DoD awards $90M+ for missile defense system integration, with Lockheed Martin as sole contractor
Contract Overview
Contract Amount: $90,150,597 ($90.2M)
Contractor: Lockheed Martin Corporation
Awarding Agency: Department of Defense
Start Date: 2020-12-31
End Date: 2025-12-31
Contract Duration: 1,826 days
Daily Burn Rate: $49.4K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Defense
Official Description: FIRE CONTROL COMPONENTS DEVELOPMENT 7 FLIGHT TEST SUPPORT FOR INTEGRATED AIR AND MISSILE DEFENSE BATTLE COMMAND SYSTEM, PATRIOT ADVANCED CAPABILITY AND PAC-3 MISSILE SEGMENT ENHANCEMENT INTEGRATION WITH LOWER TIER AIR AND MISSILE DEFENSE SENSOR
Place of Performance
Location: MADISON, MADISON County, ALABAMA, 35757
State: Alabama Government Spending
Plain-Language Summary
Department of Defense obligated $90.2 million to LOCKHEED MARTIN CORPORATION for work described as: FIRE CONTROL COMPONENTS DEVELOPMENT 7 FLIGHT TEST SUPPORT FOR INTEGRATED AIR AND MISSILE DEFENSE BATTLE COMMAND SYSTEM, PATRIOT ADVANCED CAPABILITY AND PAC-3 MISSILE SEGMENT ENHANCEMENT INTEGRATION WITH LOWER TIER AIR AND MISSILE DEFENSE SENSOR Key points: 1. Contract awarded on a cost-plus incentive fee basis, suggesting shared risk and reward. 2. Sole-source award indicates limited competition, potentially impacting price negotiation. 3. Long performance period of five years requires ongoing monitoring for cost and schedule adherence. 4. Focus on critical missile defense systems highlights national security importance. 5. Contract value exceeds $90 million, representing a significant investment in defense capabilities. 6. The contract supports integration of multiple advanced missile defense components.
Value Assessment
Rating: fair
Benchmarking the value of this sole-source contract is challenging without comparable solicitations. The Cost Plus Incentive Fee (CPIF) structure allows for potential cost savings if performance targets are met, but also carries the risk of cost overruns if not managed effectively. The contract's duration and complexity suggest a substantial effort, and its value should be assessed against the criticality of the integrated missile defense systems it supports. Without competitive bids, it's difficult to definitively state if the pricing represents optimal value for money.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only one contractor, Lockheed Martin Corporation, was solicited. This approach is typically used when a unique capability or proprietary technology is required, or in cases of urgent need where competition is not feasible. The lack of competition means there was no opportunity for other qualified companies to bid, which can limit price discovery and potentially lead to higher costs for the government compared to a fully competed contract.
Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure. The government's ability to negotiate the best possible price is diminished in a sole-source scenario.
Public Impact
The primary beneficiaries are the U.S. Army and Department of Defense, receiving enhanced integrated air and missile defense capabilities. Services delivered include development and flight test support for critical missile defense systems. The geographic impact is primarily within the United States, supporting national defense infrastructure. Workforce implications include specialized engineering, testing, and program management roles within Lockheed Martin and its potential subcontractors.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pressure, potentially increasing costs.
- Cost-plus incentive fee structure requires diligent oversight to manage potential cost overruns.
- Long contract duration increases the risk of scope creep or evolving requirements not being adequately addressed.
- Dependence on a single contractor for critical defense systems poses a strategic risk.
Positive Signals
- Focus on critical national security systems ensures advanced defense capabilities.
- Incentive fee structure can drive performance and efficiency if managed well.
- Lockheed Martin's established expertise in missile defense systems suggests a high likelihood of successful technical execution.
- Integration of multiple advanced systems addresses complex threat environments.
Sector Analysis
This contract falls within the Guided Missile and Space Vehicle Manufacturing sector, a critical component of the broader aerospace and defense industry. This sector is characterized by high R&D investment, stringent quality requirements, and significant government procurement. The market is dominated by a few large prime contractors, including Lockheed Martin, who possess the specialized expertise and facilities required for complex defense systems. Spending in this area is driven by national security priorities and evolving threat landscapes, with significant government outlays directed towards maintaining technological superiority.
Small Business Impact
This contract was not competed and there is no indication of small business set-asides or subcontracting plans. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely minimal unless Lockheed Martin voluntarily includes them in its supply chain. Further analysis would be needed to determine if subcontracting opportunities exist and if small business participation is being encouraged or mandated.
Oversight & Accountability
Oversight for this contract will likely be managed by the Department of the Army contracting and program management offices. The Cost Plus Incentive Fee (CPIF) structure necessitates robust financial and performance monitoring to ensure the contractor meets objectives and manages costs effectively. Transparency may be limited due to the sole-source nature, but contract performance reviews and audits by relevant Inspector General offices would be standard accountability measures.
