DoD awards $60M+ sole-source contract for JASSM enterprise software, citing unique agency needs

Contract Overview

Contract Amount: $60,151,912 ($60.2M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2024-04-22

End Date: 2029-03-21

Contract Duration: 1,794 days

Daily Burn Rate: $33.5K/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) ENTERPRISE SOFTWARE (JES) 2.0 - THIS CONTRACT IS AWARDED UNDER THE AUTHORITY OF FAR 6.302-1 - ONLY ONE RESPONSIBLE SOURCE AND NO OTHER SUPPLIES OR SERVICES WILL SATISFY AGENCY REQUIREMENTS.

Place of Performance

Location: KING OF PRUSSIA, MONTGOMERY County, PENNSYLVANIA, 19406

State: Pennsylvania Government Spending

Plain-Language Summary

Department of Defense obligated $60.2 million to LOCKHEED MARTIN CORPORATION for work described as: JOINT AIR TO SURFACE STANDOFF MISSILE (JASSM) ENTERPRISE SOFTWARE (JES) 2.0 - THIS CONTRACT IS AWARDED UNDER THE AUTHORITY OF FAR 6.302-1 - ONLY ONE RESPONSIBLE SOURCE AND NO OTHER SUPPLIES OR SERVICES WILL SATISFY AGENCY REQUIREMENTS. Key points: 1. Contract awarded under FAR 6.302-1, indicating a sole-source justification due to unique agency requirements. 2. The contract is for Joint Air to Surface Standoff Missile (JASSM) Enterprise Software (JES) 2.0, suggesting a critical component for missile systems. 3. Awarded to Lockheed Martin Corporation, a major defense contractor with extensive experience in missile systems. 4. The contract duration is over 4 years, indicating a long-term need for software sustainment and development. 5. The contract type is Cost Plus Fixed Fee (CPFF), which can incentivize cost control but also carries risk if not managed closely. 6. The North American Industry Classification System (NAICS) code 336419 points to specialized manufacturing within the guided missile and space vehicle sector.

Value Assessment

Rating: questionable

As a sole-source award, direct price comparisons to similar contracts are not feasible. The Cost Plus Fixed Fee (CPFF) contract type requires careful oversight to ensure costs remain reasonable and that the fixed fee adequately compensates the contractor for the effort. Without competitive bidding, it is difficult to benchmark the value for money. The total award amount of over $60 million over nearly five years suggests a significant investment in this specialized software.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under the authority of FAR 6.302-1, which permits sole-source awards when only one responsible source can satisfy agency requirements. This implies that the government has determined that Lockheed Martin Corporation is the only entity capable of providing the necessary JASSM enterprise software. The lack of competition means that price discovery through market forces was bypassed.

Taxpayer Impact: Taxpayers are potentially exposed to higher costs due to the absence of competitive pressure. The justification for a sole-source award needs to be robust to ensure public funds are used efficiently.

Public Impact

The primary beneficiaries are the Department of the Air Force and potentially other branches utilizing the JASSM missile system. The contract delivers essential software for the sustainment and potential enhancement of the JASSM missile enterprise. The geographic impact is likely concentrated within defense installations and contractor facilities involved in missile system development and deployment. Workforce implications include specialized software engineers, cybersecurity professionals, and program managers within Lockheed Martin and potentially government oversight roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
CPFF contract type requires diligent oversight to prevent cost overruns.
Reliance on a single contractor for critical software may create vendor lock-in.
Lack of transparency in pricing due to non-competitive nature.

Positive Signals

Award to an incumbent contractor likely ensures continuity of essential software support.
Specialized nature of the software may genuinely limit viable alternative sources.
Contract duration suggests a stable, long-term requirement for the JASSM system.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on guided missile and space vehicle parts and auxiliary equipment manufacturing. The market for specialized defense software, particularly for advanced weapon systems like the JASSM, is highly concentrated among a few large prime contractors. Spending in this area is driven by national security requirements and technological advancements in aerospace and defense. Comparable spending benchmarks are difficult to establish due to the proprietary and specialized nature of such software, but significant investments are typical for maintaining and upgrading complex weapon systems.

Small Business Impact

The contract data indicates that small business participation is not a primary focus, as the award is sole-source to a large prime contractor. There is no explicit mention of small business set-asides. Subcontracting opportunities for small businesses would depend on Lockheed Martin's internal procurement strategies and the specific needs of the JASSM software development. The impact on the small business ecosystem is likely minimal unless significant subcontracting is directed towards specialized small businesses in the defense software domain.

