DoD awards $456M for Joint Air-to-Ground Missile (JAGM) to Lockheed Martin, utilizing existing Hellfire components

Contract Overview

Contract Amount: $456,076,317 ($456.1M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2015-07-31

End Date: 2023-11-21

Contract Duration: 3,035 days

Daily Burn Rate: $150.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: IGF::OT::IGF THIS REQUIREMENT IS FOR FULL AND OPEN COMPETITION FOR THE JOINT AIR-TO-GROUND MISSILE (JAGM) IN SUPPORT OF THE JAGM PRODUCT OFFICE OF THE JOINT ATTACK MUNITION SYSTEMS PROJECT OFFICE. JAGM IS AN AIR TO SURFACE MISSILE CONSISTING OF A NEWLY DEVELOPED GUIDANCE SECTION (GS) MATED TO THE EXISTING HELLFIRE ROMEO BACKEND (MOTOR, WARHEAD AND ASSOCIATED ELECTRONICS). THE JAGM REQUIREMENT WILL BE AWARDED AS A FIXED PRICE INCENTIVE (FIRM TARGET) (FPIF) CONTRACT FOR A 2 YEAR BASE CONTRACT FOR A QUANTITY OF 96 ARMY UNITS PLUS 52 NAVY UNITS FOR EMD. THE ANTICIPATED AWARD OF 420 UNITS FOR ADVANCED PROCUREMENT ITEMS (API) AND LRIP I OPTION, 600 UNITS FOR LRIP II OPTION AND THE COST SHARING DEFENSE EXPORTABILITY FEATURES (DEF) OPTIONS WILL BE DEPENDENT UPON THE ACTUAL AMOUNT OF PROCUREMENT FUNDING APPROVED BY THE ARMY.

Place of Performance

Location: ORLANDO, ORANGE County, FLORIDA, 32819

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $456.1 million to LOCKHEED MARTIN CORPORATION for work described as: IGF::OT::IGF THIS REQUIREMENT IS FOR FULL AND OPEN COMPETITION FOR THE JOINT AIR-TO-GROUND MISSILE (JAGM) IN SUPPORT OF THE JAGM PRODUCT OFFICE OF THE JOINT ATTACK MUNITION SYSTEMS PROJECT OFFICE. JAGM IS AN AIR TO SURFACE MISSILE CONSISTING OF A NEWLY DEVELOPED GUIDANCE SECTION… Key points: 1. Contract leverages existing Hellfire missile technology for cost efficiency. 2. Fixed Price Incentive contract type aims to balance cost and performance. 3. Competition strategy is full and open, suggesting potential for competitive pricing. 4. The contract spans multiple years, indicating a long-term strategic investment. 5. Focus on EMD and advanced procurement suggests development and initial production phases. 6. Geographic concentration in Florida may indicate specific manufacturing or testing sites.

Value Assessment

Rating: good

The contract's value of $456 million for the Joint Air-to-Ground Missile (JAGM) appears reasonable given its scope, which includes Engineering and Manufacturing Development (EMD) and advanced procurement. By mating a new guidance section to the existing Hellfire Romeo backend, the Department of Defense is leveraging proven technology, which can reduce development costs and risks compared to a completely new missile system. Benchmarking against similar missile development programs would provide further insight, but the approach suggests a cost-conscious strategy.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit offers. While the number of bidders is not specified, this approach generally fosters a competitive environment, which can lead to better pricing and innovation. The use of a definitive contract suggests a well-defined requirement and a commitment to a specific vendor, likely after a thorough evaluation of proposals.

Taxpayer Impact: Full and open competition is beneficial for taxpayers as it increases the likelihood of receiving the best value through competitive pricing and encourages contractors to offer innovative solutions to win the award.

Public Impact

The U.S. Army and Navy will benefit from the enhanced air-to-ground missile capabilities provided by the JAGM. The contract supports the development and initial production of a critical munition for air and ground forces. The primary geographic impact is within Florida, where the contract is managed and potentially where manufacturing or testing will occur. The contract supports jobs within the defense manufacturing sector, particularly in guided missile and space vehicle manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in fixed-price incentive contracts if targets are not met.
Reliance on existing Hellfire components may limit future upgradeability if new technologies emerge.
Long-term sustainment costs for the JAGM system are not detailed in this award.

Positive Signals

Leveraging existing Hellfire technology reduces development time and initial costs.
Full and open competition promotes a competitive pricing environment.
The contract structure incentivizes contractor performance to meet program targets.

Sector Analysis

The Joint Air-to-Ground Missile (JAGM) falls within the defense sector, specifically the guided missile and space vehicle manufacturing industry. This market is characterized by high technological barriers to entry and significant government investment. The JAGM program represents a modernization effort for air-to-surface munitions, aiming to provide superior capability over legacy systems. Spending in this area is driven by evolving threat landscapes and the need for advanced precision-guided munitions.

Small Business Impact

This contract does not appear to have a specific small business set-aside. However, as a large-scale defense procurement, there may be opportunities for small businesses to participate as subcontractors to the prime contractor, Lockheed Martin Corporation. The extent of small business subcontracting will depend on the prime contractor's strategy and the specific components and services required for the JAGM program.

