Naval Sea Systems Command awarded $192M contract for Guided Missile Launch System Mk-41 to Lockheed Martin

Contract Overview

Contract Amount: $192,217,733 ($192.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2000-02-04

End Date: 2005-03-31

Contract Duration: 1,882 days

Daily Burn Rate: $102.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200005!1700!001390!BZ005 !NAVAL SEA SYSTEMS COMMAND !N0002400C5486 !A!*!* !20000204!20050930!003419090!834951691!834951691!N!38597!LOCKHEED MARTIN CORPORATION !2323 EASTERN BLVD !BALTIMORE !MD!21220!04000!510!24!BALTIMORE !BALTIMORE (CITY) !MARYLAND !0001!+000031000358!N!N!000000000000!AD24!RDTE/SERVICES-DEMO/VALID !A5 !WEAPONS !2CLB!GUIDED MSL LAUNCH MK-41 !3489!3!*!*!*!B!A!*!D !N!R!1!001!N!1G!Z!Y!Z!* !* !N!C!*!Z!Z!A!A!A!A!* !*!N!A!D!N!*!*!*!*!*!

Place of Performance

Location: MIDDLE RIVER, BALTIMORE County, MARYLAND, 21220, UNITED STATES OF AMERICA

State: Maryland Government Spending

Plain-Language Summary

Department of Defense obligated $192.2 million to LOCKHEED MARTIN CORPORATION for work described as: 200005!1700!001390!BZ005 !NAVAL SEA SYSTEMS COMMAND !N0002400C5486 !A!*!* !20000204!20050930!003419090!834951691!834951691!N!38597!LOCKHEED MARTIN CORPORATION !2323 EASTERN BLVD !BALTIMORE !MD!21220!04000!510!24!BALTIMORE !BAL… Key points: 1. Contract awarded for research, development, testing, and evaluation (RDTE) of a weapons system. 2. Significant investment in naval defense capabilities, specifically missile launch technology. 3. Contract duration of approximately 5 years indicates a long-term development or sustainment effort. 4. Awarded to a single, large defense contractor, suggesting specialized capabilities or market concentration. 5. The contract type (Cost Plus Award Fee) incentivizes performance while managing costs. 6. Geographic concentration of the contractor in Maryland may have local economic implications.

Value Assessment

Rating: fair

The contract value of $192 million over roughly five years for RDTE services related to a missile launch system appears substantial. Benchmarking this against similar contracts for advanced weapons systems development is challenging without more specific details on the scope of work. However, given the specialized nature of naval weapons and the prime contractor's established role in defense, the pricing may reflect the high R&D costs and complexity involved. Further analysis would require comparing the per-unit cost of development or specific milestones achieved against industry standards for similar technological advancements.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This typically occurs when a specific contractor possesses unique capabilities, intellectual property, or is the only source capable of meeting the requirement. The lack of competition means that price discovery through a bidding process was bypassed, potentially leading to higher costs for the government compared to a competed scenario. The rationale for sole-sourcing would need to be thoroughly documented to ensure it was justified.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without a competitive process, there is less pressure on the contractor to offer the lowest possible price.

Public Impact

The U.S. Navy benefits from advanced missile launch technology, enhancing its fleet's combat capabilities. Services delivered include research, development, testing, and evaluation for a critical weapons platform. The primary geographic impact is within the defense industrial base, particularly in Maryland where the contractor is located. Workforce implications include employment for engineers, technicians, and support staff at Lockheed Martin and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced innovation.
Sole-source awards can limit opportunities for other capable companies to enter the market.
The cost-plus award fee structure requires robust government oversight to manage costs effectively.

Positive Signals

Award to a major defense contractor like Lockheed Martin suggests access to established expertise and technology.
The contract's focus on RDTE indicates investment in future naval defense capabilities.
The long contract duration implies a strategic commitment to developing and potentially fielding this system.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on weapons systems development. The market for advanced naval weaponry is highly specialized, dominated by a few large prime contractors. Spending in this area is driven by national security priorities and technological advancements in military capabilities. Comparable spending benchmarks would involve analyzing other RDTE contracts for major defense platforms, such as aircraft, ships, or other complex weapon systems, to gauge the relative investment.

Small Business Impact

As a sole-source award to a large prime contractor, this contract does not appear to have a specific small business set-aside component. However, Lockheed Martin, like other major defense contractors, is typically required to meet subcontracting goals for small businesses. The extent to which small businesses will participate depends on the specific needs of the project and the company's subcontracting plan. Without a competitive bid process, the direct impact on small business opportunities is less transparent.

