Lockheed Martin awarded $236.7M for Joint Air-to-Surface Standoff Missile (JASSM) production by the Air Force

Contract Overview

Contract Amount: $236,677,741 ($236.7M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2023-06-01

End Date: 2027-12-31

Contract Duration: 1,674 days

Daily Burn Rate: $141.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: JOINT AIR TO SURFACE STANDOFF MISSILE (JASSM)

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $236.7 million to LOCKHEED MARTIN CORPORATION for work described as: JOINT AIR TO SURFACE STANDOFF MISSILE (JASSM) Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Significant investment in a key strategic weapon system for the Air Force. 3. Long-term contract duration suggests sustained demand and production. 4. Focus on guided missile manufacturing, a specialized defense sector. 5. Potential for cost overruns given the Cost Plus Fixed Fee contract type. 6. Geographic concentration of contract performance in Florida.

Value Assessment

Rating: fair

The total award amount of $236.7 million for the JASSM program appears substantial, reflecting the complexity and strategic importance of the weapon system. However, without specific unit cost data or comparisons to previous JASSM procurements or similar missile systems, a definitive value-for-money assessment is challenging. The Cost Plus Fixed Fee (CPFF) contract type, while providing incentives for the contractor to control costs, also carries inherent risks of cost growth if not rigorously managed and overseen. Benchmarking against industry standards for guided missile manufacturing would be necessary for a more precise evaluation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This typically occurs when a specific contractor possesses unique capabilities, intellectual property, or when urgency dictates a rapid award. The lack of competition means that the government did not benefit from the price discovery mechanisms that multiple bidders would provide, potentially leading to higher costs than if the contract had been competed.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive bidding. Without alternative offers, the government relies on negotiation and oversight to ensure a fair price, which can be less effective than market-driven competition.

Public Impact

The U.S. Air Force is the primary beneficiary, acquiring a critical long-range, stealthy cruise missile. This contract supports the continued production and delivery of JASSM missiles, enhancing air combat capabilities. Performance is concentrated in Florida, potentially impacting the local aerospace workforce and economy. The JASSM system is designed for use on various Air Force and allied aircraft, broadening its operational utility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
Cost Plus Fixed Fee contract type can lead to cost overruns if not managed effectively.
Long contract duration increases exposure to potential economic fluctuations and supply chain risks.
Reliance on a single contractor for a critical defense system poses supply chain and strategic risk.

Positive Signals

Secures a vital strategic weapon system for national defense.
Long-term contract provides production stability for the contractor and supply chain.
Focus on advanced guided missile technology supports technological superiority.
Contract performance in Florida supports regional aerospace industry and jobs.

Sector Analysis

The defense sector, specifically guided missile and space vehicle manufacturing, is characterized by high technological barriers to entry, significant R&D investment, and long production cycles. This contract falls within a critical niche of precision-guided munitions, essential for modern air power projection. The market is dominated by a few large defense contractors. Comparable spending benchmarks would involve analyzing procurements of similar advanced missile systems by the Department of Defense or allied nations.

Small Business Impact

This contract does not appear to include specific small business set-aside provisions, as indicated by the 'sb' field being false. Lockheed Martin, as the prime contractor, may engage small businesses as subcontractors. However, the primary focus of this large-scale, sole-source award is on the prime contractor's capabilities. The impact on the small business ecosystem would depend on the extent to which Lockheed Martin incorporates small businesses into its supply chain for this specific program.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force's contracting and program management offices. Accountability measures would include performance reviews, milestone tracking, and financial audits, particularly given the CPFF structure. Transparency is generally limited for sole-source defense contracts, though contract awards and basic details are publicly reported. The Inspector General of the Department of Defense may conduct audits or investigations into cost and performance.

Related Government Programs

Air-to-Ground Munitions
Precision Guided Munitions
Strategic Weapon Systems
Missile Manufacturing
Department of Defense Procurement

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Long contract duration
Critical defense system reliance

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $236.7 million to LOCKHEED MARTIN CORPORATION. JOINT AIR TO SURFACE STANDOFF MISSILE (JASSM)

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 $236.7 million.

