DoD's $6.77M Aegis BMD contract with Lockheed Martin raises questions on competition and value
Contract Overview
Contract Amount: $6,770,544 ($6.8M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2025-11-18
End Date: 2026-11-17
Contract Duration: 364 days
Daily Burn Rate: $18.6K/day
Competition Type: NOT COMPETED
Pricing Type: COST PLUS INCENTIVE FEE
Sector: R&D
Official Description: SUPPORT OF AEGIS BMD COMBAT SYSTEM ENGINEERING AND PROGRAM MANAGEMENT SERVICES RELATED TO OPERATIONAL READINESS AND AEGIS WEAPON SYSTEM (AWS) SUSTAINMENT OF THE AEGIS BMD FLEET.
Place of Performance
Location: MOORESTOWN, BURLINGTON County, NEW JERSEY, 08057
Plain-Language Summary
Department of Defense obligated $6.8 million to LOCKHEED MARTIN CORPORATION for work described as: SUPPORT OF AEGIS BMD COMBAT SYSTEM ENGINEERING AND PROGRAM MANAGEMENT SERVICES RELATED TO OPERATIONAL READINESS AND AEGIS WEAPON SYSTEM (AWS) SUSTAINMENT OF THE AEGIS BMD FLEET. Key points: 1. Contract awarded to Lockheed Martin for Aegis BMD engineering and program management. 2. Focus on operational readiness and fleet sustainment highlights critical defense infrastructure. 3. Lack of competition and cost-plus contract type present potential risks. 4. Spending falls within R&D sector, but specific benchmarks are needed.
Value Assessment
Rating: questionable
The contract is a Cost Plus Incentive Fee (CPIF) type, which can incentivize cost control but also requires careful oversight. Without comparable contracts or detailed cost breakdowns, assessing the pricing against similar services is difficult.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers as there is no competitive pressure to drive down prices.
Taxpayer Impact: The lack of competition for this significant contract may result in taxpayer funds being used less efficiently than if multiple vendors had vied for the work.
Public Impact
Ensures the operational readiness of the Aegis Ballistic Missile Defense (BMD) fleet, a key national security asset. Supports the sustainment of the Aegis Weapon System, crucial for maintaining defense capabilities. The contract's duration of one year with options for extension impacts long-term planning for defense spending.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost-plus contract type
- Lack of transparency on cost drivers
Positive Signals
- Supports critical defense system
- Focus on operational readiness
Sector Analysis
This contract falls under Research and Development in the Physical, Engineering, and Life Sciences. Spending in this sector can vary widely, but large sole-source contracts for established systems like Aegis warrant scrutiny to ensure fair pricing and effective use of funds.
Small Business Impact
The contract data indicates no specific set-aside for small businesses, and the prime contractor is a large corporation. This suggests limited direct opportunities for small businesses on this particular award.
Oversight & Accountability
The sole-source nature of this award necessitates robust oversight from the Department of Defense and the Missile Defense Agency to ensure cost reasonableness and performance standards are met. Independent cost estimates and regular performance reviews are crucial.
Related Government Programs
- Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)
- Department of Defense Contracting
- Missile Defense Agency Programs
Risk Flags
- Lack of competition
- Cost-plus contract type
- Potential for cost overruns
- Limited transparency on pricing
- No small business participation noted
Tags
research-and-development-in-the-physical, department-of-defense, nj, delivery-order, 1m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $6.8 million to LOCKHEED MARTIN CORPORATION. SUPPORT OF AEGIS BMD COMBAT SYSTEM ENGINEERING AND PROGRAM MANAGEMENT SERVICES RELATED TO OPERATIONAL READINESS AND AEGIS WEAPON SYSTEM (AWS) SUSTAINMENT OF THE AEGIS BMD FLEET.
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 $6.8 million.
What is the period of performance?
Start: 2025-11-18. End: 2026-11-17.
What is the justification for awarding this contract on a sole-source basis, and what steps are being taken to ensure fair and reasonable pricing?
The justification for a sole-source award typically involves unique capabilities or proprietary technology. To ensure fair pricing, the agency should conduct a thorough cost analysis, potentially using independent government cost estimates, and closely monitor performance incentives within the CPIF structure. Transparency regarding the rationale and pricing mechanisms is key for accountability.
How does the cost-plus incentive fee structure mitigate risks associated with potential cost overruns for this complex system?
A Cost Plus Incentive Fee (CPIF) contract aims to align contractor and government interests by providing bonuses for exceeding targets (e.g., cost savings, performance improvements) and penalties for falling short. For this Aegis BMD contract, it incentivizes Lockheed Martin to manage costs effectively while maintaining high operational readiness. However, the government must meticulously define and track performance metrics and cost targets to ensure the incentive structure truly benefits the taxpayer.
What is the long-term strategy for ensuring competitive sourcing for Aegis BMD engineering and sustainment services to maximize value?
The long-term strategy should involve market research to identify potential competitors and explore opportunities for breaking down the services into smaller, more competitive packages. Developing clear performance work statements and technical requirements that are not overly reliant on proprietary solutions can also foster competition. Periodic reviews of the sole-source justification are essential to determine if competitive sourcing becomes feasible.
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: $26,999,067
Exercised Options: $26,999,067
Current Obligation: $6,770,544
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
Start Date: 2025-11-18
Current End Date: 2026-11-17
Potential End Date: 2026-11-17 00:00:00
Last Modified: 2025-12-17
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