Oversight & Accountability

Oversight for this contract would primarily fall under the Defense Contract Management Agency (DCMA) and the Naval Sea Systems Command (NAVSEA). These entities are responsible for monitoring contract performance, ensuring compliance with terms and conditions, and overseeing cost expenditures, especially given the Cost Plus Award Fee structure. Transparency is typically managed through regular reporting requirements from the contractor. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Naval Weapons Systems
Missile Launch Systems
Defense Research and Development
Naval Surface Warfare

Risk Flags

Sole-source award lacks competitive pricing pressure.
Cost-plus contract type requires robust government oversight to control costs.
RDTE contracts inherently carry technical and schedule risks.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $192.2 million to LOCKHEED MARTIN CORPORATION. 200005!1700!001390!BZ005 !NAVAL SEA SYSTEMS COMMAND !N0002400C5486 !A!*!* !20000204!20050930!003419090!834951691!834951691!N!38597!LOCKHEED MARTIN CORPORATION !2323 EASTERN BLVD !BALTIMORE !MD!21220!04000!510!24!BALTIMORE !BALTIMORE (CITY) !MARYLAND !0001!+000031000358!N!N!000000000000!AD24!RDTE/SERVICES-DEMO/VALID !A5 !WEAPONS !2CLB!GUIDED MSL LAUNCH MK-41 !3489!3!*!*!*!B!A!*!D !N!R!

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $192.2 million.

What is the period of performance?

Start: 2000-02-04. End: 2005-03-31.

What is the specific nature of the 'Guided Missile Launch MK-41' system being developed or tested?

The Guided Missile Launch System (GMLS) Mk-41 is a versatile vertical launching system used by the U.S. Navy and allied navies. It is designed to house and launch a variety of missiles, including surface-to-air, anti-ship, and land-attack missiles. The 'RDTE/SERVICES-DEMO/VALID' designation suggests this contract likely involves research, development, testing, demonstration, and validation activities for enhancements, upgrades, or new configurations of the Mk-41 system. This could encompass improvements in missile compatibility, launch sequencing, system reliability, or integration with new sensor and fire control systems. The specific scope would detail which aspects of the Mk-41 are being addressed.

How does the $192 million contract value compare to historical spending on the Mk-41 system or similar launch systems?

The $192 million awarded to Lockheed Martin for RDTE on the Mk-41 system represents a significant investment over its approximately five-year duration. To benchmark this, one would need to examine historical spending data for the Mk-41 program, including previous R&D efforts, production runs, and sustainment contracts. Comparing it to other vertical launch systems (VLS) developed for naval platforms would also provide context. Given the complexity and critical nature of naval weapons systems, R&D costs can be substantial. Without access to detailed historical spending profiles for the Mk-41 or comparable VLS programs, it's difficult to definitively state if $192 million is high or low, but it indicates a substantial commitment to advancing this technology.

What are the key performance metrics and award fee criteria associated with this Cost Plus Award Fee contract?

For a Cost Plus Award Fee (CPAF) contract, the government establishes specific performance objectives and criteria. The 'award fee' portion is determined by the government's subjective evaluation of the contractor's performance against these criteria. Key metrics for a weapons system RDTE contract like this could include meeting technical performance specifications (e.g., missile launch success rates, system response times), adhering to development schedules, managing costs effectively within the 'cost' portion, demonstrating system reliability and safety, and successful completion of testing phases. The specific criteria and weighting would be detailed in the contract's Performance Work Statement (PWS) and award fee plan, guiding the contractor's efforts and the government's evaluation.

What is Lockheed Martin's track record with the Mk-41 system and similar naval weapon platforms?

Lockheed Martin has a long and extensive track record with the Mk-41 Vertical Launching System (VLS). They are a primary contractor responsible for the production, sustainment, and often the development of upgrades for the Mk-41. The company is a major player in the defense industry, with decades of experience in designing, manufacturing, and integrating complex naval combat systems, including missile systems, fire control, and associated platforms. Their history with the Mk-41 suggests a deep understanding of its capabilities and requirements, making them a logical choice for continued RDTE efforts. This established relationship implies a lower technical risk for the government.

Are there any identified risks associated with the sole-source nature of this award or the technology itself?

The primary risk associated with a sole-source award is the potential for reduced price competition, which could lead to higher costs for the government and taxpayers. It also limits opportunities for other companies to innovate and compete. Regarding the technology, risks could include technical challenges in R&D, potential cost overruns if development proves more complex than anticipated, schedule delays, and ensuring the system meets evolving operational requirements and interoperability standards. The CPAF structure aims to mitigate cost and performance risks by incentivizing the contractor, but requires diligent government oversight.

What is the expected impact of this contract on the future capabilities of the U.S. Navy's fleet?

This contract is expected to enhance the offensive and defensive capabilities of the U.S. Navy's fleet by advancing the technology behind the Mk-41 Vertical Launching System. Improvements in missile capacity, launch speed, reliability, or the ability to integrate next-generation missiles could significantly bolster the Navy's power projection, sea control, and missile defense capabilities. As the Mk-41 is a foundational system on many naval platforms, upgrades stemming from this RDTE effort could have a widespread positive impact across various classes of ships, ensuring the fleet remains technologically superior and capable of meeting diverse mission requirements.

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

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 2323 EASTERN BLVD, BALTIMORE, MD, 21220

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: YES

Timeline