Missile Defense Agency awards $49.1M contract to Lockheed Martin for AEGIS BMD 6.1 development

Contract Overview

Contract Amount: $49,106,284 ($49.1M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2025-08-01

End Date: 2027-07-31

Contract Duration: 729 days

Daily Burn Rate: $67.4K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: PROGRAM MANAGEMENT AND SYSTEM ENGINEERING TO DESIGN, DEVELOP, TEST, CERTIFY AND DELIVER AEGIS BALLISTIC MISSILE DEFENSE (BMD) 6.1 AEGIS WEAPON SYSTEM (AWS) TO THE MISSILE DEFENSE SYSTEM OPERATIONAL CAPABILITY LIST.

Place of Performance

Location: MOORESTOWN, BURLINGTON County, NEW JERSEY, 08057

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $49.1 million to LOCKHEED MARTIN CORPORATION for work described as: PROGRAM MANAGEMENT AND SYSTEM ENGINEERING TO DESIGN, DEVELOP, TEST, CERTIFY AND DELIVER AEGIS BALLISTIC MISSILE DEFENSE (BMD) 6.1 AEGIS WEAPON SYSTEM (AWS) TO THE MISSILE DEFENSE SYSTEM OPERATIONAL CAPABILITY LIST. Key points: 1. Contract focuses on critical AEGIS Ballistic Missile Defense (BMD) 6.1 system development. 2. High-value contract awarded to a single, established defense contractor. 3. Research and Development focus indicates early-stage, potentially high-risk, high-reward work. 4. Cost Plus Incentive Fee contract structure incentivizes performance but carries cost overrun risk. 5. Long-term contract duration suggests a complex and evolving development cycle. 6. Sole-source award raises questions about competition and potential for price optimization.

Value Assessment

Rating: fair

This contract's value of $49.1 million for AEGIS BMD 6.1 development is significant, but direct comparisons are difficult without more detailed cost breakdowns. The Cost Plus Incentive Fee (CPIF) structure suggests a negotiated baseline with incentives for meeting targets, which can be effective but also lead to higher final costs if incentives are heavily pursued or targets are missed. Benchmarking this specific R&D effort against similar advanced defense system development contracts would be necessary for a more precise value assessment.

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 is common for highly specialized defense systems where only one contractor possesses the necessary expertise and existing infrastructure. However, the lack of competition means that the Missile Defense Agency did not benefit from a bidding process that could have potentially driven down costs or spurred innovative solutions from multiple vendors.

Taxpayer Impact: Taxpayers may not have received the best possible price due to the absence of competitive bidding. This approach relies heavily on the agency's negotiation skills and the contractor's good faith to ensure fair pricing.

Public Impact

The primary beneficiaries are the U.S. military, specifically the Navy, who will utilize the advanced AEGIS BMD system. The contract delivers critical research, development, testing, and certification services for a key component of national missile defense. Geographic impact is national, enhancing U.S. strategic defense capabilities. Workforce implications include specialized engineering, technical, and program management roles within Lockheed Martin and its potential subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing and innovation.
Cost Plus Incentive Fee (CPIF) contracts can lead to cost overruns if not managed tightly.
Long contract duration (729 days) increases exposure to potential scope creep or evolving requirements.
Reliance on a single contractor for critical defense technology development poses a strategic risk.

Positive Signals

Award to Lockheed Martin, a proven contractor with extensive experience in AEGIS systems.
Focus on a critical national security program (BMD) indicates high strategic importance.
Incentive fee structure aims to align contractor performance with program objectives.
Clear delivery order for a specific system version (BMD 6.1) provides defined objectives.

Sector Analysis

This contract falls within the Aerospace and Defense sector, specifically focusing on advanced missile defense systems. The market for such specialized R&D is highly concentrated, with a few prime contractors dominating. Spending in this area is driven by national security priorities and technological advancements in threat detection and interception. Comparable spending benchmarks would likely involve other major defense system development programs, often running into hundreds of millions or billions of dollars over their lifecycle.

Small Business Impact

This contract does not appear to have a small business set-aside component (ss=false, sb=false). Given the specialized nature of AEGIS BMD development, it is likely that Lockheed Martin will subcontract portions of the work. The extent to which small businesses will be involved will depend on Lockheed Martin's subcontracting plan and the availability of specialized small business capabilities within the defense industrial base.

Oversight & Accountability

Oversight will be primarily conducted by the Missile Defense Agency (MDA) and the Department of Defense. The Cost Plus Incentive Fee contract structure necessitates close monitoring of costs, performance against milestones, and achievement of incentive targets. Transparency may be limited due to the classified nature of some aspects of missile defense technology. Inspector General jurisdiction would apply to potential fraud, waste, or abuse.