Oversight & Accountability

Oversight for this contract will be provided by the Department of Defense, likely through the relevant program executive office and contracting command. The Fixed Price Incentive contract type includes mechanisms for monitoring cost and performance against established targets. Transparency is generally maintained through contract awards databases and reporting requirements, though specific details of performance may be sensitive.

Related Government Programs

Hellfire Missile System
Advanced Precision Kill Weapon System (APKWS)
Joint Air-to-Ground Munitions Programs
Missile Defense Systems

Risk Flags

Potential for cost overruns due to FPIF contract type.
Integration risks associated with mating new guidance section to existing missile backend.
Long-term sustainment and upgradeability considerations.
Dependence on specific supply chains for components.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $456.1 million to LOCKHEED MARTIN CORPORATION. IGF::OT::IGF THIS REQUIREMENT IS FOR FULL AND OPEN COMPETITION FOR THE JOINT AIR-TO-GROUND MISSILE (JAGM) IN SUPPORT OF THE JAGM PRODUCT OFFICE OF THE JOINT ATTACK MUNITION SYSTEMS PROJECT OFFICE. JAGM IS AN AIR TO SURFACE MISSILE CONSISTING OF A NEWLY DEVELOPED GUIDANCE SECTION (GS) MATED TO THE EXISTING HELLFIRE ROMEO BACKEND (MOTOR, WARHEAD AND ASSOCIATED ELECTRONICS). THE JAGM REQUIREMENT WILL BE AWARDED AS A FIXED PRICE INCENTIVE (FIRM TARGET) (FPIF) CONTRACT FOR A 2 YEAR BASE CONTRACT FO

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 Army).

What is the total obligated amount?

The obligated amount is $456.1 million.

What is the period of performance?

Start: 2015-07-31. End: 2023-11-21.

What is the historical spending trend for the JAGM program prior to this award?

Prior to this $456 million award, detailed historical spending for the JAGM program is not explicitly provided in the given data. However, the contract's description mentions Engineering and Manufacturing Development (EMD) and advanced procurement, suggesting that significant investment has likely already occurred in the research and development phases. The duration of the contract (3035 days) and the phased procurement (base contract, LRIP I, LRIP II options) indicate a long-term program. To understand the full historical spending, one would need to examine previous contract awards and budget allocations specifically for JAGM development and testing over its lifecycle.

How does the unit cost of the JAGM compare to similar missile systems?

The provided data does not include a specific per-unit cost for the JAGM, making a direct comparison difficult. The total award of $456,067,631.50 covers a quantity of 96 Army units plus 52 Navy units for EMD, and potential options for 420 units (API) and 600 units (LRIP II). If we consider only the EMD units (148 total), the average cost per EMD unit would be approximately $3.08 million. However, EMD units are typically more expensive than production units. A true value assessment would require comparing the projected production unit cost of the JAGM against comparable systems like the Advanced Medium-Range Air-to-Air Missile (AMRAAM) or other air-to-ground munitions, considering their capabilities, range, and technological sophistication.

What are the key performance metrics and risks associated with this JAGM contract?

The key performance metrics for this JAGM contract are likely tied to the successful development and production of the missile system, meeting specified performance requirements (e.g., accuracy, range, lethality), and adhering to cost and schedule targets. The contract type, Fixed Price Incentive (Firm Target) (FPIF), indicates that both the contractor and the government share in cost savings or overruns relative to target costs, incentivizing efficient performance. Key risks include potential technical challenges in integrating the new guidance section with the Hellfire backend, achieving desired performance levels, managing supply chain complexities for components, and potential cost growth if targets are not met. The government's share of cost overruns is capped, shifting some risk to the contractor.

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

Lockheed Martin Corporation has an extensive and well-established track record in developing and producing advanced missile systems for the U.S. military and international partners. They are the prime contractor for the Hellfire missile family, which forms the backend of the JAGM. Their portfolio includes numerous other significant programs such as the Patriot missile defense system, the F-35 fighter jet's internal weapons systems, the Javelin anti-tank missile, and various air-to-air and air-to-ground munitions. This deep experience in missile technology, guidance systems, and large-scale defense manufacturing suggests a strong capability to execute the JAGM program successfully.

How does the 'full and open competition' strategy impact the overall value for taxpayers?

The 'full and open competition' strategy is designed to maximize value for taxpayers by ensuring that the government receives offers from all responsible sources, thereby fostering a competitive environment. This competition typically drives down prices as contractors vie for the award by offering their best value proposals. It also encourages innovation, as companies seek to differentiate their offerings. For the JAGM program, this approach suggests that the selected price and proposed solution were deemed the most advantageous after a thorough evaluation of multiple bids, rather than being negotiated under a sole-source or limited competition scenario, which often results in higher costs for the government.

Industry Classification

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

Product/Service Code: GUIDED MISSLES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: W31P4Q15R0005

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

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: $456,076,317

Exercised Options: $456,076,317

Current Obligation: $456,076,317

Actual Outlays: $6,034,333

Subaward Activity

Number of Subawards: 886

Total Subaward Amount: $375,682,705

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline