Lockheed Martin awarded $31.1M for JASSM missile components, a sole-source contract

Contract Overview

Contract Amount: $31,115,120 ($31.1M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2023-02-01

End Date: 2026-03-06

Contract Duration: 1,129 days

Daily Burn Rate: $27.6K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: JOINT AIR TO SURFACE STANDOFF MISSILE (JASSM) C++ PH VII

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $31.1 million to LOCKHEED MARTIN CORPORATION for work described as: JOINT AIR TO SURFACE STANDOFF MISSILE (JASSM) C++ PH VII Key points: 1. Contract awarded on a sole-source basis, limiting competitive pricing benefits. 2. The contract is for Joint Air to Surface Standoff Missile (JASSM) components, indicating a critical defense capability. 3. Performance period extends over 1129 days, suggesting a long-term need for these parts. 4. The contract type is Cost Plus Fixed Fee (CPFF), which can lead to cost overruns if not closely managed. 5. The award value of $31.1 million is significant for specialized missile components. 6. The contractor, Lockheed Martin, is a major defense supplier, suggesting established capabilities but also potential market dominance.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging due to the sole-source nature and specialized components. However, the Cost Plus Fixed Fee (CPFF) contract type carries inherent risks of cost escalation compared to fixed-price contracts. Without competitive bids, it's difficult to ascertain if the pricing reflects optimal value for money. Further analysis would require comparing the fixed fee percentage and the estimated costs against historical data for similar missile component procurements from Lockheed Martin or other prime contractors.

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 solicited. This approach is typically used when a unique capability or proprietary technology is required, or in cases of urgent need where competition is not feasible. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive bidding, as the government did not benefit from price reductions that typically arise from multiple offers.

Public Impact

The primary beneficiaries are the U.S. Air Force and potentially other branches of the military requiring advanced standoff missile capabilities. The contract delivers essential components for the Joint Air to Surface Standoff Missile (JASSM), a key weapon system. The geographic impact is primarily within Florida, where the contractor is located, and potentially at various Air Force bases where the missiles are deployed. Workforce implications include continued employment for specialized engineers, technicians, and manufacturing personnel at Lockheed Martin's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs.
Cost Plus Fixed Fee (CPFF) contract type can incentivize cost overruns if not rigorously managed.
Reliance on a single contractor for critical missile components poses supply chain risk.
Lack of transparency in the sole-source justification requires careful review.

Positive Signals

Contract supports a critical defense capability (JASSM missile).
Awardee (Lockheed Martin) is an established defense contractor with proven expertise.
Long performance period suggests sustained operational requirements.
Contract is for components, indicating a focus on specific manufacturing needs.

Sector Analysis

This contract falls within the "Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing" sector. This is a highly specialized segment of the aerospace and defense industry, characterized by high barriers to entry, significant R&D investment, and long production cycles. The market is dominated by a few large prime contractors like Lockheed Martin. Spending in this sector is driven by national defense priorities and technological advancements in weaponry.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Lockheed Martin Corporation is a large prime contractor. While the prime contract is not set aside for small businesses, there may be subcontracting opportunities for small businesses within Lockheed Martin's supply chain. However, the direct award to a large entity suggests limited direct impact on the small business ecosystem for this specific procurement.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Air Force contracting and program management offices. The Cost Plus Fixed Fee (CPFF) structure necessitates robust financial oversight to monitor costs and ensure the fixed fee is justified. Transparency may be limited due to the sole-source nature, but contract performance reviews and audits by the Defense Contract Audit Agency (DCAA) 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)
Missile Component Manufacturing
Defense Procurement
Aerospace Manufacturing
Cost Plus Fixed Fee Contracts

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Potential for cost overruns
Limited price competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.1 million to LOCKHEED MARTIN CORPORATION. JOINT AIR TO SURFACE STANDOFF MISSILE (JASSM) C++ PH VII

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 $31.1 million.

What is the period of performance?

Start: 2023-02-01. End: 2026-03-06.

What is the track record of Lockheed Martin Corporation in delivering JASSM components?

Lockheed Martin Corporation is the prime contractor for the Joint Air to Surface Standoff Missile (JASSM) program and has a long-standing history of producing these advanced cruise missiles. Their track record includes successful development, production, and integration of JASSM variants for the U.S. Air Force and allied nations. The company possesses extensive experience in aerospace manufacturing, guided missile technology, and complex defense systems. While specific performance metrics for component delivery under this particular contract (PH VII) are not detailed in the provided data, Lockheed Martin's overall performance in the defense sector is generally considered strong, though subject to the inherent complexities and oversight typical of large government contracts.

How does the Cost Plus Fixed Fee (CPFF) contract type compare to other pricing arrangements for similar defense components?

The Cost Plus Fixed Fee (CPFF) contract type, used here, reimburses the contractor for allowable costs plus a predetermined fixed fee representing profit. This contrasts with Fixed-Price contracts, where the price is set regardless of actual costs, offering greater cost certainty to the government but potentially higher risk for the contractor. CPFF is often used when the scope of work is not well-defined or involves significant uncertainty, like research and development or complex manufacturing where costs are difficult to estimate precisely. However, CPFF contracts carry a higher risk of cost growth, as the contractor is incentivized to incur costs to achieve the fixed fee, necessitating stringent government oversight to control expenditures and ensure value.

What are the primary risks associated with a sole-source award for critical missile components?

The primary risks associated with a sole-source award for critical missile components include a lack of price competition, which can lead to inflated costs for the government. Without multiple bidders vying for the contract, there is less incentive for the contractor to offer the most competitive pricing. Furthermore, sole-source awards can reduce transparency and limit opportunities for innovation that might arise from a broader competitive field. There's also a potential risk of vendor lock-in, making it difficult and costly to switch suppliers in the future. Finally, the justification for a sole-source award must be robust to ensure it is truly necessary and not a result of poor planning or market manipulation.

What is the historical spending pattern for JASSM components or similar missile parts by the Department of Defense?

Historical spending on the Joint Air to Surface Standoff Missile (JASSM) program and its components by the Department of Defense has been substantial, reflecting its strategic importance. The JASSM program has seen multiple production phases (e.g., PH I, II, III, IV, V, VI, VII), each involving significant contract awards to Lockheed Martin for missile production and associated components. Annual spending can fluctuate based on production rates, modernization efforts, and specific contract awards for different phases or upgrades. While the exact figures for 'Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing' are aggregated, the overall defense budget allocated to missile systems and their sustainment runs into billions of dollars annually, with specific programs like JASSM representing a notable portion of that expenditure.

How does the geographic location of the contract award (Florida) impact its significance?

The contract award to Lockheed Martin Corporation in Florida (ST: FL, SN: FLORIDA) signifies the concentration of defense manufacturing capabilities within that state. Florida has a well-established aerospace and defense industry, hosting numerous facilities for major contractors. This award contributes to the local economy through job creation, supply chain activity, and technological development within the region. For the Department of Defense, awarding contracts to facilities in states with strong defense industrial bases can leverage existing infrastructure, skilled labor, and established logistical networks, potentially streamlining production and delivery processes for critical assets like the JASSM missile components.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment 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: $34,016,570

Exercised Options: $33,200,137

Current Obligation: $31,115,120

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $217,078

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA868222DB001

IDV Type: IDC

Timeline