectrum military hardware.

What were the key performance metrics tied to the 'award fee' component of the contract?

The provided data does not detail the specific performance metrics used for the award fee component of this Cost Plus Award Fee (CPAF) contract. CPAF contracts typically establish objective and subjective criteria related to technical performance, schedule adherence, cost control, and management effectiveness. The 'award fee' is earned based on the contractor's performance against these criteria, as evaluated by the government. Without access to the contract's Performance Requirements Summary or similar documentation, the exact metrics remain unknown.

What is the historical spending trend for the Titan IV launch vehicle program prior to this contract?

The provided data represents a single, large definitive contract for the Titan IV Launch Vehicle Program awarded in 1997. It does not offer historical spending trends prior to this award. To understand the historical spending, one would need to access procurement data for earlier contracts related to the Titan IV program, potentially including research, development, and earlier production phases. This single data point indicates a significant investment during the contract period but does not illustrate the program's lifecycle cost or prior funding patterns.

What is Lockheed Martin's overall track record with large-scale government aerospace contracts?

Lockheed Martin is one of the largest and most experienced aerospace and defense contractors globally, with a long history of managing complex, high-value government contracts. They are known for their work on major programs such as the F-35 fighter jet, various missile systems (like the Trident and PAC-3), and space systems, including satellite development and launch services. Their track record generally includes successful delivery on many large-scale projects, though like any major contractor, they have also faced challenges and scrutiny on specific programs regarding cost, schedule, and performance. Their extensive experience suggests a high capability for executing programs like the Titan IV.

What are the potential risks associated with a sole-source, cost-plus contract for a long-duration program?

Sole-source, cost-plus contracts, especially for long-duration programs, carry inherent risks. For the government, the primary risks include potentially higher costs due to the lack of competitive pressure and the contractor's ability to recover all allowable costs plus a fee. Cost-plus structures can reduce the contractor's incentive to control expenses unless strong award-fee criteria are in place. For long-duration programs, risks also include potential cost overruns due to unforeseen technical challenges, changes in requirements, inflation, and contractor inefficiencies accumulating over time. Ensuring robust oversight and clearly defined performance metrics are crucial to mitigate these risks.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Address: 12257 S WADSWORTH BLVD, LITTLETON, CO, 80125

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

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline