DoD awards $24M for LRASM Datalink, a sole-source contract to Lockheed Martin

Contract Overview

Contract Amount: $24,001,134 ($24.0M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2018-04-18

End Date: 2020-03-09

Contract Duration: 691 days

Daily Burn Rate: $34.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: LRASM DATALINK

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $24.0 million to LOCKHEED MARTIN CORPORATION for work described as: LRASM DATALINK Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Cost-plus-incentive-fee structure may incentivize contractor efficiency. 3. Contract duration of 691 days suggests a focused project scope. 4. The contract falls under Guided Missile and Space Vehicle Manufacturing. 5. Awarded by the Department of Defense, a major federal spender. 6. No small business set-aside, indicating potential exclusion of smaller firms.

Value Assessment

Rating: questionable

The contract's value of $24 million for LRASM Datalink is difficult to benchmark without specific performance metrics and comparable sole-source awards. The cost-plus-incentive-fee (CPIF) pricing structure, while designed to share risk and reward efficiency, can lead to cost overruns if not closely managed. Without transparency into the cost breakdown and profit margins, assessing true value-for-money is challenging. The absence of competition inherently removes a key mechanism for ensuring competitive pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning only one contractor, Lockheed Martin Corporation, was solicited. This approach bypasses the competitive bidding process, which typically involves multiple companies submitting proposals. While sole-source awards can be justified for unique capabilities or urgent needs, they limit the government's ability to explore alternative solutions and potentially secure lower prices through open competition.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings that competitive bidding can generate. The government may pay a premium due to the lack of market pressure on pricing.

Public Impact

The primary beneficiaries are the Department of Defense, which receives critical LRASM datalink capabilities. The contract supports the development and integration of advanced missile technology. The geographic impact is primarily in Florida, where the contractor is located. Workforce implications include employment for engineers and technicians involved in advanced aerospace manufacturing.

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 create contractor dependency and limit future market options.
CPIF contracts require robust oversight to prevent cost escalation.

Positive Signals

Award to a major defense contractor suggests access to specialized expertise.
CPIF structure can incentivize meeting cost and performance targets.
Contract duration indicates a defined project scope, potentially leading to focused execution.

Sector Analysis

The LRASM datalink contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a specialized segment of the aerospace and defense industry. This sector is characterized by high R&D investment, stringent quality requirements, and significant government procurement. Spending in this area is driven by national security needs and technological advancements in defense systems. Comparable spending benchmarks would typically involve other advanced weapons systems development and production contracts.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. This suggests that the primary contractor, Lockheed Martin, will likely perform the majority of the work, potentially limiting opportunities for small businesses to participate in this specific defense contract. The absence of set-asides in sole-source awards is common, as the justification often centers on unique capabilities not readily available from smaller, less specialized firms.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance, quality, and compliance with contract terms. The cost-plus-incentive-fee structure necessitates close monitoring of costs and performance against established targets. Transparency is limited due to the sole-source nature and the proprietary information inherent in defense contracting. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Long Range Anti-Ship Missile (LRASM) Program
Advanced Weapons Systems Development
Department of Defense Procurement
Aerospace Manufacturing Contracts

Risk Flags

Sole-source award limits competition
Potential for cost overruns in CPIF contracts
Lack of transparency in pricing
No small business participation noted

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $24.0 million to LOCKHEED MARTIN CORPORATION. LRASM DATALINK

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 $24.0 million.

What is the period of performance?

Start: 2018-04-18. End: 2020-03-09.

What is the historical spending trend for LRASM datalink or similar components by the Department of Defense?

Analyzing historical spending for LRASM datalink specifically is challenging with the provided data, as this appears to be a single contract award. However, the Department of Defense (DoD) consistently invests billions annually in advanced weapons systems, including missiles and their associated technologies. The Long Range Anti-Ship Missile (LRASM) program itself has seen significant investment over its development lifecycle. Broader trends in guided missile and space vehicle manufacturing show a sustained high level of federal spending, driven by modernization efforts and geopolitical considerations. Without access to detailed historical contract databases for this specific component or program, precise year-over-year spending trends are not available from this single data point. However, the nature of such advanced defense systems implies multi-year, substantial financial commitments.

How does the cost-plus-incentive-fee (CPIF) structure compare to other contract types used for similar defense systems?

The Cost-Plus-Incentive-Fee (CPIF) contract is one of several types the DoD utilizes for complex defense systems. Unlike Firm-Fixed-Price (FFP) contracts, which offer price certainty but can be risky for the contractor on novel projects, CPIF shares cost risks and rewards between the government and contractor. It aims to incentivize the contractor to control costs and meet performance targets by adjusting the final profit based on achieving predetermined cost, performance, or schedule goals. Other common types include Cost Plus Fixed Fee (CPFF), where profit is fixed, and Cost Plus Award Fee (CPAF), where the contractor earns award fees based on subjective government evaluations. For advanced R&D or systems with high technical uncertainty, CPIF and CPAF are often preferred over FFP to encourage innovation and manage unforeseen challenges, though they require diligent oversight to prevent cost overruns.

What are the specific performance metrics or milestones associated with this LRASM datalink contract?

The provided data does not specify the exact performance metrics or milestones for this LRASM datalink contract. However, typical performance metrics for such a contract would likely include factors such as data transmission speed, reliability, security, integration compatibility with the LRASM platform, and operational effectiveness in various environmental conditions. Milestones might involve design reviews, prototype testing, integration phases, and final delivery and acceptance. The Cost-Plus-Incentive-Fee (CPIF) structure implies that specific targets for cost, schedule, and performance were established, and the contractor's final profit is contingent upon meeting or exceeding these targets. Detailed performance specifications are usually found in the contract's Statement of Work (SOW) and associated exhibits, which are not publicly available in this dataset.

What is Lockheed Martin's track record with sole-source defense contracts of similar value and complexity?

Lockheed Martin Corporation, as one of the largest defense contractors globally, has an extensive history of receiving sole-source contracts from the U.S. Department of Defense (DoD) for complex systems, often valued in the tens or hundreds of millions of dollars, and sometimes billions. Their track record includes major programs like the F-35 fighter jet, THAAD missile defense system, and various classified projects. Sole-source awards to Lockheed Martin are typically justified by their established expertise, proprietary technology, existing infrastructure, or the need for integration with platforms they already produce. While specific details of all sole-source awards and their outcomes are not always public, the company's continued success in securing such contracts suggests a perceived capability and reliability by the DoD, although it also highlights the inherent risks of limited competition.

What are the potential risks associated with the 'Guided Missile and Space Vehicle Manufacturing' sector for federal spending?

The 'Guided Missile and Space Vehicle Manufacturing' sector presents several risks for federal spending. High research and development costs are inherent, with long lead times and the possibility of technological obsolescence or failure to meet performance requirements. Program cost overruns are common due to the complexity and evolving nature of these systems, often leading to budget increases. Sole-source or limited competition awards, as seen here, can result in higher prices than might be achieved through open bidding. Furthermore, geopolitical shifts can alter program priorities, potentially leading to contract cancellations or significant scope changes. Ensuring robust oversight and realistic budgeting is crucial to mitigate these risks and ensure value for taxpayer money in this high-stakes sector.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 5600 W SAND LAKE RD # MP-265, ORLANDO, FL, 32819

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $24,134,199

Exercised Options: $24,134,199

Current Obligation: $24,001,134

Subaward Activity

Number of Subawards: 19

Total Subaward Amount: $63,377,721

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NOT OBTAINED - WAIVED

Timeline