DoD awards $1.16B for Long Range Anti-Ship Missiles, with Lockheed Martin as sole source

Contract Overview

Contract Amount: $1,164,277,426 ($1.2B)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2023-05-18

End Date: 2029-01-31

Contract Duration: 2,085 days

Daily Burn Rate: $558.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LONG RANGE ANTI-SHIP MISSILE (LRASM) LOT 7/8

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $1.16 billion to LOCKHEED MARTIN CORPORATION for work described as: LONG RANGE ANTI-SHIP MISSILE (LRASM) LOT 7/8 Key points: 1. Contract awarded to a single, established provider, raising questions about competitive pricing. 2. Significant investment in advanced missile technology, indicating a focus on strategic defense capabilities. 3. Long contract duration suggests a sustained need for these munitions. 4. Sole-source award limits opportunities for new market entrants and potential cost savings through competition. 5. High value of the contract underscores the strategic importance and unit cost of LRASM. 6. Contract performance will be critical given the advanced nature of the weapon system.

Value Assessment

Rating: questionable

The contract value of $1.16 billion for Lot 7/8 of the Long Range Anti-Ship Missile (LRASM) is substantial. Without competitive bidding, it is difficult to benchmark the value for money. However, given the specialized nature of advanced missile systems, pricing is often high. Further analysis would require access to historical pricing for similar lots or components to assess if the current price reflects fair market value or if the lack of competition has inflated costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to Lockheed Martin Corporation. This means that the Department of Defense did not solicit bids from other potential suppliers. While sole-source awards can be justified for unique capabilities or existing systems, they eliminate the price discovery benefits that come from a competitive bidding process, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competition, as the government did not leverage multiple bids to secure the best possible price for these critical munitions.

Public Impact

The U.S. Air Force benefits from the acquisition of advanced long-range anti-ship missiles, enhancing its strategic deterrence and power projection capabilities. This contract ensures the continued production and delivery of the LRASM system, a key component of naval and air defense strategies. The primary geographic impact is within the defense industrial base, supporting manufacturing and R&D activities. Workforce implications include continued employment for engineers, technicians, and manufacturing personnel at Lockheed Martin and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in the procurement process due to non-competitive nature.
High contract value necessitates rigorous oversight to ensure funds are used effectively.
Long contract duration could lead to cost overruns if not managed carefully.

Positive Signals

Award to a prime contractor with established expertise in missile systems.
Contract addresses a critical national defense need for advanced weaponry.
Firm Fixed Price contract type provides cost certainty for the government.
Long contract duration ensures sustained availability of a key defense asset.

Sector Analysis

The defense sector, particularly the guided missile and space vehicle manufacturing industry, is characterized by high R&D costs, long development cycles, and significant government investment. This contract for LRASM fits within this context, representing a substantial investment in a technologically advanced weapon system. Comparable spending benchmarks would involve other major defense procurement programs for advanced munitions or aircraft, which often run into billions of dollars.

Small Business Impact

This contract does not appear to have a small business set-aside component, as it was awarded sole-source to Lockheed Martin Corporation. There is no explicit information regarding subcontracting plans for small businesses within this award notice. The impact on the small business ecosystem is therefore likely minimal unless Lockheed Martin voluntarily includes small businesses in its supply chain for this specific lot.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force contracting and program management offices. Accountability measures would include performance reviews, milestone tracking, and adherence to the firm-fixed-price terms. Transparency is limited due to the sole-source nature of the award, but contract modifications and performance reports would be subject to standard government oversight procedures. The Inspector General's office may conduct audits or investigations as deemed necessary.

Related Government Programs

Long Range Anti-Ship Missile (LRASM)
Advanced Conventional Weapons
Air-to-Surface Missiles
Naval Warfare Systems
Strategic Deterrence Programs

Risk Flags

Sole-source procurement
High contract value
Long contract duration
Advanced weapon system procurement

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.16 billion to LOCKHEED MARTIN CORPORATION. LONG RANGE ANTI-SHIP MISSILE (LRASM) LOT 7/8

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 $1.16 billion.

