DoD's $6.7M AEGIS BMD contract awarded to Lockheed Martin for R&D, with no competition

Contract Overview

Contract Amount: $6,719,536 ($6.7M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2025-09-15

End Date: 2026-03-31

Contract Duration: 197 days

Daily Burn Rate: $34.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: DEVELOPMENT, INTEGRATION, TESTING, AND CERTIFICATION OF DESIGNATED AEGIS BMD IN-SERVICE BASELINES

Place of Performance

Location: MOORESTOWN, BURLINGTON County, NEW JERSEY, 08057

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $6.7 million to LOCKHEED MARTIN CORPORATION for work described as: DEVELOPMENT, INTEGRATION, TESTING, AND CERTIFICATION OF DESIGNATED AEGIS BMD IN-SERVICE BASELINES Key points: 1. Contract focuses on critical missile defense system development and integration. 2. Sole-source award raises questions about price discovery and potential cost efficiencies. 3. Long-term sustainment of AEGIS BMD suggests ongoing need and potential for future contracts. 4. Research and Development in physical sciences is a high-risk, high-reward area. 5. Missile Defense Agency's reliance on specific contractors warrants scrutiny of performance and innovation. 6. Geographic concentration in New Jersey for this development effort.

Value Assessment

Rating: questionable

The contract value of $6.7 million for development, integration, testing, and certification of AEGIS BMD in-service baselines is difficult to benchmark without comparable sole-source R&D contracts. Given the lack of competition, there is a heightened risk that the pricing may not reflect optimal value for money. The Cost Plus Incentive Fee (CPIF) contract type suggests an attempt to incentivize performance, but the absence of competitive pressure makes a definitive value assessment challenging.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one contractor, 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 alternative solutions and potentially secure lower prices through market competition.

Taxpayer Impact: The lack of competition means taxpayers may not benefit from the cost savings that could arise from a more open bidding process. Without competing offers, the government has less leverage to negotiate the most favorable terms and pricing.

Public Impact

The primary beneficiaries are the Department of Defense and the Missile Defense Agency, ensuring the continued development and readiness of the AEGIS Ballistic Missile Defense system. Services delivered include crucial research, development, integration, testing, and certification activities for the AEGIS BMD system. The geographic impact is concentrated in New Jersey, where the contractor is located. Workforce implications include specialized engineering and technical roles required for advanced defense system development.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
CPIF contract type requires careful monitoring to ensure contractor incentives align with government objectives.
Reliance on a single contractor for critical system development poses a potential risk if performance issues arise.
The specific baselines being addressed are not detailed, making it hard to assess the scope of work.

Positive Signals

Award to an incumbent contractor with established expertise in AEGIS BMD suggests continuity and reduced transition risk.
CPIF contract structure aims to reward efficient performance and cost control.
Focus on R&D indicates investment in future defense capabilities.
Clear end dates provide a defined period for the contract activities.

Sector Analysis

The AEGIS Ballistic Missile Defense (BMD) system is a critical component of national security, falling within the broader defense sector. This contract specifically addresses Research and Development (R&D) in physical sciences, a segment characterized by high innovation requirements and often long development cycles. The market for such specialized defense R&D is typically dominated by a few large, experienced prime contractors. Benchmarking spending in this niche is challenging due to the proprietary nature of the technology and the limited number of qualified entities.

Small Business Impact

This contract does not appear to involve a small business set-aside, as indicated by the prime contractor being Lockheed Martin Corporation. There is no explicit information regarding subcontracting plans for small businesses within this specific award. The focus on advanced R&D for a major defense system often involves highly specialized components and services that may not be readily available from small businesses, though they could potentially participate in lower-tier subcontracting.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of Defense and the Missile Defense Agency through contract administration and technical representatives. The Cost Plus Incentive Fee (CPIF) structure necessitates close monitoring of costs and performance to ensure alignment with contract objectives and to manage incentive payouts. Transparency regarding the specific R&D milestones and outcomes will be crucial for accountability, though detailed public reporting on such sensitive defense R&D may be limited.

