Lockheed Martin awarded $5.6M contract for warhead data receiving cabinet manufacturing services

Contract Overview

Contract Amount: $5,632,350 ($5.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2025-09-15

End Date: 2027-09-30

Contract Duration: 745 days

Daily Burn Rate: $7.6K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS INCENTIVE FEE

Sector: R&D

Official Description: PROVIDE SUBJECT MATTER EXPERTISE TO IDENTIFY, RECOMMEND, AND IF ACCEPTED, ENGINEER QUALIFIED SOLUTIONS TO DIMINISHED MANUFACTURING SERVICES (DMS) CONDITIONS PRESENT WITHIN THE BMD MK78 MOD1 WARHEAD DATA RECEIVING CABINET (WDRC).

Place of Performance

Location: MOORESTOWN, BURLINGTON County, NEW JERSEY, 08057

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $5.6 million to LOCKHEED MARTIN CORPORATION for work described as: PROVIDE SUBJECT MATTER EXPERTISE TO IDENTIFY, RECOMMEND, AND IF ACCEPTED, ENGINEER QUALIFIED SOLUTIONS TO DIMINISHED MANUFACTURING SERVICES (DMS) CONDITIONS PRESENT WITHIN THE BMD MK78 MOD1 WARHEAD DATA RECEIVING CABINET (WDRC). Key points: 1. Contract focuses on addressing diminished manufacturing capabilities for a critical missile defense component. 2. The chosen contract type, Cost Plus Incentive Fee, aims to incentivize contractor performance and cost control. 3. A sole-source award suggests potential barriers to entry or unique contractor capabilities. 4. The contract duration of over two years indicates a significant effort required for solution engineering. 5. Performance is located in New Jersey, potentially impacting local specialized manufacturing workforce.

Value Assessment

Rating: fair

The contract value of $5.6 million for specialized R&D services appears reasonable given the niche nature of the work. However, without detailed cost breakdowns or comparisons to similar manufacturing recovery efforts, a definitive value-for-money assessment is challenging. The Cost Plus Incentive Fee structure allows for performance-based adjustments, which could lead to a more favorable outcome if the contractor meets targets. Benchmarking against other sole-source R&D contracts for defense systems would provide further context.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that the Missile Defense Agency likely identified Lockheed Martin as the only capable provider for this specific requirement. This could be due to proprietary knowledge, existing infrastructure, or specialized expertise related to the BMD MK78 Mod1 warhead. The lack of competition means that price discovery through market forces was not utilized, potentially leading to higher costs than if multiple bidders had participated.

Taxpayer Impact: Taxpayers may not benefit from the cost savings typically achieved through competitive bidding. The agency relied on its assessment of contractor capability rather than market competition to secure the necessary services.

Public Impact

The primary beneficiaries are the U.S. military, ensuring the operational readiness of the Ballistic Missile Defense (BMD) system. The contract delivers specialized engineering and manufacturing solutions to overcome critical supply chain vulnerabilities. Geographic impact is concentrated in New Jersey, where the contractor's facility is located. Workforce implications include the potential utilization of highly skilled engineers and manufacturing specialists in the defense sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Cost Plus Incentive Fee contracts can sometimes lead to cost overruns if not closely managed.
Reliance on a single contractor for critical manufacturing solutions poses a supply chain risk.

Positive Signals

Addresses a critical manufacturing gap for a vital defense system, ensuring readiness.
The incentive fee structure can drive contractor efficiency and performance.
Leverages the expertise of a known defense contractor with likely existing knowledge of the system.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on advanced manufacturing solutions for defense systems. The market for specialized defense manufacturing, particularly for sensitive components like warhead systems, is often characterized by high barriers to entry, proprietary technology, and limited competition. Spending in this niche is driven by national security requirements and the need to maintain technological superiority. Comparable spending benchmarks are difficult to establish due to the unique nature of the requirement.

Small Business Impact

The contract indicates that small business set-asides were not utilized, and there is no explicit mention of subcontracting requirements for small businesses. This suggests that the primary focus was on securing specialized capabilities from the prime contractor. The impact on the small business ecosystem is likely minimal for this specific award, though larger prime contractors often have broader subcontracting plans that may indirectly involve small businesses.