Related Government Programs

AEGIS Weapon System (AWS)
Ballistic Missile Defense System (BMDS)
Missile Defense Agency (MDA) Programs
Naval Surface Warfare
Advanced Weapons Development

Risk Flags

Sole-source award
Cost-plus contract type
Advanced technology development

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $49.1 million to LOCKHEED MARTIN CORPORATION. PROGRAM MANAGEMENT AND SYSTEM ENGINEERING TO DESIGN, DEVELOP, TEST, CERTIFY AND DELIVER AEGIS BALLISTIC MISSILE DEFENSE (BMD) 6.1 AEGIS WEAPON SYSTEM (AWS) TO THE MISSILE DEFENSE SYSTEM OPERATIONAL CAPABILITY LIST.

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Missile Defense Agency).

What is the total obligated amount?

The obligated amount is $49.1 million.

What is the period of performance?

Start: 2025-08-01. End: 2027-07-31.

What is Lockheed Martin's track record with AEGIS and Ballistic Missile Defense programs?

Lockheed Martin has a long and extensive track record with the AEGIS Combat System, serving as the prime contractor for its development and sustainment for decades. They are responsible for integrating the AEGIS Weapon System (AWS) with various sensors and weapon payloads, including ballistic missile defense capabilities. Their involvement spans multiple upgrades and versions of the AEGIS system, including previous BMD configurations. This deep institutional knowledge and demonstrated performance in delivering complex, integrated defense systems make them a logical choice for continued development, such as the AEGIS BMD 6.1 upgrade. Their history includes successful testing and deployment of AEGIS-based BMD capabilities, contributing significantly to U.S. missile defense architecture.

How does the $49.1 million value compare to previous AEGIS BMD development contracts?

Directly comparing the $49.1 million value of this specific delivery order for AEGIS BMD 6.1 development to previous contracts requires access to historical MDA contract data and specific program phases. However, it's important to note that $49.1 million represents the value of this particular delivery order, not the total program cost. The AEGIS BMD program is a multi-billion dollar, multi-year endeavor. Individual development contracts or delivery orders for specific upgrades like BMD 6.1 can vary significantly based on the scope of work, the phase of development (e.g., initial research vs. integration vs. testing), and the specific capabilities being addressed. This figure likely represents a significant but not the entirety of the funding allocated for the 6.1 iteration.

What are the primary risks associated with developing the AEGIS BMD 6.1 system?

The primary risks associated with developing the AEGIS BMD 6.1 system are multifaceted. Technical risks include the inherent complexity of integrating new hardware and software to counter evolving ballistic missile threats, potential interoperability issues with existing systems, and the challenges of achieving required performance metrics in testing. Programmatic risks involve potential cost overruns, schedule delays, and scope creep, particularly given the Cost Plus Incentive Fee (CPIF) contract type and the sole-source nature of the award. Strategic risks include reliance on a single contractor and the potential for technological obsolescence if development timelines are not met. Furthermore, the effectiveness of the system against sophisticated countermeasures remains a persistent challenge.

How effective is the Cost Plus Incentive Fee (CPIF) contract structure in managing R&D projects like this?

The Cost Plus Incentive Fee (CPIF) contract structure is designed to manage R&D projects by providing a framework where the contractor is reimbursed for allowable costs plus a fee that is adjusted based on performance against pre-determined targets. For projects like AEGIS BMD 6.1 development, CPIF aims to incentivize the contractor (Lockheed Martin) to meet specific cost, schedule, and performance objectives. If the contractor performs better than the target, the fee increases (up to a ceiling); if they perform worse, the fee decreases (down to a minimum). This structure can be effective in aligning contractor and government interests, encouraging efficiency and innovation. However, it requires careful negotiation of the target cost, the sharing ratio for cost variances, and the incentive targets themselves to ensure they are realistic and motivating without unduly increasing the government's financial exposure.

What are the historical spending patterns for AEGIS BMD development by the Missile Defense Agency?

The Missile Defense Agency (MDA) has consistently allocated substantial funding towards the AEGIS Ballistic Missile Defense (BMD) program over many years. Historical spending patterns show a significant, ongoing investment in the development, testing, and fielding of AEGIS BMD capabilities, reflecting its critical role in U.S. missile defense strategy. Funding typically supports research and development, system upgrades (like the 6.1 version), integration with the fleet, and operational testing. While specific annual figures fluctuate based on program priorities and budget cycles, the AEGIS BMD program has been a major component of the MDA's budget, often representing hundreds of millions to over a billion dollars annually when considering the full scope of development, procurement, and sustainment across multiple ship classes and upgrades.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)

Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Address: 199 BORTON LANDING RD, MOORESTOWN, NJ, 08057

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: $56,905,933

Exercised Options: $56,905,933

Current Obligation: $49,106,284

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HQ085125DE001

IDV Type: IDC

Timeline