Related Government Programs

AEGIS Combat System
Ballistic Missile Defense Systems
Department of Defense Research and Development Programs
Missile Defense Agency Contracts
Lockheed Martin Defense Contracts

Risk Flags

Sole Source Award
Research and Development Contract
Cost Plus Incentive Fee Structure
Critical Defense System

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $6.7 million to LOCKHEED MARTIN CORPORATION. DEVELOPMENT, INTEGRATION, TESTING, AND CERTIFICATION OF DESIGNATED AEGIS BMD IN-SERVICE BASELINES

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 $6.7 million.

What is the period of performance?

Start: 2025-09-15. End: 2026-03-31.

What is Lockheed Martin Corporation's track record with AEGIS BMD development and integration?

Lockheed Martin Corporation has a long-standing and primary role in the development, production, and sustainment of the AEGIS Combat System and its Ballistic Missile Defense (BMD) capabilities. As the prime contractor for AEGIS, they have been instrumental in evolving the system through numerous baselines and upgrades over decades. Their extensive experience includes integrating advanced radar, weapon control, and missile interceptor technologies. This deep institutional knowledge and established infrastructure position them as a critical partner for the Missile Defense Agency. Past performance reviews and contract histories with the DoD would provide further detail on their specific successes and challenges in delivering AEGIS BMD capabilities on time and within budget across various programs.

How does the $6.7 million value compare to similar AEGIS BMD R&D contracts?

Directly comparing the $6.7 million value of this specific contract to similar AEGIS BMD R&D efforts is challenging due to the proprietary nature of defense R&D and the variability in contract scope. However, R&D for complex defense systems like AEGIS BMD often involves multi-year efforts with values ranging from millions to hundreds of millions of dollars, depending on the specific baseline, technological advancements, and integration complexity. This $6.7 million award appears to be for a specific phase or set of activities within a larger, ongoing development program. Without more granular data on the specific "designated AEGIS BMD in-service baselines" and the scope of "development, integration, testing, and certification," a precise benchmark is difficult. The sole-source nature also prevents direct comparison with competitively bid R&D projects.

What are the primary risks associated with this sole-source R&D contract?

The primary risks associated with this sole-source R&D contract are centered around cost control and potential lack of innovation due to the absence of competitive pressure. Without competing bids, there's a risk that the pricing may not be as optimized as it could be in a competitive environment, potentially leading to higher costs for taxpayers. Furthermore, sole-source awards can sometimes reduce the incentive for the contractor to aggressively pursue innovative solutions or efficiencies, as they are guaranteed the work. There's also the inherent risk in R&D projects, where outcomes are uncertain, and timelines can slip. Finally, reliance on a single contractor for critical development phases poses a risk if performance issues, financial instability, or strategic shifts occur within the contractor's organization.

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

The Cost Plus Incentive Fee (CPIF) contract type is designed to manage R&D projects by sharing cost risks and incentivizing performance. In a CPIF contract, the contractor is reimbursed for allowable costs and receives a target fee, but the final fee is adjusted based on whether actual costs are below or above the target cost, and performance objectives are met. This structure aims to motivate the contractor to control costs and achieve specific performance targets, which is particularly relevant for R&D where outcomes can be uncertain. However, the effectiveness of CPIF hinges on well-defined performance metrics and realistic cost targets. For R&D, defining these metrics can be complex. While it encourages efficiency, the sole-source nature of this award means the baseline cost targets and performance expectations are set without competitive validation, potentially limiting its effectiveness compared to a competitively awarded CPIF contract.

What are the historical spending patterns for AEGIS BMD development and sustainment?

Historical spending on AEGIS BMD development and sustainment represents a significant and sustained investment by the U.S. Department of Defense over several decades. The AEGIS system, and its BMD capabilities, have undergone continuous upgrades and modernization, leading to substantial, multi-billion dollar expenditures across numerous contracts. These expenditures cover research and development, system integration, hardware production, software updates, testing, and lifecycle support. Major contractors, primarily Lockheed Martin, have received the bulk of these funds. Spending patterns reflect the evolving threat landscape and technological advancements, with budgets often fluctuating based on program priorities, congressional appropriations, and specific modernization phases. This $6.7 million contract represents a small, specific increment within this larger, long-term spending trend.

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: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD 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: $8,243,910

Exercised Options: $8,243,910

Current Obligation: $6,719,536

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