Tuesday, March 21, 2017

Lockheed Strikes Back

Here’s the latest stunning contract award for highly questionable work.
Lockheed Martin Mission Systems Sensors … is being awarded an $80,556,000 cost-plus-fixed-fee contract modification to a previously-awarded contract (N00024-16-C-5103) for additional Aegis implementation studies for future foreign military sales … expected to be completed by November 2019. 

This one is wrong on multiple levels.

We’re paying the company that produces the Aegis system to sell their product????  Isn’t that what the company is supposed to do on their own?  Would you pay Ford Motor Company to study how to sell cars?

How much study does the producer of Aegis really need to do to be able to answer questions about possible future sales?

How about that dollar amount?  That’s $80M over 20 months.  That’s $4M per month.  If there were 100 people dedicated to nothing but this (a ridiculous number of people but what the heck) and their time was charged at $100/hr, the cost would be $1.7M for a month’s work.  That leaves us short $2.3M per month!!!!!

You know Lockheed doesn’t have 100 people working full time on this.  I’d be surprised if they have 10.

Lockheed is raping the government which means they’re taking my tax dollars.  How is the Navy being a good steward of my tax dollars on this?

Is this Lockheed’s response to the unilateral contract imposition on the F-35 program?


  1. I'm not a lawyer, or a government official. I know contracts are complex. But I'll be waiting with baited breath for the answer to this, because one of the consistent things the Navy does is cry poor mouth.

    I'll reiterate, I want a strong defense. I want our Navy and our sailors to have good equipment.

    But the only way we can do that sustainably is to spend our money efficiently, and if the status quo is that the Navy pi$$es away money in weird contracts to do studies then I have zero desire to give them more money.

    Take the 1/3 cut of 1/2 a TRILLION dollars you get every year and find better ways to spend it. Wise use of financial resources is part of national security too.

  2. Foreign military sales funding in the amount of $54,933,437 will be obligated at time of award and will not expire at the end of the current fiscal year.

    That's the rest of that contract listing, which shows that it is FMS funding being used to fund the contract. That is foreign dollars provided to the US to fund a product, so its not funding coming out of the Navy's budget.

    Also, the $80M is the total ceiling amount and not the funded amount; cost type contracts can be funded incrementally. It would be interesting to see what the scope of the effort is under the term "implementation studies" because that could be pretty extensive. It could include integration efforts on new platforms unique to those countries.

    1. The source does not change the fact that that is an obscene amount of money to pay a company to study how to sell their products. Every contract hits its max amount and more. The entire $80M will be spent. Lockheed will see to that.

    2. Would it be money to study how to fit Aegis into foreign ship classes?
      And if it is FMS funding, is this not money from taxpayers in foreign countries?

    3. I can only repeat what little was described in the contract announcement:

      "Aegis implementation studies for future foreign military sales"

      And no, it's not clear where the funds came from. It cites FMS for partial funding but I don't know where those funds came from.

  3. Yellow Flag against InterestedParty.

    Foreign Military sales funding can (and is) paid for by US Treasury. In this case No sale has occurred for the Aegis study ("future foreign military sales") and no revenues were generated.

    Its all pork. CNO is correct.

    -10 yards for obscuring truth

    -50 yards if you did it intentionally and not out of ignorance.


    1. Thanks for the link. Please keep it polite and respectful. We just want to learn not blame. Anyone can make a mistake, even me. Well, in theory ... Hasn't happened yet. :)

    2. Take another look at your link...it talks to how the US Government can finance the procurement of military hardware for a foreign nation, which could include FMS. The funding could be from the US (in the form of direct financing or foreign aid) or from the foreign nation. The particular source of the funding for this contract is not clear, other than FMS funds are being obligated for the execution under the contract. The scope of the work isn't even clear based on the announcement. While is may appear obscene, we are all just speculating what the scope of the work is and how much we think that work should cost.


      And by the way, I have been involved in acquisition projects for foreign nations, through FMS, DCS, and ACP. Its not uncommon for foreign nations to procure services from a US contractor to address issues unique to the foreign navy's application of a technology or capability. In this case, the AEGIS system on a foreign combatant is probably not the same as what is installed on a USN platform, and is expected to interface and integrate with a different set of systems on a foreign platform. AEGIS is notoriously expensive to mess with since even a simple modification requires verification that all the integrated systems are not affected. Making upgrades to the non-AEGIS platforms was much easier (and cheaper) since you didn't have to go through the AEGIS mafia.

    3. IP, keep in mind that the main point of the post was not where the funding came from but, rather, the very concept of paying a company to do their sales research. That's totally inappropriate.

      A secondary, though important, point was the sheer magnitude of the cost. I demonstrated with some quick and simple arithmetic that the cost was beyond anything that could be called reasonable even if it was appropriate to pay for such a service.

    4. From the original post - Lockheed is raping the government which means they’re taking my tax dollars. How is the Navy being a good steward of my tax dollars on this?

      And its pure speculation if this is "sales research" or implementation studies, directed by a foreign customer. We are both speculating on what the scope of work is. I can agree that the amounts sound incredible, but without knowing where the funding is coming from and where the funding is going (ie, sub-contracts? proto-typing?), its hard to get too outraged or draw any definitive conclusions.

      By the way, should have noticed this before, but we need to check out math. March 2017 to November 2019 is 32 months vice 20 months, or approximately $2.5M per month.

    5. "November 2019 is 32 months"

      Oops! My bad. I used 2018 and therefore missed 12 months. Good catch.

  4. Straight out pork and corporate welfare.

  5. CNO;

    can explain your math better. At 100 retired admirals drawing (not earning) $250/hr you can spend the $4M/month.

    Seems like a reasonable retirement gig (tongue in cheek) to me. Oh let me get the envy out of my voice!


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