Oversight & Accountability

Oversight will likely be managed by the Department of Defense and the Missile Defense Agency through contract administration and program management offices. Accountability measures will be tied to the Cost Plus Incentive Fee structure, with performance metrics and cost targets. Transparency may be limited due to the sole-source nature and the sensitive defense application of the work. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse.

Related Government Programs

Ballistic Missile Defense Systems
Warhead Manufacturing
Defense Supply Chain Management
Advanced Manufacturing R&D
Aerospace and Defense Contractors

Risk Flags

Sole-source award
Potential for cost overruns (CPIF)
Supply chain dependency on a single contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $5.6 million to LOCKHEED MARTIN CORPORATION. PROVIDE SUBJECT MATTER EXPERTISE TO IDENTIFY, RECOMMEND, AND IF ACCEPTED, ENGINEER QUALIFIED SOLUTIONS TO DIMINISHED MANUFACTURING SERVICES (DMS) CONDITIONS PRESENT WITHIN THE BMD MK78 MOD1 WARHEAD DATA RECEIVING CABINET (WDRC).

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 $5.6 million.

What is the period of performance?

Start: 2025-09-15. End: 2027-09-30.

What is the specific nature of the 'diminished manufacturing services' for the BMD MK78 Mod1 warhead data receiving cabinet?

The provided data does not specify the exact nature of the diminished manufacturing services (DMS). However, DMS typically refers to a loss of industrial capacity, specialized skills, or critical manufacturing processes required to produce a particular component or system. For a warhead data receiving cabinet, this could involve obsolescence of tooling, loss of specialized workforce expertise, unavailability of raw materials, or outdated production techniques. The contract's objective is to identify, recommend, and engineer solutions to restore or replace these diminished capabilities, ensuring the continued production and support of this vital defense component.

How does the Cost Plus Incentive Fee (CPIF) contract structure work in this context?

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 performance against pre-determined targets. In this case, Lockheed Martin will be reimbursed for its costs incurred in providing the subject matter expertise and engineering solutions. The 'incentive' part means the final fee will be adjusted upwards or downwards based on achieving specific performance goals, such as meeting cost targets, schedule milestones, or technical performance objectives related to restoring the manufacturing capability. This structure aims to motivate the contractor to control costs while achieving desired outcomes.

What are the risks associated with a sole-source award for critical defense manufacturing?

Sole-source awards, while sometimes necessary for unique capabilities, carry inherent risks. Primarily, the lack of competition can lead to higher prices than might be achieved in a competitive bidding process, as the government does not benefit from market-driven price discovery. There's also a risk of complacency from the sole provider, potentially leading to less innovation or efficiency over time. Furthermore, reliance on a single source creates a critical vulnerability in the supply chain; if the contractor experiences production issues, financial instability, or decides to exit the market, the government may have limited alternatives for obtaining the necessary components, impacting national security readiness.

What is the historical spending pattern for similar R&D services related to missile defense components?

The provided data does not include historical spending patterns for similar R&D services. However, R&D contracts for specialized defense components, especially those involving manufacturing recovery or advanced technology development, are typically significant investments. The Missile Defense Agency (MDA) consistently funds research and development to maintain and enhance its complex systems. Spending in this area is often characterized by long-term commitments and can fluctuate based on evolving threats, technological advancements, and program priorities. Without access to MDA's historical contract databases or specific program budgets, a precise historical comparison is not feasible.

What are the potential implications for the broader Ballistic Missile Defense (BMD) program if manufacturing issues are not resolved?

Failure to resolve the diminished manufacturing services for the BMD MK78 Mod1 warhead data receiving cabinet could have severe implications for the broader Ballistic Missile Defense (BMD) program. This component is critical for the warhead's functionality, which is essential for intercepting threats. If manufacturing cannot be restored, it could lead to a shortage of operational warheads, impacting the availability and readiness of interceptor missiles. This could compromise the U.S. military's ability to defend against ballistic missile attacks, potentially weakening national security and strategic deterrence. The contract aims to mitigate these risks by ensuring the sustainment of this critical capability.

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: INSTALLATION OF EQUIPMENT › INSTALLATION 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: $7,829,280

Exercised Options: $7,829,280

Current Obligation: $5,632,350

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