DoD awards $126.7M for LRASM missile development, with Lockheed Martin as sole source

Contract Overview

Contract Amount: $126,710,181 ($126.7M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2019-07-03

End Date: 2025-11-03

Contract Duration: 2,315 days

Daily Burn Rate: $54.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: UCA FOR LRASM 1.1 NRE.

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $126.7 million to LOCKHEED MARTIN CORPORATION for work described as: UCA FOR LRASM 1.1 NRE. Key points: 1. This contract represents a significant investment in advanced missile technology. 2. The sole-source nature raises questions about price competitiveness and potential for cost overruns. 3. Performance risk is moderate given the complexity of guided missile development. 4. The contract duration extends over several years, indicating a long-term development cycle. 5. This award falls within the defense manufacturing sector, specifically guided missile production. 6. The lack of competition limits opportunities for other manufacturers to contribute to this program.

Value Assessment

Rating: questionable

The contract's value of $126.7 million for Non-Recurring Engineering (NRE) for the LRASM 1.1 is substantial. Without competitive bids, it is difficult to benchmark the pricing against market rates or similar contracts. The Cost Plus Incentive Fee (CPIF) structure aims to control costs by incentivizing the contractor, but the absence of competition means there's less external pressure to achieve the most economical outcome. Further analysis would require access to detailed cost breakdowns and historical data for similar missile development programs.

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 is typically justified when a unique capability or proprietary technology is involved, or in cases of urgent need where only one source can reasonably meet the requirement. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices or spurred innovation from multiple vendors.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. The government's negotiating position is weakened without alternative offers, potentially leading to higher overall program costs.

Public Impact

The primary beneficiaries are the U.S. Navy and potentially other branches of the Department of Defense, receiving advanced long-range anti-ship missile capabilities. The contract supports the development and integration of the LRASM 1.1 variant, enhancing strategic deterrence and offensive capabilities. The geographic impact is primarily within Florida, where Lockheed Martin's facilities are located, potentially supporting local jobs and the aerospace ecosystem. This contract will likely sustain and potentially create high-skilled jobs in aerospace engineering, manufacturing, and program management within Lockheed Martin and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Cost Plus Incentive Fee (CPIF) contracts can lead to cost overruns if not managed rigorously.
Long contract duration (over 2 years) increases exposure to economic fluctuations and potential scope creep.
Developmental nature of the contract (NRE) carries inherent technical and schedule risks.
Lack of transparency in sole-source procurements can obscure true value for money.

Positive Signals

Award to a major defense contractor with established expertise in missile systems.
CPIF contract structure provides incentives for cost efficiency and performance.
Focus on advanced missile technology development aligns with strategic defense modernization goals.
Long-term contract provides stability for development and ensures continued capability enhancement.
Delivery order under an existing contract (implied) may streamline acquisition process.

Sector Analysis

The guided missile and space vehicle manufacturing sector (NAICS 336414) is a critical component of the defense industrial base. This sector is characterized by high barriers to entry, significant R&D investment, and long product development cycles. Spending in this area is driven by national security requirements and technological advancements. Comparable spending benchmarks are difficult to establish without detailed program specifics, but significant government investment is typical for advanced weapon systems development.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses explicitly stated in the provided data. As a sole-source award to a large prime contractor, the primary impact on the small business ecosystem would be through potential subcontracting opportunities awarded by Lockheed Martin. The extent of these opportunities is not detailed here, but large prime contractors often utilize small businesses for specialized components or services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The Cost Plus Incentive Fee (CPIF) structure implies performance and cost monitoring to ensure incentives are met. Transparency is limited due to the sole-source nature. The Inspector General of the Department of Defense would have jurisdiction to investigate potential fraud, waste, or abuse related to this contract.

Related Government Programs

Long Range Anti-Ship Missile (LRASM)
Naval Air Systems Command (NAVAIR) Contracts
Department of Defense Research and Development
Guided Missile Manufacturing
Lockheed Martin Defense Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Long contract duration
Developmental contract (NRE)

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $126.7 million to LOCKHEED MARTIN CORPORATION. UCA FOR LRASM 1.1 NRE.

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $126.7 million.

What is the period of performance?

Start: 2019-07-03. End: 2025-11-03.

What is the specific technical objective of the LRASM 1.1 NRE contract?

The Non-Recurring Engineering (NRE) contract for LRASM 1.1 aims to fund the design, development, testing, and integration activities necessary to mature and finalize the next increment (version 1.1) of the Long Range Anti-Ship Missile. This typically involves refining the missile's software, hardware, guidance systems, and warhead integration to meet updated performance requirements or incorporate new technologies. The goal is to ensure the missile remains effective against evolving threats and maintains its operational capabilities for the U.S. Navy.

How does the Cost Plus Incentive Fee (CPIF) structure work in 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 receives a target fee. However, the final fee is adjusted based on the contractor's performance in relation to target cost, schedule, and performance objectives. For this LRASM 1.1 NRE contract, Lockheed Martin would be incentivized to control costs below a certain target, meet development milestones, and achieve specific performance metrics. If they exceed cost targets, their fee is reduced; if they perform better than targets, their fee increases, up to a pre-defined maximum.

What are the risks associated with a sole-source award for missile development?

Sole-source awards for complex defense systems like missile development carry several risks. Primarily, the absence of competition can lead to higher prices as there is no market pressure to offer the most cost-effective solution. It can also limit innovation, as potential competitors with novel approaches are not engaged. Furthermore, the government's negotiating leverage is reduced, potentially resulting in less favorable terms. There's also a risk that the sole provider may not have the most efficient processes or could face internal production issues without external benchmarks.

What is the historical spending trend for LRASM development and procurement?

Historical spending data for the LRASM program indicates a consistent and significant investment by the Department of Defense, particularly the Navy, over several years. Early phases involved substantial R&D funding, followed by increments of development and procurement. The total lifecycle cost of the LRASM program, including development, testing, and procurement of fielded missiles, runs into billions of dollars. This $126.7 million award for LRASM 1.1 NRE represents a specific, albeit large, component of that ongoing investment in capability enhancement and modernization.

How does the LRASM 1.1 compare to previous versions in terms of capabilities and cost?

The LRASM 1.1 is intended to be an incremental improvement over previous versions, likely incorporating enhanced targeting capabilities, improved electronic warfare countermeasures, or expanded operational envelopes. While specific details are often classified, the NRE funding suggests significant developmental effort. Comparing costs directly is challenging without detailed program breakdowns, but NRE for new variants typically involves substantial investment. The CPIF structure aims to manage cost growth, but the overall cost-effectiveness depends on the realized performance gains and the efficiency of the development process compared to the benefits delivered.

What is Lockheed Martin's track record with similar missile development contracts?

Lockheed Martin Corporation has an extensive and well-established track record in developing and manufacturing complex missile systems for the U.S. military and international partners. They are a prime contractor on numerous advanced programs, including various air-to-air, air-to-ground, and naval missiles. Their experience spans decades and includes successful development and production of systems requiring sophisticated guidance, propulsion, and warhead technologies. While specific performance metrics on all contracts are not publicly available, their continued selection as a prime contractor for critical defense programs suggests a generally positive performance history and capability.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001919R4037

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 5600 W SAND LAKE RD # MP-265, ORLANDO, FL, 32819

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: $126,710,181

Exercised Options: $126,710,181

Current Obligation: $126,710,181

Actual Outlays: $22,564,068

Subaward Activity

Number of Subawards: 137

Total Subaward Amount: $32,235,024

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001919G0011

IDV Type: BOA

Timeline