The Theater High Altitude Area Defense (THAAD) Engineering and Manufacturing
Development (EMD) contract for $3.8 billion was awarded to Lockheed Martin Space Systems
Company, Missile and Space Operations (LMSSC/M&SO), Sunnyvale, CA, on June 28, 2000.
The THAAD EMD contract is an award fee type contract. The functional performance areas are
technical, management, schedule and cost.
Emphasis was placed on the importance of successful fl ight tests occurring on schedule and
within cost by including in the contract an award fee pool with special incentives for successful
fl ight test intercepts for the fi rst two fl ight attempts at White Sands Missile Range (WSMR)
and Kwajalein Missile Range (KMR). If Lockheed Martin achieves a successful intercept
within the fi rst two attempts at WSMR, they will receive $25M in award fee. However, if they
are unsuccessful after the fi rst attempt, LM will share $15M of the contract cost. If Lockheed
Martin achieves a successful intercept within the fi rst two attempts at KMR, they will receive
$25M in award fee. However, if they are unsuccessful after the fi rst attempt, LM will share
$20M of the contract cost. The clause identifi es technical parameters that must be met during
each of the fi rst two fl ight tests at both ranges.
The use of the alpha contracting process for development of the scope of work (SOW) and
the integrated Master Plan and Master Schedule as well as proposal preparation/evaluation
provided the government with a best value contract. The Integrated Master Plan (IMP)
provides the process narratives, events and criteria for the EMD program. The Integrated Master
Schedule (IMS) provides the detail tasks and schedule for implementing the IMP. Both of these
documents were developed during the alpha contracting process, substantially reducing the
normal negotiation time and promoting a better understanding of the EMD requirements and
the contractor-proposed approach to meeting these requirement