Oversight & Accountability

Oversight for this contract will primarily be conducted by the Department of the Air Force contracting and program management offices. Accountability measures will be tied to the performance metrics outlined in the Cost Plus Fixed Fee agreement. Transparency may be limited due to the sole-source nature and the proprietary aspects of the software. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Joint Air to Surface Standoff Missile (JASSM)
Air Force Weapon Systems Software Development
Defense Enterprise Software Solutions
Missile Guidance and Control Systems
Aerospace Manufacturing Support Contracts

Risk Flags

Sole-source justification requires rigorous review.
Cost control and oversight are critical for CPFF contracts.
Potential for vendor lock-in.
Limited transparency in pricing.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $60.2 million to LOCKHEED MARTIN CORPORATION. JOINT AIR TO SURFACE STANDOFF MISSILE (JASSM) ENTERPRISE SOFTWARE (JES) 2.0 - THIS CONTRACT IS AWARDED UNDER THE AUTHORITY OF FAR 6.302-1 - ONLY ONE RESPONSIBLE SOURCE AND NO OTHER SUPPLIES OR SERVICES WILL SATISFY AGENCY REQUIREMENTS.

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 $60.2 million.

What is the period of performance?

Start: 2024-04-22. End: 2029-03-21.

What is the specific justification for the sole-source award under FAR 6.302-1 for the JASSM Enterprise Software (JES) 2.0?

The justification for the sole-source award under FAR 6.302-1 stems from the assertion that only one responsible source, Lockheed Martin Corporation, can satisfy the agency's requirements for the JASSM Enterprise Software (JES) 2.0. This regulation typically applies when the supplies or services are unique or when there is a compelling reason for a specific contractor's involvement, such as proprietary data, unique capabilities, or essential integration with existing systems. For JES 2.0, the government likely determined that Lockheed Martin possesses the necessary technical expertise, intellectual property, and intimate knowledge of the JASSM system architecture to develop, maintain, or enhance the software effectively. Without this specific expertise or access to proprietary information, other potential sources would be unable to meet the requirement, thus necessitating a sole-source procurement to ensure the continued operational capability and modernization of the JASSM weapon system.

How does the Cost Plus Fixed Fee (CPFF) contract type influence cost control and contractor incentives for this $60M+ award?

The Cost Plus Fixed Fee (CPFF) contract type means that Lockheed Martin will be reimbursed for all allowable costs incurred in performing the contract, plus a predetermined fixed fee. This fee represents the contractor's profit. For cost control, the 'cost' portion incentivizes the contractor to manage expenses efficiently, as any savings on allowable costs do not reduce the fixed fee. However, the 'fixed fee' aspect means the contractor's profit is guaranteed regardless of the final cost, which can reduce the incentive to aggressively cut costs compared to a fixed-price contract. The government's role in diligent oversight, auditing of costs, and defining clear performance objectives is crucial to ensure value for money and prevent potential cost overruns. The effectiveness of CPFF hinges on robust government administration and clear scope definition.

What are the potential risks associated with a sole-source award for critical defense software like JES 2.0?

A primary risk of a sole-source award for critical defense software like JES 2.0 is the potential for inflated costs due to the lack of competitive pricing. Without market pressure, the contractor may not be as motivated to offer the most competitive price. Another significant risk is vendor lock-in; the government becomes heavily reliant on Lockheed Martin for this specific software, potentially limiting future flexibility in technology choices or vendor relationships. This reliance can also extend to maintenance and upgrades, where the government may have fewer options and potentially higher long-term support costs. Furthermore, a sole-source award can reduce transparency in pricing and performance metrics, making it harder for the government to independently verify the value received for taxpayer dollars.

What is the historical spending pattern for JASSM Enterprise Software or similar systems within the Department of Defense?

Historical spending on enterprise software for complex weapon systems like the JASSM typically involves significant, long-term investments. While specific figures for JES 2.0 prior to this award are not detailed here, similar programs often see multi-year contracts for development, sustainment, integration, and upgrades. The Department of Defense consistently allocates substantial budgets towards software development and maintenance for its advanced platforms, recognizing software as a critical enabler of mission effectiveness. Spending patterns are influenced by the lifecycle of the weapon system, evolving threats, technological advancements, and cybersecurity requirements. Contracts for such specialized software are often sole-source or limited competition due to the unique integration requirements and the contractor's established role in the weapon system's ecosystem.

How does the NAICS code 336419 (Other Guided Missile and Space Vehicle Parts and Auxiliary Equipment Manufacturing) inform our understanding of this contract's scope?

The North American Industry Classification System (NAICS) code 336419 signifies that the primary business activity of the contractor, Lockheed Martin Corporation in this instance, relates to the manufacturing of parts and auxiliary equipment for guided missiles and space vehicles. This classification helps contextualize the JASSM Enterprise Software (JES) 2.0 contract within the broader defense industrial base. It suggests that the software being procured is integral to the operation, maintenance, or enhancement of missile systems, likely involving complex integration with hardware components, guidance systems, or launch platforms. This code reinforces the specialized and critical nature of the software, aligning it with the manufacturing and support of advanced defense technology rather than general IT services.

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

Solicitation ID: FA868224RB002

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 230 MALL BLVD, KING OF PRUSSIA, PA, 19406

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $186,042,742

Exercised Options: $60,151,912

Current Obligation: $60,151,912

Actual Outlays: $9,565

Subaward Activity

Number of Subawards: 7

Total Subaward Amount: $2,425,742

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline