DoD's $341M AEGIS contract with Lockheed Martin faces scrutiny over competition and value
Contract Overview
Contract Amount: $341,043,397 ($341.0M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2011-09-29
End Date: 2016-06-30
Contract Duration: 1,736 days
Daily Burn Rate: $196.5K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: AEGIS WEAPON SYSTEM (AWS) AND AEGIS COMBAT SYSTEM (ACS) COMBAT SYSTEMS ENGINEERING, ALTERATION INSTALLATION/REPAIR OVERHAUL (AI/ROH) EXECUTION, COMPUTER PROGRAM MAINTENANCE, IN-COUNTRY SUPPORT SERVICES, AND STAGING SUPPORT TO FULFILL AEGIS FMS LIFETIME SUPPORT REQUIREMENTS
Place of Performance
Location: MOORESTOWN, BURLINGTON County, NEW JERSEY, 08057
Plain-Language Summary
Department of Defense obligated $341.0 million to LOCKHEED MARTIN CORPORATION for work described as: AEGIS WEAPON SYSTEM (AWS) AND AEGIS COMBAT SYSTEM (ACS) COMBAT SYSTEMS ENGINEERING, ALTERATION INSTALLATION/REPAIR OVERHAUL (AI/ROH) EXECUTION, COMPUTER PROGRAM MAINTENANCE, IN-COUNTRY SUPPORT SERVICES, AND STAGING SUPPORT TO FULFILL AEGIS FMS LIFETIME SUPPORT REQUIREMENTS Key points: 1. Significant investment in a critical defense system, AEGIS. 2. Sole-source award to Lockheed Martin raises competition concerns. 3. Long-term contract duration may impact cost-effectiveness. 4. Focus on sustainment and support services for a complex system.
Value Assessment
Rating: questionable
The contract's Cost Plus Fixed Fee structure, combined with a lack of competition, makes a definitive pricing assessment difficult. Benchmarking against similar sole-source sustainment contracts is challenging but essential for ensuring fair pricing.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to Lockheed Martin. This limits price discovery and potentially leads to higher costs for the government compared to a competitive environment.
Taxpayer Impact: The lack of competition in this large contract may result in taxpayers paying a premium for AEGIS system support and maintenance.
Public Impact
Ensures continued operational readiness of the U.S. Navy's AEGIS-equipped vessels. Supports foreign military sales (FMS) requirements, impacting international partnerships. Maintains critical combat system capabilities for national defense. Potential for cost overruns due to sole-source nature and contract type.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost Plus Fixed Fee contract type
- Lack of demonstrated competition
- Long contract duration
Positive Signals
- Supports critical national defense system
- Addresses lifetime support requirements
- Includes essential maintenance and repair services
Sector Analysis
This contract falls within the defense sector, specifically focusing on complex weapon systems and their sustainment. Spending benchmarks for similar sole-source combat system support contracts are difficult to establish due to the unique nature of AEGIS.
Small Business Impact
The data indicates this contract was awarded to Lockheed Martin Corporation, a large prime contractor. There is no explicit information suggesting subcontracting opportunities for small businesses within this specific award, though they may be involved at lower tiers.
Oversight & Accountability
The sole-source nature of this contract warrants close oversight to ensure costs are reasonable and performance meets requirements. Regular reviews of contractor performance and cost reporting are crucial for accountability.
Related Government Programs
- Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Lack of competition
- Potential for cost overruns
- Contract type may not incentivize lowest cost
- Long contract duration
- Reliance on a single source for critical system sustainment
Tags
search-detection-navigation-guidance-aer, department-of-defense, nj, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $341.0 million to LOCKHEED MARTIN CORPORATION. AEGIS WEAPON SYSTEM (AWS) AND AEGIS COMBAT SYSTEM (ACS) COMBAT SYSTEMS ENGINEERING, ALTERATION INSTALLATION/REPAIR OVERHAUL (AI/ROH) EXECUTION, COMPUTER PROGRAM MAINTENANCE, IN-COUNTRY SUPPORT SERVICES, AND STAGING SUPPORT TO FULFILL AEGIS FMS LIFETIME SUPPORT REQUIREMENTS
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 $341.0 million.
What is the period of performance?
Start: 2011-09-29. End: 2016-06-30.
What is the justification for the sole-source award, and were alternative competitive strategies considered?
The justification for a sole-source award typically stems from unique capabilities, proprietary technology, or urgent needs where only one source can fulfill the requirement. For this AEGIS contract, the Department of Defense would need to provide specific documentation detailing why competition was not feasible or advantageous, potentially citing Lockheed Martin's sole responsibility for the AEGIS system's design and integration.
How does the Cost Plus Fixed Fee structure impact cost control and contractor incentive for efficiency?
The Cost Plus Fixed Fee (CPFF) structure reimburses the contractor for allowable costs plus a fixed fee representing profit. While the fixed fee incentivizes cost control to some extent (as it doesn't increase with costs), it can be less effective than other contract types like fixed-price contracts in driving down overall expenses. The government bears the risk of cost overruns beyond the negotiated fee.
What mechanisms are in place to ensure the long-term value and effectiveness of the AEGIS system under this contract?
Mechanisms for ensuring long-term value and effectiveness likely include performance metrics, technical reviews, and milestone tracking within the contract. The Department of the Navy would monitor system performance, reliability, and the successful execution of maintenance and repair tasks. Regular program reviews and potential contract modifications based on evolving threats or technological advancements would also contribute to sustained effectiveness.
Industry Classification
NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0002410R5127
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 199 BORTON LANDING RD, MOORESTOWN, NJ, 08057
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $347,136,147
Exercised Options: $347,136,147
Current Obligation: $341,043,397
Subaward Activity
Number of Subawards: 28
Total Subaward Amount: $7,176,250
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2011-09-29
Current End Date: 2016-06-30
Potential End Date: 2016-06-30 00:00:00
Last Modified: 2024-07-19
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