DoD's Missile Defense Agency awards $18.3M contract for AEGIS weapon system development to Lockheed Martin

Contract Overview

Contract Amount: $18,315,205 ($18.3M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2025-07-01

End Date: 2027-06-30

Contract Duration: 729 days

Daily Burn Rate: $25.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS INCENTIVE FEE

Sector: R&D

Official Description: EFFORT REQUIRED FOR SEA-BASED WEAPON SYSTEMS (WS) GPI CAPABILITY DEVELOPMENT, INCLUDING CONCEPT DEVELOPMENT, STUDIES AND ANALYSES, REQUIREMENTS GENERATION, DESIGN SPECIFICATIONS ACROSS THE AEGIS WS, AND PARTICIPATION IN MEETINGS AND WORKING GROUPS.

Place of Performance

Location: MOORESTOWN, BURLINGTON County, NEW JERSEY, 08057

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $18.3 million to LOCKHEED MARTIN CORPORATION for work described as: EFFORT REQUIRED FOR SEA-BASED WEAPON SYSTEMS (WS) GPI CAPABILITY DEVELOPMENT, INCLUDING CONCEPT DEVELOPMENT, STUDIES AND ANALYSES, REQUIREMENTS GENERATION, DESIGN SPECIFICATIONS ACROSS THE AEGIS WS, AND PARTICIPATION IN MEETINGS AND WORKING GROUPS. Key points: 1. Contract focuses on crucial concept development and design specifications for sea-based weapon systems. 2. Sole-source award to Lockheed Martin raises questions about potential price efficiencies and market alternatives. 3. Long-term contract duration of 729 days suggests a significant, ongoing need for specialized R&D. 4. The contract's R&D nature indicates investment in future defense capabilities rather than immediate procurement. 5. Performance-based contract type (Cost Plus Incentive Fee) aims to align contractor incentives with government objectives. 6. Geographic concentration in New Jersey for contract performance.

Value Assessment

Rating: fair

The contract value of $18.3 million for R&D services is difficult to benchmark without more specific details on the scope of work. As a sole-source award, there is no direct comparison to other bids to assess pricing competitiveness. The Cost Plus Incentive Fee structure suggests an attempt to control costs, but the ultimate value for money will depend on the achievement of performance incentives and the successful development of the AEGIS WS GPI capability.

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 bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified for specialized capabilities or urgent needs, they limit the government's ability to explore a wider range of solutions and potentially secure more favorable pricing through competition.

Taxpayer Impact: A sole-source award means taxpayers do not benefit from the price discovery and potential cost savings that a competitive bidding process could offer. This could lead to higher overall costs for the government compared to a competed contract.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Missile Defense Agency, which will receive advanced capabilities for the AEGIS weapon system. Services delivered include concept development, studies, analyses, requirements generation, and design specifications. The geographic impact is concentrated in New Jersey, where the contractor is located and performance will likely occur. This contract supports specialized research and development roles, potentially impacting a highly skilled workforce in the defense technology sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source award limits exploration of alternative technological solutions.
Contract duration and cost-plus structure require close monitoring for efficiency.

Positive Signals

Focus on critical R&D for advanced weapon systems enhances national security.
Cost Plus Incentive Fee structure incentivizes contractor performance and cost control.
Long-term engagement with a known prime contractor can ensure continuity and expertise.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. The Missile Defense Agency's work on the AEGIS Weapon System is a critical component of national defense strategy, involving complex technological advancements. Comparable spending in this sector often involves significant investments in innovation and system modernization, with contracts ranging from early-stage research to full-scale system integration.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the specialized nature of AEGIS weapon system development and the sole-source award to a large prime contractor like Lockheed Martin, subcontracting opportunities for small businesses may be limited or dependent on Lockheed Martin's internal subcontracting plans. Further analysis would be needed to determine the extent of small business participation.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of Defense's contracting officers and program managers within the Missile Defense Agency. Accountability measures are embedded in the Cost Plus Incentive Fee structure, which ties contractor profit to performance metrics. Transparency may be limited due to the sole-source nature and the sensitive defense-related work, but contract modifications and performance reports would be subject to internal review and potentially Inspector General oversight.

Related Government Programs

AEGIS Combat System
Ballistic Missile Defense Systems
Naval Surface Warfare
Advanced Weapon Systems Development
Department of Defense Research and Development Programs

Risk Flags

Sole-source award may limit cost savings.
Lack of competition could restrict innovative solutions.
Cost-plus contract requires diligent oversight to ensure value.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.3 million to LOCKHEED MARTIN CORPORATION. EFFORT REQUIRED FOR SEA-BASED WEAPON SYSTEMS (WS) GPI CAPABILITY DEVELOPMENT, INCLUDING CONCEPT DEVELOPMENT, STUDIES AND ANALYSES, REQUIREMENTS GENERATION, DESIGN SPECIFICATIONS ACROSS THE AEGIS WS, AND PARTICIPATION IN MEETINGS AND WORKING GROUPS.