What is the period of performance?

Start: 2023-05-18. End: 2029-01-31.

What is Lockheed Martin Corporation's track record with the LRASM program?

Lockheed Martin Corporation has been the prime contractor for the Long Range Anti-Ship Missile (LRASM) program, developing and producing the system. Their track record includes successful development phases, integration with various platforms (like the F/A-18E/F Super Hornet and B-1B Lancer), and previous production lots. The company possesses significant expertise in guided missile manufacturing and defense systems. However, specific performance metrics for previous lots, such as on-time delivery rates, defect rates, or cost performance against initial estimates, would require deeper analysis of program history and government performance reports.

How does the $1.16 billion contract value compare to previous LRASM procurements?

The $1.16 billion value for Lot 7/8 represents a significant investment in the LRASM program. To provide a precise comparison, historical data on the value of previous lots (e.g., Lot 1, Lot 2, etc.) would be necessary. Given that this is a sole-source award for production, it is plausible that the cost per missile or the total value of this lot is consistent with or higher than previous production runs, reflecting inflation, potential upgrades, or the scale of the order. Without direct comparative figures for prior lots, a definitive value assessment is challenging, but the amount indicates a substantial ongoing commitment to this weapon system.

What are the primary risks associated with this sole-source contract?

The primary risk associated with this sole-source contract is the potential for inflated pricing due to the lack of competitive bidding. Without competing offers, the government has less leverage to negotiate the lowest possible price. Another risk is contractor performance; while Lockheed Martin has experience, any delays or quality issues could have significant impacts on defense readiness. Furthermore, reliance on a single source can create supply chain vulnerabilities if the contractor faces production challenges. The long duration of the contract also introduces risks related to technological obsolescence or the emergence of superior alternative solutions during its term.

How effective is the LRASM system in meeting its intended mission objectives?

The Long Range Anti-Ship Missile (LRASM) is designed to detect and destroy high-value enemy surface combatants, including aircraft carriers, in contested environments. Its effectiveness is predicated on its advanced sensor suite, stealth characteristics, and ability to navigate complex threat environments autonomously. Reports and assessments from the Department of Defense and military exercises generally indicate that LRASM meets its intended mission objectives, providing a critical standoff strike capability. However, continuous evaluation and potential upgrades are necessary to maintain effectiveness against evolving adversary defenses.

What are the historical spending patterns for the LRASM program prior to this award?

Historical spending patterns for the LRASM program prior to this $1.16 billion award indicate a consistent investment by the Department of Defense in its development and initial production phases. Funding has been allocated across multiple fiscal years for research, development, testing, and evaluation (RDT&E), as well as for procurement of earlier lots. These expenditures reflect the program's progression from concept to a fielded weapon system. Analyzing annual budget requests and appropriations for LRASM would reveal a trend of increasing procurement funding as the system moved towards full-rate production, culminating in large-value contracts like the one awarded here.

What is the strategic importance of LRASM to the U.S. military?

The LRASM holds significant strategic importance for the U.S. military, particularly the Navy and Air Force, as it addresses the growing threat posed by advanced anti-access/area denial (A2/AD) capabilities of potential adversaries. Its long range allows platforms to engage targets from a safe distance, while its sophisticated targeting and electronic warfare countermeasures enable it to penetrate heavily defended areas. This capability is crucial for maintaining freedom of navigation, projecting power, and deterring aggression in critical maritime regions. LRASM enhances the survivability of strike platforms and provides a versatile option for various operational scenarios.

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

Solicitation ID: FA868223R0001

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 5600 W SAND LAKE RD, 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: $1,185,520,944

Exercised Options: $1,185,142,198

Current Obligation: $1,164,277,426

Subaward Activity

Number of Subawards: 221

Total Subaward Amount: $366,248,537

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline