DoD Awards $491M Lockheed Martin Contract for AEGIS Combat System Test Sites
Contract Overview
Contract Amount: $491,131,370 ($491.1M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2023-09-18
End Date: 2032-01-31
Contract Duration: 3,057 days
Daily Burn Rate: $160.7K/day
Competition Type: NOT AVAILABLE FOR COMPETITION
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Defense
Official Description: AEGIS FMS CANADIAN SURFACE COMBATANT LAND BASED TEST SITES ESTABLISHMENT
Place of Performance
Location: MOORESTOWN, BURLINGTON County, NEW JERSEY, 08057
Plain-Language Summary
Department of Defense obligated $491.1 million to LOCKHEED MARTIN CORPORATION for work described as: AEGIS FMS CANADIAN SURFACE COMBATANT LAND BASED TEST SITES ESTABLISHMENT Key points: 1. Significant investment in critical defense infrastructure for the Canadian Surface Combatant program. 2. Sole-source award to Lockheed Martin highlights reliance on established prime contractor. 3. Long contract duration (3057 days) suggests complex, multi-year development and testing. 4. Potential for cost overruns given the Cost Plus Incentive Fee (CPIF) contract type.
Value Assessment
Rating: questionable
The contract value of $491.1 million for establishing land-based test sites is substantial. Without specific benchmarks for similar test site establishments, it's difficult to definitively assess pricing. However, the CPIF structure suggests a focus on performance incentives rather than strict cost control.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not available for competition, indicating a sole-source award. This limits price discovery and potentially leads to higher costs compared to a competitive bidding process. The justification for sole-source likely relates to the unique capabilities and integration required for the AEGIS system.
Taxpayer Impact: Taxpayer funds are being used for a sole-source contract, which may not represent the best value. The lack of competition raises concerns about cost efficiency and the potential for inflated prices.
Public Impact
Enhances Canada's naval defense capabilities through the AEGIS Combat System. Supports the development and testing infrastructure for advanced naval technology. Impacts the defense industrial base, particularly for companies involved in naval systems integration. Ensures the operational readiness of future Canadian warships.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competition and price negotiation.
- Cost Plus Incentive Fee (CPIF) contract can lead to cost overruns.
- Long contract duration increases exposure to economic fluctuations and scope creep.
- Lack of specific performance metrics in provided data.
Positive Signals
- Supports a key allied nation's defense modernization.
- Establishes critical testing infrastructure for advanced naval systems.
- Leverages established technology and contractor expertise.
Sector Analysis
This contract falls within the defense sector, specifically focusing on advanced combat systems and their associated testing infrastructure. Spending benchmarks for establishing such specialized land-based test sites are highly variable and depend on the complexity of the system being tested. The value is significant for this niche area.
Small Business Impact
The provided data does not indicate any specific provisions or set-asides for small businesses in this sole-source contract. Large prime contractors like Lockheed Martin typically manage subcontracts, but the direct award to the prime limits direct small business participation opportunities on this specific contract.
Oversight & Accountability
The Department of the Navy is the awarding agency. Oversight will be crucial to manage the CPIF contract effectively, ensuring that incentives align with cost control and performance goals. The long duration necessitates sustained oversight to prevent scope creep and ensure 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
- Sole-source award
- Cost Plus Incentive Fee contract type
- Long contract duration
- Potential for cost overruns
- Lack of transparency in competition justification
- Limited visibility into 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 $491.1 million to LOCKHEED MARTIN CORPORATION. AEGIS FMS CANADIAN SURFACE COMBATANT LAND BASED TEST SITES ESTABLISHMENT
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 $491.1 million.
What is the period of performance?
Start: 2023-09-18. End: 2032-01-31.
What is the specific justification for the sole-source award, and have alternative competitive strategies been considered?
The justification for a sole-source award typically centers on unique capabilities, proprietary technology, or essential integration requirements that only one contractor can fulfill. For the AEGIS system, this often relates to its complex architecture and established integration with existing platforms. Alternative competitive strategies may have been explored but deemed unsuitable due to program maturity or specific technical needs. Further documentation would be required to detail the specific rationale.
How will the Cost Plus Incentive Fee (CPIF) structure be managed to ensure cost efficiency and prevent potential overruns?
Managing a CPIF contract requires clearly defined performance targets and cost ceilings. The incentive fees must be carefully structured to reward efficient cost management and successful achievement of technical objectives. Regular audits, performance reviews, and transparent reporting from the contractor are essential. The government must actively monitor expenditures against the baseline and ensure that incentive payouts are justified by demonstrable value and performance improvements.
What are the key performance indicators (KPIs) for this contract, and how will their achievement be measured to justify incentive payouts?
Key performance indicators for establishing test sites would likely include the timely completion of infrastructure development, successful integration of test equipment, achievement of operational readiness by specified dates, and the accuracy and reliability of test data generated. Measurement would involve regular progress reports, site inspections, system validation tests, and independent verification of data integrity. The specific KPIs and their weighting for incentive calculations would be detailed in the contract's performance work statement.
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 AVAILABLE FOR COMPETITION
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N0002422R5101
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, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $551,950,097
Exercised Options: $551,950,097
Current Obligation: $491,131,370
Subaward Activity
Number of Subawards: 74
Total Subaward Amount: $16,280,299
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2023-09-18
Current End Date: 2032-01-31
Potential End Date: 2032-01-31 00:00:00
Last Modified: 2025-12-11
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