Related Government Programs
- Integrated Air and Missile Defense (IAMD) Battle Command System
- Patriot Advanced Capability (PAC-3) Missile Segment Enhancement
- Lower Tier Air and Missile Defense Sensor Integration
- Missile Defense Agency Programs
- Army Tactical Missile Systems
Risk Flags
- Sole Source Award
- Cost-Plus Contract Type
- Long Performance Period
Tags
defense, department-of-defense, department-of-the-army, lockheed-martin-corporation, sole-source, cost-plus-incentive-fee, missile-defense, integration, flight-test, guided-missile-and-space-vehicle-manufacturing, alabama, large-business
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $90.2 million to LOCKHEED MARTIN CORPORATION. FIRE CONTROL COMPONENTS DEVELOPMENT 7 FLIGHT TEST SUPPORT FOR INTEGRATED AIR AND MISSILE DEFENSE BATTLE COMMAND SYSTEM, PATRIOT ADVANCED CAPABILITY AND PAC-3 MISSILE SEGMENT ENHANCEMENT INTEGRATION WITH LOWER TIER AIR AND MISSILE DEFENSE SENSOR
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 $90.2 million.
What is the period of performance?
Start: 2020-12-31. End: 2025-12-31.
What is Lockheed Martin Corporation's track record with similar sole-source contracts for missile defense systems?
Lockheed Martin Corporation has a long and extensive history of developing and producing complex missile defense systems for the U.S. Department of Defense and allied nations. They are a prime contractor for numerous programs, including the Patriot system itself, THAAD, and various missile components. While specific data on their track record with sole-source contracts for integration and flight testing is not publicly detailed in this context, their overall performance in delivering advanced missile defense technologies is generally well-established. However, sole-source awards, by their nature, limit public scrutiny of competitive performance metrics and pricing comparisons, making a direct assessment of 'track record' in that specific context difficult without internal government data.
How does the $90M+ contract value compare to similar missile defense integration efforts?
Directly comparing the $90.15 million contract value for this specific integration and flight test support is challenging due to the sole-source nature and the unique combination of systems involved (Integrated Air and Missile Defense Battle Command System, PAC-3, and Lower Tier sensors). Missile defense integration contracts can vary significantly in cost based on the complexity of the systems being integrated, the scope of testing required (e.g., live fire vs. simulation), and the duration of the effort. Larger, more comprehensive integration programs or development efforts for entirely new missile defense platforms can easily run into hundreds of millions or even billions of dollars. This $90M+ award appears to be for a specific phase of integration and testing support, rather than full system development, suggesting it is a substantial but potentially proportionate investment for the defined scope.
What are the primary risks associated with this sole-source, cost-plus incentive fee contract?
The primary risks associated with this contract are multifaceted. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated costs and reduced incentive for the contractor to achieve maximum efficiency. Secondly, the Cost Plus Incentive Fee (CPIF) structure, while designed to align contractor and government interests, carries inherent risks. If the incentive targets are poorly defined or if government oversight is insufficient, costs can escalate beyond initial projections. There's also the risk of scope creep over the five-year performance period, where requirements may expand without corresponding adjustments to budget or schedule. Finally, reliance on a single contractor for critical defense system integration poses a strategic risk; any performance issues or disruptions with Lockheed Martin could have significant national security implications.
How effective is the Cost Plus Incentive Fee (CPIF) structure likely to be for this missile defense integration contract?
The effectiveness of the CPIF structure hinges critically on the clarity and attainability of the performance targets set by the Department of the Army. CPIF aims to incentivize the contractor to perform efficiently by sharing potential cost savings if targets are exceeded, while also sharing the burden of cost overruns if targets are missed. For a complex integration and flight test effort like this, well-defined metrics related to system performance, integration success, test completion, and potentially schedule adherence are crucial. If these metrics are robust and measurable, the CPIF can encourage Lockheed Martin to optimize performance and manage costs diligently. However, inadequate target setting or weak oversight could undermine its effectiveness, leading to cost growth without commensurate performance gains.
What are the historical spending patterns for missile defense integration and support by the Department of the Army?
The Department of the Army, along with the broader Department of Defense, has consistently allocated significant funding towards missile defense capabilities over the past several decades. Spending patterns reflect evolving threat assessments and technological advancements. Historical data shows substantial investments in programs like Patriot, THAAD, and various sensor and command-and-control systems. Integration efforts, particularly for complex, multi-component systems like the Integrated Air and Missile Defense Battle Command System, represent a recurring and substantial portion of this spending. While specific figures for 'integration and support' contracts fluctuate annually based on program maturity and acquisition strategies, the overall trend indicates sustained, high-level investment in maintaining and enhancing missile defense readiness.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Guided Missile and Space Vehicle Manufacturing
Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE (V)
Evaluated Preference: NONE
Contractor Details
Parent Company: Lockheed Martin Corp
Address: 1701 W MARSHALL DR, GRAND PRAIRIE, TX, 75051
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: $90,351,860
Exercised Options: $90,150,597
Current Obligation: $90,150,597
Subaward Activity
Number of Subawards: 1
Total Subaward Amount: $79,930
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Parent Contract
Parent Award PIID: W31P4Q17G0001
IDV Type: BOA
Timeline
Start Date: 2020-12-31
Current End Date: 2025-12-31
Potential End Date: 2025-12-31 00:00:00
Last Modified: 2025-07-30
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