DoD Awards $406M for AEGIS Follow-On Support, Completing Baseline 9 Fielding
Contract Overview
Contract Amount: $406,299,035 ($406.3M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2016-09-16
End Date: 2025-12-31
Contract Duration: 3,393 days
Daily Burn Rate: $119.7K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Defense
Official Description: AEGIS FOLLOW ON SUPPORT FOR DDGS 116-118 REPRESENTING COMPLETION OF THE DEVELOPMENT AND FIELDING OF THE AEGIS BASELINE 9
Place of Performance
Location: MOORESTOWN, BURLINGTON County, NEW JERSEY, 08057
Plain-Language Summary
Department of Defense obligated $406.3 million to LOCKHEED MARTIN CORPORATION for work described as: AEGIS FOLLOW ON SUPPORT FOR DDGS 116-118 REPRESENTING COMPLETION OF THE DEVELOPMENT AND FIELDING OF THE AEGIS BASELINE 9 Key points: 1. Significant investment in critical naval defense technology. 2. Sole-source award to Lockheed Martin raises competition concerns. 3. Long-term contract (2016-2025) indicates ongoing program needs. 4. Focus on completing AEGIS Baseline 9 development and fielding.
Value Assessment
Rating: questionable
The contract value of $406M for AEGIS follow-on support is substantial. Without specific benchmarks for similar follow-on support contracts for complex defense systems, assessing its pricing efficiency is difficult. The cost-plus-incentive-fee structure suggests an attempt to control costs while incentivizing performance.
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 lack of competition limits price discovery and may result in higher costs for taxpayers. The justification for a sole-source award in a program of this scale warrants scrutiny.
Taxpayer Impact: The absence of competition for a contract of this magnitude could lead to suboptimal pricing, directly impacting taxpayer funds allocated to defense.
Public Impact
Ensures continued operational readiness of AEGIS-equipped destroyers. Supports the completion of a major naval combat system upgrade. Impacts the technological superiority of the U.S. Navy fleet. Contributes to the defense industrial base and associated jobs.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Lack of competition
- High contract value
Positive Signals
- Critical defense system support
- Completion of system fielding
- Long-term program stability
Sector Analysis
This contract falls within the Defense sector, specifically supporting naval combat systems. Spending on major defense platforms like AEGIS is a significant portion of the DoD budget, with substantial investments often made in system sustainment and upgrades.
Small Business Impact
The data does not indicate any specific provisions or awards made to small businesses under this contract. Large sole-source contracts often bypass opportunities for small business participation unless specifically mandated.
Oversight & Accountability
The Department of the Navy awarded this contract, implying oversight from the Department of Defense. However, the sole-source nature of the award raises questions about the extent of competitive oversight and justification processes.
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
- Sole-source award limits competition.
- Potential for higher costs due to lack of competition.
- Long contract duration may obscure current market pricing.
- Contract completion date extends significantly into the future.
- No indication of small business participation.
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 $406.3 million to LOCKHEED MARTIN CORPORATION. AEGIS FOLLOW ON SUPPORT FOR DDGS 116-118 REPRESENTING COMPLETION OF THE DEVELOPMENT AND FIELDING OF THE AEGIS BASELINE 9
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 $406.3 million.
What is the period of performance?
Start: 2016-09-16. End: 2025-12-31.
What was the specific justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?
The justification for a sole-source award typically stems from unique capabilities, proprietary technology, or the need for urgent support that only one contractor can provide. For the AEGIS system, Lockheed Martin's deep involvement in its development and sustainment likely formed the basis. However, a thorough review would examine if phased competitive approaches or specific contract actions could have been used to introduce competition for certain support elements.
How does the cost-plus-incentive-fee structure compare to industry standards for similar long-term defense system support contracts, and what are the potential risks of cost overruns?
Cost-plus-incentive-fee (CPIF) contracts aim to balance cost control with performance incentives. For complex, long-term defense systems like AEGIS, CPIF is common. Risks of cost overruns exist if the baseline cost estimates are inaccurate, the incentive targets are not well-defined, or unforeseen technical challenges arise. Effective government oversight is crucial to manage these risks and ensure the contractor meets performance goals within reasonable cost parameters.
What is the long-term strategy for AEGIS system support beyond Baseline 9, and will future procurements involve greater competition?
The long-term strategy for AEGIS support likely involves continuous upgrades and sustainment as technology evolves and the fleet ages. Future procurements may aim for increased competition, especially for specific components or services, or as new system baselines are introduced. However, the inherent complexity and integration requirements of the AEGIS system may continue to favor incumbent contractors for certain aspects of support.
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: FIRE CONTROL EQPT.
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0002415R5193
Offers Received: 1
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, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $449,811,743
Exercised Options: $440,655,309
Current Obligation: $406,299,035
Actual Outlays: $20,393,660
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2016-09-16
Current End Date: 2025-12-31
Potential End Date: 2025-12-31 00:00:00
Last Modified: 2025-09-23
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