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 $18.3 million.

What is the period of performance?

Start: 2025-07-01. End: 2027-06-30.

What is the specific technical scope of 'GPI CAPABILITY DEVELOPMENT' for the AEGIS WS?

The provided data indicates that 'GPI CAPABILITY DEVELOPMENT' for the AEGIS Weapon System (WS) encompasses a range of activities crucial for enhancing its effectiveness. This includes concept development, where initial ideas and feasibility studies are explored; detailed studies and analyses to understand technical challenges and potential solutions; requirements generation, defining the precise specifications the system must meet; and design specifications, outlining the architectural and engineering details. The contract also involves participation in meetings and working groups, suggesting a collaborative approach to refining these capabilities. While the acronym 'GPI' is not explicitly defined in the provided snippet, its context within AEGIS WS development points towards advancements in areas such as guided missile capabilities, fire control, or integrated platform performance, all vital for modern naval defense.

How does the Cost Plus Incentive Fee (CPIF) structure typically work, and what are its implications for this contract?

A Cost Plus Incentive Fee (CPIF) contract is a type of cost-reimbursement contract where the contractor is reimbursed for allowable costs and also receives a fee that is adjusted based on whether the final cost is above or below a pre-determined target cost. The contract establishes a target cost, a target fee, and a fee-mix ratio. If the final cost is lower than the target cost, both the government and the contractor share in the savings according to the agreed-upon ratio. Conversely, if the final cost exceeds the target cost, both parties share in the overruns. For this $18.3 million contract with Lockheed Martin, the CPIF structure aims to incentivize the contractor to manage costs effectively while achieving the desired technical outcomes for the AEGIS WS GPI capability. The government benefits by potentially paying less than the maximum fee if costs are controlled, while the contractor is motivated to perform efficiently to maximize its fee.

What are the potential risks associated with a sole-source award for advanced defense R&D?

Sole-source awards for advanced defense R&D, like this contract for the AEGIS WS, carry several potential risks. Firstly, the absence of competition can lead to a lack of price pressure, potentially resulting in higher costs for the government than if multiple bids were evaluated. Secondly, it limits the government's exposure to innovative or alternative technological approaches that other contractors might offer. This can stifle innovation by not exploring a broader market of solutions. Thirdly, without competitive benchmarks, it can be more challenging to assess whether the chosen contractor's proposed approach and pricing are truly optimal. Finally, sole-source awards can sometimes raise concerns about fairness and transparency in the procurement process, even when justified by specific circumstances such as unique capabilities or urgent needs.

What is the historical spending trend for AEGIS Weapon System development or similar R&D contracts by the Missile Defense Agency?

Analyzing historical spending trends for AEGIS Weapon System (WS) development and similar R&D contracts by the Missile Defense Agency (MDA) reveals a pattern of significant and sustained investment in advanced missile defense technologies. The MDA consistently allocates substantial portions of its budget to research, development, testing, and evaluation (RDT&E) for complex systems like AEGIS. Contracts in this domain often involve long-term commitments, high dollar values, and are frequently awarded to established defense contractors with specialized expertise, such as Lockheed Martin. Spending fluctuates based on program maturity, technological breakthroughs, and evolving threat assessments. While specific historical figures for 'GPI CAPABILITY DEVELOPMENT' are not detailed here, the overall MDA budget and its allocation towards major programs like AEGIS indicate a consistent, multi-billion dollar annual expenditure on missile defense R&D over many years, reflecting the critical nature of these capabilities.

How does the geographic location (New Jersey) impact the performance and oversight of this contract?

The geographic location of contract performance in New Jersey, where Lockheed Martin Corporation has significant operations, can influence both the execution and oversight of this $18.3 million R&D contract. Proximity can facilitate easier communication and collaboration between government representatives (e.g., contracting officers, technical monitors) and the contractor's project team, potentially leading to more efficient problem-solving and decision-making. On-site inspections, reviews, and meetings can be conducted more readily. However, it also means that oversight efforts are concentrated in one specific region. Depending on the nature of the R&D, the location might also imply access to a skilled local workforce and specialized facilities within the defense technology ecosystem of the area. For oversight, the MDA would likely have personnel or representatives capable of managing the contract's performance and compliance from their respective locations, coordinating with the contractor's New Jersey-based team.

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: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

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: $53,577,770

Exercised Options: $53,577,770

Current Obligation: $18,315,205

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