DoD's $247M EHF Satellite Comms Contract Awarded to Lockheed Martin Amidst Limited Competition
Contract Overview
Contract Amount: $246,828,900 ($246.8M)
Contractor: Lockheed Martin Corp
Awarding Agency: Department of Defense
Start Date: 2025-01-01
End Date: 2026-12-31
Contract Duration: 729 days
Daily Burn Rate: $338.6K/day
Competition Type: NOT COMPETED
Pricing Type: COST PLUS INCENTIVE FEE
Sector: IT
Official Description: CORE OPERATIONS AND SUSTAINMENT PROVIDES INTEGRATED SYSTEMS ENGINEERING SUSTAINMENT SUPPORT FOR PROTECTED EXTREMELY HIGH FREQUENCY SATELLITE COMMUNICATIONS SATELLITES, MILSTAR BLOCK I AND II AS WELL AS THE DEFENSE SATELLITE COMMUNICATIONS SYSTEM III
Place of Performance
Location: LITTLETON, DOUGLAS County, COLORADO, 80125
State: Colorado Government Spending
Plain-Language Summary
Department of Defense obligated $246.8 million to LOCKHEED MARTIN CORP for work described as: CORE OPERATIONS AND SUSTAINMENT PROVIDES INTEGRATED SYSTEMS ENGINEERING SUSTAINMENT SUPPORT FOR PROTECTED EXTREMELY HIGH FREQUENCY SATELLITE COMMUNICATIONS SATELLITES, MILSTAR BLOCK I AND II AS WELL AS THE DEFENSE SATELLITE COMMUNICATIONS SYSTEM III Key points: 1. Contract focuses on critical EHF satellite communications sustainment for military operations. 2. Lockheed Martin, a major defense contractor, is the sole awardee. 3. Limited competition raises questions about potential price overruns and innovation. 4. The IT and Defense sectors are heavily reliant on such secure communication systems.
Value Assessment
Rating: fair
The contract type is Cost Plus Incentive Fee (CPIF), which can lead to cost overruns if not managed carefully. Benchmarking against similar sustainment contracts for complex satellite systems is difficult without more detailed cost breakdowns.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The contract was not competed, indicating a sole-source or limited competition award. This limits price discovery and potentially reduces the government's ability to secure the best value.
Taxpayer Impact: The lack of robust competition may result in higher costs for taxpayers compared to a fully competed contract.
Public Impact
Ensures continuity of vital military satellite communication services. Supports national security by maintaining protected EHF satellite systems. Potential for increased costs due to limited competition impacts taxpayer funds. Reliability of these systems is crucial for global military operations.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Limited competition
- Cost-plus contract type
- Sole awardee
Positive Signals
- Critical national security system sustainment
- Experienced contractor
- Long-term support
Sector Analysis
This contract falls within the IT and Defense sectors, specifically focusing on the sustainment of high-value, complex satellite communication systems. Spending in this area is critical for maintaining national security infrastructure, but often involves high costs due to specialized technology and limited market players.
Small Business Impact
There is no indication that small businesses were involved in this specific contract award. The nature of high-tech satellite sustainment often favors large, established defense contractors.
Oversight & Accountability
Oversight will be crucial to ensure Lockheed Martin meets performance objectives and manages costs effectively under the CPIF structure. The Department of the Air Force will need robust contract management to mitigate risks associated with limited competition.
Related Government Programs
- Engineering Services
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Potential for cost overruns due to CPIF contract type.
- Lack of robust competition may lead to suboptimal pricing.
- High reliance on a single contractor for critical infrastructure.
- Technical obsolescence risk for older satellite systems.
- Cybersecurity vulnerabilities in legacy communication systems.
Tags
engineering-services, department-of-defense, co, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $246.8 million to LOCKHEED MARTIN CORP. CORE OPERATIONS AND SUSTAINMENT PROVIDES INTEGRATED SYSTEMS ENGINEERING SUSTAINMENT SUPPORT FOR PROTECTED EXTREMELY HIGH FREQUENCY SATELLITE COMMUNICATIONS SATELLITES, MILSTAR BLOCK I AND II AS WELL AS THE DEFENSE SATELLITE COMMUNICATIONS SYSTEM III
Who is the contractor on this award?
The obligated recipient is LOCKHEED MARTIN CORP.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Air Force).
What is the total obligated amount?
The obligated amount is $246.8 million.
What is the period of performance?
Start: 2025-01-01. End: 2026-12-31.
What specific factors justified the limited competition for this critical satellite sustainment contract?
The justification for limited competition likely stems from the highly specialized nature of the protected EHF satellite systems (Milstar, DSCS III) and the unique expertise required for their sustainment. Lockheed Martin's role as the original equipment manufacturer or prime integrator for these systems may necessitate their continued involvement to ensure operational integrity and avoid introducing new risks.
How will the Cost Plus Incentive Fee (CPIF) structure be monitored to ensure cost control and prevent contractor overspending?
The Department of the Air Force must implement stringent performance metrics and cost tracking mechanisms. Regular audits and reviews of contractor expenditures will be essential. Incentive targets should be clearly defined and achievable, with penalties for cost overruns and rewards for efficiency, ensuring alignment between contractor profit and government cost savings.
What is the long-term strategy for ensuring competitive sourcing for future satellite sustainment needs beyond this contract?
The government should explore strategies to foster competition for future sustainment requirements. This could involve breaking down large contracts into smaller, more manageable components, encouraging technology refresh initiatives that allow new entrants, and investing in organic government capabilities or training to reduce reliance on single contractors.
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
Pricing Type: COST PLUS INCENTIVE FEE (V)
Evaluated Preference: NONE
Contractor Details
Address: 12257 S WADSWORTH BLVD, LITTLETON, CO, 80125
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $625,736,629
Exercised Options: $405,010,345
Current Obligation: $246,828,900
Subaward Activity
Number of Subawards: 40
Total Subaward Amount: $29,371,383
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: FA882320D0001
IDV Type: IDC
Timeline
Start Date: 2025-01-01
Current End Date: 2026-12-31
Potential End Date: 2027-12-31 00:00:00
Last Modified: 2026-01-15
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