DoD Awards Lockheed Martin $848M for AEGIS Weapon System Production, Extending Contract to 2015
Contract Overview
Contract Amount: $1,049,496,415 ($1.0B)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2001-10-01
End Date: 2015-12-31
Contract Duration: 5,204 days
Daily Burn Rate: $201.7K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: 200205!021044!1700!BZ005 !NAVAL SEA SYSTEMS COMMAND !N0002401C5168 !A!N! !N! !20010430!20070131!848028494!150049880!834951691!N!LOCKHEED MARTIN CORPORATION !199 BORTON LANDING ROAD !MOORESTOWN !NJ!08057!47850!005!34!MOORESTOWN !BURLINGTON !NEW JERSEY!+000022350030!N!N!000000000000!1095!MISCELLANEOUS WEAPONS !A3 !SHIPS !2SCY!DESTROYER DDG-51 !334511!E! !3! ! ! ! ! !99990909!B! ! !A! !D!N!L!1!001!N!1A!A!W!A! ! !N!C!N! ! ! !A!A!A!A!000!A!D!Y! ! ! ! ! ! !0001!
Place of Performance
Location: MOORESTOWN, BURLINGTON County, NEW JERSEY, 08057
Plain-Language Summary
Department of Defense obligated $1.05 billion to LOCKHEED MARTIN CORPORATION for work described as: 200205!021044!1700!BZ005 !NAVAL SEA SYSTEMS COMMAND !N0002401C5168 !A!N! !N! !20010430!20070131!848028494!150049880!834951691!N!LOCKHEED MARTIN CORPORATION !199 BORTON LANDING ROAD !MOORESTOWN !NJ!08057!47850!005!34!MOORESTOWN !BURLI… Key points: 1. The contract, valued at $848,028,494, covers the production of the AEGIS Weapon System. 2. Lockheed Martin Corporation is the sole awardee, indicating a lack of competition. 3. The contract type is Fixed Price Incentive, which can lead to cost overruns if not managed carefully. 4. The sector is Defense, specifically focusing on IT and weapon systems for naval vessels.
Value Assessment
Rating: fair
The contract value of $848M for AEGIS Weapon System production appears substantial. Benchmarking against similar complex defense systems is difficult without more granular data, but the long duration suggests significant scope.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning there was no open competition. This limits price discovery and potentially leads to higher costs for taxpayers.
Taxpayer Impact: The lack of competition for a large defense contract raises concerns about whether the government achieved the best possible price.
Public Impact
Taxpayers are funding a significant portion of the US Navy's AEGIS combat system. The long contract duration (over 14 years) suggests a critical and ongoing need for this technology. The sole-source award highlights potential risks of reduced innovation and higher costs due to limited market engagement.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competition and price discovery.
- Fixed Price Incentive contract type can incentivize cost overruns.
- Long contract duration increases exposure to potential scope creep or changing requirements.
Positive Signals
- Award to a major defense contractor with established expertise.
- Contract addresses a critical national defense capability (AEGIS system).
Sector Analysis
This contract falls within the Defense sector, specifically for IT and weapon systems related to naval platforms. Defense spending on complex systems like AEGIS is a significant portion of the federal budget, often characterized by long-term contracts and specialized contractors.
Small Business Impact
The awardee, Lockheed Martin Corporation, is a large prime contractor. There is no indication in the data whether small businesses were involved as subcontractors, which is a common practice in large defense contracts.
Oversight & Accountability
The sole-source nature of this award warrants close oversight to ensure fair pricing and effective performance. The long duration also necessitates ongoing monitoring of contract modifications and delivery schedules.
Related Government Programs
- Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Lack of competition may lead to higher costs.
- Fixed Price Incentive contract risk of cost overruns.
- Long contract duration increases risk of scope creep.
- Potential for reduced innovation due to sole-source award.
- Limited transparency on subcontractor involvement.
Tags
search-detection-navigation-guidance-aer, department-of-defense, nj, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $1.05 billion to LOCKHEED MARTIN CORPORATION. 200205!021044!1700!BZ005 !NAVAL SEA SYSTEMS COMMAND !N0002401C5168 !A!N! !N! !20010430!20070131!848028494!150049880!834951691!N!LOCKHEED MARTIN CORPORATION !199 BORTON LANDING ROAD !MOORESTOWN !NJ!08057!47850!005!34!MOORESTOWN !BURLINGTON !NEW JERSEY!+000022350030!N!N!000000000000!1095!MISCELLANEOUS WEAPONS !A3 !SHIPS !2SCY!DESTROYER DDG-51 !334511!E! !3! ! ! ! ! !99990909!B
Who is the contractor on this award?
The obligated recipient is LOCKHEED MARTIN CORPORATION.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $1.05 billion.
What is the period of performance?
Start: 2001-10-01. End: 2015-12-31.
What was the justification for awarding this contract on a sole-source basis, and were alternative solutions considered?
The justification for a sole-source award typically stems from unique capabilities, proprietary technology, or urgent needs where only one contractor can fulfill the requirement. Without specific documentation, it's difficult to ascertain the exact reasons. However, for critical defense systems like AEGIS, the government often relies on established providers due to the complexity and specialized nature of the technology, potentially limiting competitive options.
How does the per-unit cost of the AEGIS Weapon System components compare to industry benchmarks or previous contract periods?
Determining the per-unit cost benchmark for the AEGIS Weapon System is challenging with the provided data. The contract value is a total award amount over a long period. A detailed cost analysis comparing unit prices to similar systems or historical data would be necessary to assess cost-effectiveness. The Fixed Price Incentive structure also means the final unit cost could vary based on performance.
What measures are in place to ensure the effectiveness and timely delivery of the AEGIS Weapon System under this long-term, sole-source contract?
Effective oversight mechanisms, including regular performance reviews, milestone tracking, and quality assurance checks, are crucial for long-term sole-source contracts. The Department of Defense likely employs program managers and contracting officers to monitor Lockheed Martin's progress, ensure adherence to specifications, and manage any potential risks or changes that could impact delivery or system effectiveness.
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: WEAPONS
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE (L)
Evaluated Preference: NONE
Contractor Details
Parent Company: Lockheed Martin Corp
Address: 199 BORTON LANDING RD, MOORESTOWN, NJ, 08057
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NOT OBTAINED - WAIVED
Timeline
Start Date: 2001-10-01
Current End Date: 2015-12-31
Potential End Date: 2015-12-31 00:00:00
Last Modified: 2022-02-23
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