DoD awards $167M for Hellfire missile engineering services to Lockheed Martin
Contract Overview
Contract Amount: $166,796,887 ($166.8M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2019-07-31
End Date: 2025-07-31
Contract Duration: 2,192 days
Daily Burn Rate: $76.1K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: HELLFIRE AND JOINT AIR-TO-GROUND MISSILE (JAGM) ENGINEERING SERVICES
Place of Performance
Location: ORLANDO, ORANGE County, FLORIDA, 32819
State: Florida Government Spending
Plain-Language Summary
Department of Defense obligated $166.8 million to LOCKHEED MARTIN CORPORATION for work described as: HELLFIRE AND JOINT AIR-TO-GROUND MISSILE (JAGM) ENGINEERING SERVICES Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Significant funding allocated for engineering services over a multi-year period. 3. Focus on advanced missile systems indicates a critical defense capability. 4. Contract duration extends through mid-2025, suggesting ongoing program needs. 5. Potential for cost overruns given the Cost Plus Fixed Fee contract type.
Value Assessment
Rating: fair
The contract value of $166.8 million for engineering services is substantial. Without comparable sole-source contracts for similar advanced missile system engineering, a direct value-for-money assessment is challenging. The Cost Plus Fixed Fee (CPFF) structure, while common for complex R&D, carries inherent risks of cost escalation if not closely managed. Benchmarking against industry standards for engineering services in the defense sector would be necessary for a more definitive value assessment.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when a single contractor possesses unique capabilities or intellectual property essential for the requirement. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs than if multiple bids were solicited.
Taxpayer Impact: Taxpayers may not receive the best possible price due to the absence of competitive bidding. The government relies on negotiation and oversight to ensure fair pricing in sole-source awards.
Public Impact
The U.S. Army benefits from continued engineering support for the Hellfire missile system. Ensures the sustainment and potential upgrades of a key air-to-ground weapon. Supports advanced defense capabilities critical for national security. Work is likely concentrated in Florida, impacting the local defense industry workforce.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pressure on pricing.
- Cost Plus Fixed Fee contract type can incentivize higher spending.
- Lack of transparency in sole-source negotiations can obscure true value.
- Long contract duration may not reflect evolving technological needs.
Positive Signals
- Lockheed Martin is a proven contractor with extensive experience in missile systems.
- Engineering services are crucial for maintaining and improving critical defense assets.
- The contract supports a vital component of the U.S. military's arsenal.
- The fixed fee component provides some cost certainty for the contractor's effort.
Sector Analysis
This contract falls within the Defense sector, specifically focusing on missile systems engineering. The defense industry is characterized by high R&D investment, long product lifecycles, and significant government procurement. Engineering services are vital for maintaining the technological edge of military hardware. Comparable spending in this sub-sector often involves substantial sums due to the complexity and criticality of the systems involved.
Small Business Impact
This contract does not appear to have a small business set-aside. Given the sole-source nature and the specialized engineering services required for advanced missile systems, it is unlikely that significant subcontracting opportunities for small businesses will be mandated or readily available, unless Lockheed Martin proactively seeks them for specific components or support functions.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures would be tied to the performance metrics outlined in the Cost Plus Fixed Fee agreement. Transparency may be limited due to the sole-source nature, but contract modifications and performance reports are typically subject to internal review and potentially Inspector General oversight if issues arise.
Related Government Programs
- Hellfire Missile Program
- Joint Air-to-Ground Missile (JAGM)
- Air-to-Ground Munitions
- Missile Systems Engineering
- Department of Defense Research and Development
Risk Flags
- Sole-source award
- Cost Plus Fixed Fee contract type
- Potential for cost overruns
- Limited price competition
Tags
defense, department-of-defense, department-of-the-army, engineering-services, missile-systems, lockheed-martin, sole-source, cost-plus-fixed-fee, definitive-contract, florida, research-and-development
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $166.8 million to LOCKHEED MARTIN CORPORATION. HELLFIRE AND JOINT AIR-TO-GROUND MISSILE (JAGM) ENGINEERING SERVICES
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 $166.8 million.
