Lockheed Martin awarded $17.5M for Joint Air-to-Surface Missile engineering support, a sole-source contract

Contract Overview

Contract Amount: $17,475,919 ($17.5M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2018-09-26

End Date: 2022-11-21

Contract Duration: 1,517 days

Daily Burn Rate: $11.5K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: JOINT AIR-TO-SURFACE STANDOFF MISSILE - ENGINEERING SUPPORT 2.0

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $17.5 million to LOCKHEED MARTIN CORPORATION for work described as: JOINT AIR-TO-SURFACE STANDOFF MISSILE - ENGINEERING SUPPORT 2.0 Key points: 1. Contract awarded on a sole-source basis, limiting competitive price discovery. 2. Engineering support for a critical missile system indicates ongoing program needs. 3. Contract duration of over four years suggests a long-term requirement. 4. Cost-plus-fixed-fee structure may incentivize cost overruns. 5. Focus on engineering support rather than production implies a need for sustainment and upgrades. 6. Geographic location in Florida may indicate specific facility or personnel requirements.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source engineering support contract is challenging without comparable sole-source awards for similar missile systems. The cost-plus-fixed-fee (CPFF) pricing structure, while common for complex R&D and engineering services, carries inherent risks of cost escalation. Without competition, it's difficult to ascertain if the fixed fee represents a fair profit margin or if the overall cost basis is optimized. Further analysis would require access to the contractor's cost proposals and detailed performance metrics.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Air Force did not conduct a competitive bidding process. This typically occurs when a specific contractor possesses unique capabilities, intellectual property, or is the sole provider of a necessary component or service. The lack of competition means that pricing and terms were negotiated directly with Lockheed Martin Corporation, potentially leading to higher costs than if multiple vendors had vied for the contract.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure to drive down prices. The government's negotiating position is weakened without alternative sources.

Public Impact

The U.S. Air Force benefits from continued engineering support for the Joint Air-to-Surface Standoff Missile (JASSM) program. This contract ensures the sustainment, maintenance, and potential upgrades of a key offensive weapon system. The primary geographic impact is within Florida, where the contractor's facilities or personnel are located. The contract supports specialized engineering and technical roles within Lockheed Martin Corporation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost-plus-fixed-fee contract structure can lead to cost overruns.
Lack of transparency in sole-source negotiations makes value assessment difficult.

Positive Signals

Contract supports a critical defense capability (JASSM).
Long-term contract duration suggests program stability and importance.
Engineering support ensures system readiness and potential for future enhancements.

Sector Analysis

The aerospace and defense sector is characterized by high R&D costs, long product development cycles, and significant government procurement. Contracts for missile systems and their associated engineering support are a substantial part of this sector. The market is often dominated by a few large prime contractors like Lockheed Martin, especially for specialized systems where intellectual property and established expertise are critical. Spending benchmarks for similar engineering support contracts can vary widely based on system complexity and program phase.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Lockheed Martin Corporation, a large prime contractor, is the direct awardee. While the prime contractor may engage small businesses for subcontracting, the primary award does not directly benefit small businesses through a set-aside. The implications for the small business ecosystem would depend on the extent of subcontracting opportunities generated by this specific contract.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Air Force's contracting and program management offices. The Cost-Plus-Fixed-Fee (CPFF) structure necessitates robust oversight to monitor costs and ensure the fixed fee is earned based on performance. Transparency is limited due to the sole-source nature, but contract performance reviews and financial audits would be standard oversight mechanisms. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Joint Air-to-Surface Standoff Missile (JASSM) Program
Air Force Weapon Systems Sustainment
Guided Missile Manufacturing
Aerospace Engineering Services

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $17.5 million to LOCKHEED MARTIN CORPORATION. JOINT AIR-TO-SURFACE STANDOFF MISSILE - ENGINEERING SUPPORT 2.0

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $17.5 million.

What is the period of performance?

Start: 2018-09-26. End: 2022-11-21.

What is Lockheed Martin Corporation's track record with sole-source defense contracts, particularly for missile systems?

Lockheed Martin Corporation, as a major defense contractor, has a significant history of receiving sole-source contracts, especially for complex and specialized systems like missiles. These awards are often justified by the company's unique capabilities, proprietary technology, and established role as the prime contractor or original equipment manufacturer. While sole-source awards can raise concerns about price competition, they are sometimes deemed necessary for national security when alternatives are not feasible or would significantly delay critical program objectives. Analyzing their past sole-source awards would involve reviewing contract histories for similar systems, examining the justifications provided for sole-sourcing, and assessing performance outcomes and cost trends on those contracts.

How does the $17.5 million value of this engineering support contract compare to similar contracts for missile systems?

Directly comparing the $17.5 million value of this specific engineering support contract is challenging without knowing the exact scope of work and the specific missile system variant it supports. Engineering support contracts can range dramatically in cost based on factors like the maturity of the system, the complexity of the required engineering tasks (e.g., sustainment, upgrades, troubleshooting), and the duration of the support period. For a sole-source contract, benchmarking against competitive awards is not feasible. However, one could look at historical spending on engineering support for other major missile programs managed by the Department of Defense to establish a general range, keeping in mind that each system's needs are unique.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract for engineering services?

The primary risks associated with a sole-source, cost-plus-fixed-fee (CPFF) contract for engineering services are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher prices and less favorable terms for the government, as the contractor faces no direct market alternatives. Secondly, the CPFF structure, while providing flexibility for evolving requirements, can incentivize the contractor to incur higher costs, as the government reimburses allowable costs plus a predetermined fixed fee. This can reduce the contractor's motivation to control expenses efficiently, increasing the risk of cost overruns. Robust government oversight is crucial to mitigate these risks by scrutinizing costs and ensuring the fixed fee is appropriately earned.

What is the typical performance context for engineering support contracts on major weapon systems like the JASSM?

Engineering support contracts for major weapon systems like the Joint Air-to-Surface Standoff Missile (JASSM) typically focus on ensuring the system's operational readiness, reliability, and continued effectiveness throughout its lifecycle. This can encompass a range of activities, including troubleshooting technical issues, developing software updates, providing technical data packages, performing system diagnostics, recommending and implementing upgrades, and ensuring compliance with evolving requirements. The performance context often involves close collaboration between the contractor's engineering teams and the government's program managers and end-users to address emergent problems and plan for future enhancements, ensuring the weapon system remains a viable asset.

How has federal spending on guided missile and space vehicle manufacturing evolved, and where does this contract fit?

Federal spending on guided missile and space vehicle manufacturing has historically been substantial, driven by national defense priorities and technological advancements. This sector represents a significant portion of the Department of Defense's procurement budget. Spending patterns can fluctuate based on geopolitical events, the introduction of new weapon systems, and the sustainment needs of existing platforms. This specific contract, valued at $17.5 million for engineering support, represents a component of the broader spending within this category. It focuses on the sustainment and technical evolution of an existing system rather than new production, indicating a mature phase of the JASSM program's lifecycle.

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

Pricing Type: COST PLUS FIXED FEE (U)

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: $19,364,117

Exercised Options: $19,364,117

Current Obligation: $17,475,919

Actual Outlays: $105,575

Subaward Activity

Number of Subawards: 25

Total Subaward Amount: $8,650,526

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA868214D0029

IDV Type: IDC

Timeline