DoD's $176M AEGIS System Contract Awarded to Lockheed Martin Raises Questions on Competition and Value
Contract Overview
Contract Amount: $176,305,050 ($176.3M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2024-01-09
End Date: 2029-01-10
Contract Duration: 1,828 days
Daily Burn Rate: $96.4K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Defense
Official Description: AEGIS DEVELOPMENT AND TEST SITES OPERATION AND MAINTAINENCE
Place of Performance
Location: MOORESTOWN, BURLINGTON County, NEW JERSEY, 08057
Plain-Language Summary
Department of Defense obligated $176.3 million to LOCKHEED MARTIN CORPORATION for work described as: AEGIS DEVELOPMENT AND TEST SITES OPERATION AND MAINTAINENCE Key points: 1. Significant contract value for a critical defense system. 2. Sole-source award to Lockheed Martin limits competitive pricing. 3. Potential for cost overruns due to Cost Plus Incentive Fee structure. 4. Focus on advanced navigation and guidance systems highlights technological importance.
Value Assessment
Rating: questionable
The contract's Cost Plus Incentive Fee structure, while incentivizing performance, can lead to higher costs compared to fixed-price contracts. Benchmarking against similar complex defense system contracts is difficult without more detailed cost breakdowns.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, meaning Lockheed Martin was the only bidder. This lack of competition significantly reduces the government's ability to negotiate the best possible price and may lead to inflated costs.
Taxpayer Impact: The absence of competition means taxpayers may be paying a premium for the AEGIS system development and maintenance, as there was no market pressure to drive down prices.
Public Impact
Impacts national defense capabilities through the AEGIS combat system. Potential for taxpayer funds to be used inefficiently due to sole-source award. Long-term maintenance and operation costs could exceed initial estimates.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competition.
- Cost-plus contract type can lead to cost overruns.
- Lack of transparency in pricing due to sole-source nature.
- Long contract duration increases risk exposure.
Positive Signals
- Critical defense system acquisition.
- Potential for technological advancement through R&D.
- Experienced contractor with a history in defense systems.
Sector Analysis
This contract falls within the Defense sector, specifically for the manufacturing and maintenance of advanced navigation and guidance systems. Spending benchmarks for similar sole-source, long-term defense contracts are typically high, but the lack of competition makes direct comparison challenging.
Small Business Impact
The contract was awarded to Lockheed Martin Corporation, a large prime contractor. There is no indication of subcontracting opportunities for small businesses within the provided data, suggesting limited direct impact on the small business sector for this specific award.
Oversight & Accountability
The sole-source nature of this award warrants close oversight to ensure fair pricing and prevent potential cost creep. Regular performance reviews and audits will be crucial for accountability throughout the contract's duration.
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 contract type.
- Potential for cost overruns.
- Lack of competitive pricing pressure.
- Long contract duration.
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 $176.3 million to LOCKHEED MARTIN CORPORATION. AEGIS DEVELOPMENT AND TEST SITES OPERATION AND MAINTAINENCE
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 $176.3 million.
What is the period of performance?
Start: 2024-01-09. End: 2029-01-10.
What specific justifications were provided for awarding this contract on a sole-source basis, and have alternative competitive strategies been considered?
The justification for a sole-source award typically centers on unique capabilities, proprietary technology, or the absence of adequate competition. For the AEGIS system, this could relate to Lockheed Martin's established expertise and existing infrastructure. However, a thorough review of the procurement process should confirm that all avenues for competition were explored and deemed unfeasible before resorting to a sole-source designation.
How will the government ensure cost control and value for money given the Cost Plus Incentive Fee structure and the lack of competition?
Effective cost control will rely on robust government oversight, including detailed cost analysis, performance monitoring, and stringent auditing. The incentive fee structure must be carefully managed to ensure that incentives align with achieving specific, measurable cost-saving targets. Regular benchmarking against industry standards and independent cost estimates will be vital to validate the reasonableness of expenditures.
What are the long-term implications of this sole-source contract on the future development and maintenance costs of the AEGIS system?
A long-term sole-source contract can potentially lead to escalating costs over time as the contractor faces less pressure to innovate or reduce expenses. It may also stifle competition in future procurements if alternative solutions are not explored. The government should proactively plan for future competition by encouraging technology maturation and potentially breaking down future requirements into smaller, more contestable contract vehicles.
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: N0002422R5116
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: $464,977,704
Exercised Options: $239,325,285
Current Obligation: $176,305,050
Actual Outlays: $6,227,716
Subaward Activity
Number of Subawards: 115
Total Subaward Amount: $22,530,046
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2024-01-09
Current End Date: 2029-01-10
Potential End Date: 2029-01-10 00:00:00
Last Modified: 2026-01-12
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