What is the period of performance?

Start: 2023-06-01. End: 2027-12-31.

What is the historical spending trend for the JASSM program under Lockheed Martin?

Analyzing historical spending for the JASSM program reveals a consistent and significant investment by the Department of Defense over several years. While the current award totals $236.7 million, previous contract actions for JASSM production, sustainment, and upgrades have cumulatively amounted to billions of dollars. For instance, prior contract awards have often been in the hundreds of millions annually, reflecting the program's long-term nature and the ongoing need for these advanced munitions. This sustained funding indicates the JASSM's critical role in the Air Force's arsenal and the government's commitment to its continued development and deployment. Understanding these historical patterns is crucial for assessing the long-term cost trajectory and the overall value proposition of the JASSM program.

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

Determining the precise unit cost of the JASSM is challenging without access to detailed contract line item numbers and specific delivery quantities for this award. However, based on publicly available data from previous JASSM procurements and analyses of comparable advanced air-to-surface missiles, the JASSM is generally considered a high-cost, high-capability weapon system. Its unit cost is likely in the range of several hundred thousand dollars per missile, reflecting its advanced stealth technology, long-range capabilities, and sophisticated guidance systems. Competitors like the Tomahawk (though primarily a naval weapon) or other long-range standoff missiles from various manufacturers often fall within a similar high-cost bracket. The sole-source nature of this award further complicates direct cost comparisons, as competitive pressures that drive down unit prices are absent.

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

The primary risks associated with this sole-source contract for JASSM production revolve around cost and performance. Firstly, the lack of competition inherently reduces the government's leverage in price negotiations, potentially leading to higher unit costs than if the contract were competed. Secondly, the Cost Plus Fixed Fee (CPFF) contract type, while incentivizing cost control, can still result in cost overruns if the contractor's estimates are inaccurate or if unforeseen technical challenges arise. Effective government oversight is critical to mitigate these risks. Thirdly, reliance on a single source for a critical defense asset like the JASSM creates a strategic vulnerability; any disruption in Lockheed Martin's production capability, supply chain, or financial stability could directly impact national security readiness. Finally, ensuring technological relevance and managing potential obsolescence over the contract's long duration presents an ongoing risk.

What is the expected impact of this contract on the JASSM program's overall effectiveness and readiness?

This contract is expected to significantly bolster the overall effectiveness and readiness of the JASSM program. By securing funding for continued production, the Air Force ensures a steady supply of these advanced, long-range, stealthy cruise missiles, which are crucial for penetrating sophisticated enemy air defenses and striking high-value targets. The sustained production capability maintained through this award helps preserve the industrial base necessary for manufacturing such complex systems. Furthermore, the contract's duration, extending through December 2027, suggests a commitment to maintaining and potentially modernizing the JASSM fleet, ensuring its relevance against evolving threats. This consistent investment directly translates to enhanced air combat power projection capabilities and improved mission success probabilities for platforms equipped with the JASSM.

How does the contract type (Cost Plus Fixed Fee) influence contractor behavior and government oversight for JASSM?

The Cost Plus Fixed Fee (CPFF) contract type for JASSM production influences contractor behavior by providing reimbursement for all allowable costs incurred, plus a predetermined fixed fee representing profit. This structure incentivizes the contractor, Lockheed Martin, to manage costs efficiently to maximize their profit margin, as the fee is fixed regardless of the final cost. However, it also requires robust government oversight to ensure that costs are reasonable, allocable, and allowable, and that the contractor is making a good-faith effort to control expenditures. The government must actively monitor progress, audit expenditures, and manage scope to prevent cost creep. While CPFF contracts are common for complex R&D or production where cost estimation is difficult, they place a significant burden on government program managers to maintain strict financial discipline and performance monitoring to achieve value for taxpayer money.

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 FIXED FEE (U)

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: $402,755,228

Exercised Options: $390,080,659

Current Obligation: $236,677,741

Subaward Activity

Number of Subawards: 63

Total Subaward Amount: $62,034,109

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline