DoD awards $1.9B for Joint Air-to-Surface Standoff Missile production engineering to Lockheed Martin

Contract Overview

Contract Amount: $19,163,786 ($19.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2022-12-15

End Date: 2026-02-27

Contract Duration: 1,170 days

Daily Burn Rate: $16.4K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: JOINT AIR TO SURFACE STANDOFF MISSILE, PRODUCTION ENGINEERIN

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $19.2 million to LOCKHEED MARTIN CORPORATION for work described as: JOINT AIR TO SURFACE STANDOFF MISSILE, PRODUCTION ENGINEERIN Key points: 1. Contract awarded on a sole-source basis, raising questions about price competition. 2. Significant funding allocated for production engineering over a multi-year period. 3. Focus on a critical missile system highlights defense modernization efforts. 4. Geographic concentration of contract performance in Florida. 5. Contract type (Cost Plus Fixed Fee) may incentivize cost escalation. 6. Long performance period suggests a sustained need for missile support.

Value Assessment

Rating: questionable

The contract's value of $1.9 billion for production engineering is substantial. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The Cost Plus Fixed Fee (CPFF) contract type, while common for complex engineering efforts, can lead to higher costs for the government if not managed closely, as the contractor is reimbursed for all allowable costs plus a fixed fee. This structure may not provide the strongest incentive for cost control.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one source is capable of meeting the requirement, often due to proprietary technology or unique expertise. The lack of competition means the government did not benefit from potential price reductions or innovative solutions that could arise from a bidding process.

Taxpayer Impact: The absence of competition for this significant contract means taxpayers may not be receiving the best possible price. Without alternative bids, there is a risk of overpayment compared to what could have been achieved in a competitive environment.

Public Impact

The U.S. Air Force and Navy will benefit from continued engineering support for the Joint Air-to-Surface Standoff Missile (JASSM) program. This contract ensures the ongoing production engineering necessary for the development and sustainment of a key strategic weapon system. The primary geographic impact is in Florida, where the contractor's operations are located. The contract supports a specialized workforce in advanced manufacturing and engineering within the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential savings.
Cost Plus Fixed Fee structure may lead to cost overruns if not rigorously managed.
Long contract duration increases exposure to potential cost escalations over time.
Lack of transparency in the sole-source justification could obscure potential alternatives.

Positive Signals

Award to a known, experienced contractor (Lockheed Martin) for a critical defense system.
Focus on production engineering ensures continued availability of a vital weapon.
Long-term contract provides stability for program execution and workforce planning.

Sector Analysis

The defense sector, particularly the aerospace and defense manufacturing sub-sector, is characterized by high R&D costs, long product lifecycles, and significant government procurement. Contracts for advanced missile systems represent a substantial portion of defense spending. Comparable spending benchmarks are difficult to establish precisely due to the specialized nature of such systems, but multi-billion dollar awards for production and engineering support are not uncommon for major weapon platforms.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Lockheed Martin, a large prime contractor, is likely to subcontract portions of this work. The extent to which small businesses will benefit through subcontracting opportunities is not detailed in the provided data, but it is a crucial area for ensuring broader economic impact and fostering the small business defense ecosystem.

Oversight & Accountability

Oversight for this contract will primarily fall under the Department of Defense's contracting and program management offices. The Cost Plus Fixed Fee structure necessitates robust financial oversight to ensure all reimbursed costs are allowable and reasonable. Inspector General investigations may be triggered by allegations of fraud, waste, or abuse. Transparency is enhanced through contract award databases, but detailed justifications for sole-source awards and ongoing performance metrics are not always publicly accessible.

Related Government Programs

Joint Air-to-Surface Standoff Missile (JASSM) Program
Air Force Munitions Procurement
Navy Missile Systems Development
Guided Missile and Space Vehicle Manufacturing

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Potential for cost escalation
Lack of competitive benchmarking

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.2 million to LOCKHEED MARTIN CORPORATION. JOINT AIR TO SURFACE STANDOFF MISSILE, PRODUCTION ENGINEERIN

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 $19.2 million.

What is the period of performance?

Start: 2022-12-15. End: 2026-02-27.

What is Lockheed Martin's track record with the JASSM program and similar missile production contracts?

Lockheed Martin Corporation has a long-standing history as the prime contractor for the Joint Air-to-Surface Standoff Missile (JASSM) family of weapons, including the JASSM-ER and LRASM variants. Their extensive experience with this specific platform suggests a deep understanding of its design, production, and sustainment requirements. The company also produces other advanced missile systems for various military branches, indicating a strong track record in complex defense manufacturing. However, like many large defense contractors, they have faced scrutiny over cost and performance on various programs. A detailed review of past performance metrics, delivery schedules, and cost variances on previous JASSM contracts and comparable missile programs would provide a more comprehensive assessment of their reliability and efficiency in fulfilling this current production engineering award.

How does the $1.9 billion value compare to historical spending on JASSM production engineering?

The $1.9 billion allocated for production engineering over the contract's duration (approximately 2.5 years) represents a significant investment. To contextualize this value, historical spending data for JASSM production engineering would need to be analyzed. This would involve examining previous contracts awarded for similar services, looking at annual expenditures, and identifying trends in cost escalation or reduction. Without direct comparative data for this specific engineering function, it's challenging to definitively state if $1.9 billion is high or low. However, given the complexity and strategic importance of the JASSM, and considering the multi-year nature of the award, the figure suggests a sustained and substantial commitment to the program's ongoing development and manufacturing readiness. Further analysis would require accessing historical contract databases and program budget documents.

What are the primary risks associated with a sole-source, Cost Plus Fixed Fee contract for missile production engineering?

The primary risks associated with this contract structure are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher prices than could be achieved through a bidding process. The government lacks the leverage of alternative suppliers to negotiate favorable terms. Secondly, the Cost Plus Fixed Fee (CPFF) structure reimburses the contractor for all allowable costs incurred, plus a predetermined fixed fee. While the fee is fixed, the contractor has less incentive to control costs aggressively because their profit margin is not directly tied to cost savings. This can increase the risk of cost overruns if the government's oversight is not sufficiently rigorous in scrutinizing allowable costs and ensuring efficient execution. This combination can result in a higher overall expenditure for the taxpayer compared to a fixed-price contract awarded competitively.

How effective is the JASSM program in meeting its intended operational objectives, and how does this contract support that effectiveness?

The Joint Air-to-Surface Standoff Missile (JASSM) program is designed to provide air and naval forces with a long-range, precision-guided, conventional standoff weapon capable of defeating high-value, well-defended targets. Its effectiveness is generally considered high, with variants like the JASSM-ER offering extended range and improved capabilities. This production engineering contract is crucial for maintaining and enhancing the JASSM's effectiveness. It ensures that the manufacturing processes are optimized, that any necessary design refinements for improved performance or reliability are incorporated, and that the supply chain for components remains robust. By supporting the engineering aspects of production, the contract directly contributes to the continued availability, reliability, and potential future upgrades of a critical weapon system, thereby underpinning its operational readiness and strategic value.

What are the historical spending patterns for the JASSM program, and how does this award fit into that trend?

Historical spending on the JASSM program has been substantial, reflecting its status as a key strategic asset. Over the years, funding has been allocated across research and development, procurement of missile units, and sustainment activities, including production engineering. This $1.9 billion award for production engineering over approximately 2.5 years fits into the ongoing sustainment and modernization phase of the JASSM lifecycle. It suggests a continued commitment to ensuring the weapon system remains viable and producible. Analyzing past annual appropriations for JASSM, including specific line items for engineering and production support, would reveal whether this award represents an increase, decrease, or stable level of investment compared to previous periods. Such analysis is essential to understand the long-term financial trajectory of the program.

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: $19,884,296

Exercised Options: $19,884,296

Current Obligation: $19,163,786

Subaward Activity

Number of Subawards: 12

Total Subaward Amount: $1,930,902

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA868217D0002

IDV Type: IDC

Timeline