What is the period of performance?
Start: 2019-07-31. End: 2025-07-31.
What is Lockheed Martin's track record with the Hellfire and JAGM programs?
Lockheed Martin has a long and established history as the prime contractor for the Hellfire missile system, which has been a cornerstone of U.S. and allied air-to-ground attack capabilities for decades. They have been responsible for its production, sustainment, and various upgrades. The company is also a key player in the development of the Joint Air-to-Ground Missile (JAGM), which is intended to replace both the Hellfire and other missiles, offering enhanced capabilities. Their extensive experience suggests a deep understanding of the program's technical requirements, manufacturing processes, and operational needs, making them a logical choice for continued engineering services.
How does the $166.8 million contract value compare to historical spending on Hellfire/JAGM engineering services?
The $166.8 million awarded for engineering services represents a significant investment over the contract's duration (July 2019 - July 2025, approximately 6 years). Historical spending on engineering services for mature programs like the Hellfire can fluctuate based on upgrade cycles, sustainment needs, and the introduction of new variants or replacement systems like JAGM. Without specific historical data on engineering service expenditures for these programs, it's difficult to definitively benchmark this amount. However, given the complexity and critical nature of advanced missile systems, such funding levels are not uncommon for multi-year engineering support contracts within the defense sector.
What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for engineering services?
The primary risk with a Cost Plus Fixed Fee (CPFF) contract is that the contractor is reimbursed for all allowable costs incurred, plus a predetermined fixed fee. This structure can incentivize the contractor to incur higher costs, as their fee remains constant regardless of the total cost. While the fixed fee provides some cost certainty for the contractor's profit, the government bears the risk of cost overruns. Effective oversight, stringent cost controls, and clear performance metrics are crucial to mitigate these risks and ensure the government receives good value for its investment.
How does the sole-source award impact the government's ability to ensure fair and reasonable pricing?
A sole-source award inherently limits the government's ability to ensure fair and reasonable pricing through the mechanism of competitive bidding. In such cases, the government must rely heavily on negotiation, cost analysis, and price reasonableness techniques. This involves scrutinizing the contractor's proposed costs, comparing them to historical data, industry benchmarks, and independent cost estimates. The Defense Contract Audit Agency (DCAA) often plays a role in auditing the contractor's cost proposals. However, the absence of competing offers means the government lacks the leverage that multiple bids provide, potentially resulting in a higher price than could be achieved through competition.
What are the potential performance implications of awarding this contract to Lockheed Martin?
Awarding this contract to Lockheed Martin, the original equipment manufacturer and a long-standing developer of the Hellfire and JAGM systems, offers several potential performance advantages. Their deep institutional knowledge, existing infrastructure, and established supply chain for these specific missile systems can lead to efficient execution and reduced ramp-up time. This continuity is crucial for maintaining the operational readiness of critical defense assets. Furthermore, their proven track record in missile development suggests a high likelihood of meeting technical specifications and performance requirements, thereby ensuring the continued effectiveness of these vital weapons.
Are there any specific performance metrics or milestones tied to this contract?
While the provided data does not detail specific performance metrics or milestones, Cost Plus Fixed Fee (CPFF) contracts typically include clauses that define the scope of work, deliverables, and performance standards. The 'fixed fee' is contingent upon the contractor achieving these defined objectives. The Department of the Army's program office would be responsible for monitoring Lockheed Martin's progress against these requirements. Performance reviews, technical reviews, and acceptance testing of engineering outputs would serve as key indicators of successful contract execution. Failure to meet critical milestones or performance standards could impact the contractor's ability to receive the full fixed fee or lead to contract remedies.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: W31P4Q18R0014
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
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: $366,856,006
Exercised Options: $166,796,887
Current Obligation: $166,796,887
Actual Outlays: $1,420,379
Subaward Activity
Number of Subawards: 166
Total Subaward Amount: $25,757,955
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2019-07-31
Current End Date: 2025-07-31
Potential End Date: 2025-07-31 00:00:00
Last Modified: 2025-08-07
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