Lockheed Martin awarded $193.9M for Joint Air-to-Surface Standoff Missile (LRASM) Lot 2 production

Contract Overview

Contract Amount: $193,867,974 ($193.9M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2018-11-15

End Date: 2024-04-30

Contract Duration: 1,993 days

Daily Burn Rate: $97.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: JOINT AIR TO SURFACE STANDOFF MISSILE LRASM LOT 2

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $193.9 million to LOCKHEED MARTIN CORPORATION for work described as: JOINT AIR TO SURFACE STANDOFF MISSILE LRASM LOT 2 Key points: 1. Contract awarded to a single source, raising questions about price competition. 2. Long contract duration (over 5 years) may impact cost control. 3. Fixed Price Incentive contract type aims to balance cost and performance. 4. Missile production is a critical defense capability. 5. Geographic concentration in Florida for contract performance. 6. No small business set-aside noted, potentially limiting broader economic participation.

Value Assessment

Rating: fair

The contract value of $193.9 million for LRASM Lot 2 production appears substantial. Benchmarking against similar advanced missile system procurements is challenging without more specific cost breakdowns. The fixed-price incentive structure suggests an attempt to manage costs, but the lack of competition makes a direct value-for-money assessment difficult. The provided data does not include unit costs for comparison.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Lockheed Martin Corporation, was considered. This approach is typically used when a unique capability is required or when only one source can meet the government's needs. The absence of a competitive bidding process means the government did not benefit from the price discovery that typically occurs in a multi-bidder scenario.

Taxpayer Impact: Sole-source awards can lead to higher prices for taxpayers as there is no competitive pressure to reduce costs. This limits the government's ability to secure the best possible price for the LRASM.

Public Impact

The U.S. Air Force benefits from the continued production of advanced long-range, stealthy, precision-guided munitions. This contract ensures the delivery of critical air-to-surface standoff missiles, enhancing combat capabilities. The primary geographic impact is in Florida, where the contractor is located and likely where production and assembly will occur. The contract supports jobs within the aerospace and defense manufacturing sector, specifically at Lockheed Martin facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for taxpayers.
Long contract duration could lead to cost overruns if not managed effectively.
Lack of small business involvement may limit broader economic benefits and innovation.

Positive Signals

Fixed Price Incentive contract type provides some incentive for the contractor to control costs.
Production of advanced LRASM missiles is crucial for national defense capabilities.
Contract awarded to a known defense prime contractor with established production capabilities.

Sector Analysis

The Joint Air-to-Surface Standoff Missile (LRASM) falls within the defense sector, specifically guided missile and space vehicle manufacturing. This is a highly specialized and technologically advanced segment of the aerospace and defense industry. Spending in this area is driven by national security requirements and the need for advanced weapon systems. Comparable spending benchmarks would involve other major defense procurement programs for advanced munitions and aircraft components.

Small Business Impact

This contract does not appear to include a small business set-aside. As a sole-source award to a large prime contractor, there is no direct mechanism for small business participation mandated within this specific contract. Subcontracting opportunities may exist, but they are not explicitly detailed in the provided data. The impact on the small business ecosystem is likely indirect, through potential subcontracting relationships rather than direct prime contract awards.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, specifically within the Department of the Air Force. Accountability measures are inherent in the Fixed Price Incentive contract type, which links profit to performance and cost targets. Transparency is limited due to the sole-source nature of the award. The Inspector General of the Department of Defense would have jurisdiction for audits and investigations if any issues arise.

Related Government Programs

Advanced Cruise Missile Programs
Air-Launched Weapon Systems
Defense Procurement
Guided Missile Manufacturing
Aerospace and Defense Contracts

Risk Flags

Sole-source award
Lack of competitive bidding
High-value defense contract

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $193.9 million to LOCKHEED MARTIN CORPORATION. JOINT AIR TO SURFACE STANDOFF MISSILE LRASM LOT 2

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 $193.9 million.

What is the period of performance?

Start: 2018-11-15. End: 2024-04-30.

What is the historical spending trend for the Joint Air-to-Surface Standoff Missile (LRASM) program?

Analyzing historical spending for the LRASM program requires access to detailed budget documents and contract award histories beyond the provided data. However, it is understood that LRASM is a relatively new program, evolving from earlier concepts like the Joint Standoff Weapon (JSOW) and incorporating stealth and anti-access/area denial capabilities. Initial development and testing phases would have incurred significant R&D costs, followed by production contracts similar to Lot 2. Without specific historical data, it's difficult to establish a precise trend, but spending typically increases as a program moves from low-rate initial production to full-rate production, and then may stabilize or decline as the system matures and procurement quantities are met or reduced.

How does the unit cost of the LRASM compare to similar advanced air-to-surface missiles?

Direct comparison of unit costs for the LRASM is challenging without specific unit cost data from this contract (Lot 2) or publicly available figures for comparable missiles. Advanced, stealthy, long-range missiles like the LRASM are inherently expensive due to their complex technology, materials, and manufacturing processes. Competitors or similar systems might include the Tomahawk (though typically ship/submarine-launched), or other advanced cruise missiles. However, the LRASM's specific design for penetrating contested airspace and its integration with specific platforms (like the B-1B, B-2, F/A-18E/F) contribute to its unique cost profile. The sole-source nature of this award further complicates direct benchmarking against potentially competitive systems.

What are the key performance metrics and targets associated with the Fixed Price Incentive (FPI) contract type for LRASM Lot 2?

Under a Fixed Price Incentive (FPI) contract, the final price is determined by the relationship between the final negotiated cost and the target cost. The government and contractor agree on a target cost, a target profit, and a price ceiling. If the final cost is below the target cost, both parties share in the savings based on a pre-negotiated formula. Conversely, if the final cost exceeds the target cost, the contractor bears a portion of the overrun up to the price ceiling, after which the government may be responsible for additional costs. Key performance metrics would likely relate to missile reliability, accuracy, range, warhead effectiveness, and delivery schedule adherence. The incentive aspect encourages the contractor to meet or exceed these performance targets while managing costs.

What is Lockheed Martin's track record with producing advanced missile systems for the Department of Defense?

Lockheed Martin Corporation has a long and extensive track record of producing advanced missile systems for the Department of Defense. They are a primary contractor for numerous critical programs, including the Patriot air defense missile, the Javelin anti-tank missile, the HIMARS rocket system, and various air-launched missiles. Their experience spans decades and encompasses a wide range of technologies, from guided munitions to strategic missiles. While specific performance details vary by program, Lockheed Martin is generally recognized as a leading defense contractor with significant expertise in missile design, development, and large-scale production. Their involvement in the LRASM program builds upon this established capability.

What are the potential risks associated with the sole-source procurement of LRASM Lot 2, and how are they mitigated?

The primary risk of a sole-source procurement is the potential for inflated pricing due to the lack of competition. Without competing bids, there is less pressure on the contractor to offer the lowest possible price. Additionally, sole-source awards can sometimes indicate a lack of robust market research or a reliance on a single supplier, which can create dependency. Mitigation strategies employed by the government often include extensive cost analysis, negotiation with the sole provider, and potentially incorporating performance incentives (as seen with the FPI contract type) to ensure value. For future procurements, the government might explore options to introduce competition or re-evaluate the necessity of a sole-source approach if alternative solutions emerge.

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: FIXED PRICE INCENTIVE (L)

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: $193,867,974

Exercised Options: $193,867,974

Current Obligation: $193,867,974

Actual Outlays: $48,218,002

Subaward Activity

Number of Subawards: 465

Total Subaward Amount: $1,204,650,609

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline