Lockheed Martin Rotary and Mission Systems, Moorestown, New Jersey, was awarded a $75.6 million contract modification on May 8, 2026, under contract N00024-23-C-5117, for systems engineering and software integration services covering integrated combat systems across Navy and Coast Guard surface forces, Naval Sea Systems Command (NAVSEA) announced. The modification carries a mixed contract type — fixed-price-award-fee, cost-plus-award-fee, cost-plus-incentive-fee, and cost-plus-fixed-fee — with performance through September 2026. Work is distributed among Moorestown, New Jersey (41 percent); Columbia, Maryland (30 percent); Norfolk, Virginia (7 percent); and multiple other locations. The modification sustains engineering continuity on combat systems that defend the surface fleet against hypersonic missiles, advanced cruise missile salvos, and drone swarms that challenge current intercept timelines and require continuous software modernization to maintain effective intercept probabilities against the evolving threat inventory.
Program Background
Lockheed Martin's Moorestown, New Jersey facility is the operational center for the Aegis Combat System — the integrated naval weapons system deployed on Navy Arleigh Burke-class destroyers, Ticonderoga-class cruisers, and allied navies across Japan, South Korea, Spain, Norway, Australia, and Poland. Aegis integrates the AN/SPY radar family, the Mk 41 Vertical Launch System, and a combat management computer that fuses radar tracks, electronic intelligence, and cooperative engagement data into a unified air picture. Systems engineering and software integration work of this type sustains the spiral development model that keeps Aegis current against new threats as they mature from laboratory demonstrations to deployed weapons capable of challenging fleet air defense.
Aegis software baselines are updated through numbered Weapons System releases. Each release incorporates new threat discrimination algorithms, cybersecurity vulnerability patches, and integration of new weapons such as the SM-6 extended range interceptor and the Standard Missile-3 Block IIA for ballistic missile defense. Integration work funded by this modification supports testing and certification of new software baselines across the operational fleet, requiring coordination between Moorestown engineers, NAVSEA program offices, and ship's company technical representatives at homeports including Norfolk and San Diego. Regression testing alone — verifying that new code does not degrade existing capabilities — requires hundreds of test cases per release cycle and represents a significant portion of the engineering workforce's ongoing effort per program increment.
The Coast Guard's inclusion reflects ongoing combat systems modernization on National Security Cutters, which carry the Mk 110 57mm gun and Phalanx close-in weapon systems, and Offshore Patrol Cutters, which incorporate combat management architectures sharing software lineage with Navy surface combatant systems. Integrating Navy and Coast Guard engineering under a single contract enables shared development costs and interoperability testing efficiencies during joint maritime security operations in which USCG and Navy vessels frequently operate in coordinated formations requiring compatible recognized maritime pictures.
Aegis Modernization Context
The Aegis Weapons System is in its most significant modernization cycle in a decade, driven simultaneously by the need to address hypersonic threats, integrate the Constellation-class frigate's combat system into the broader Aegis engineering baseline, and refresh computing infrastructure on the oldest Arleigh Burke Flight I destroyers — ships commissioned in the early 1990s whose combat system computers are approaching end of vendor support. The systems engineering work funded by this modification encompasses all three modernization threads, requiring Lockheed Martin's Moorestown engineers to manage interdependencies across Weapons System software releases that must remain backward compatible with Flight I hardware while incorporating capabilities that exploit the newer computing resources available on Flight IIA and Flight III ships.
The Constellation-class frigate — the Navy's newest surface combatant design — uses an Aegis-derived combat management system that shares software lineage with the destroyers but runs on newer computing hardware and incorporates operational lessons from two decades of Arleigh Burke service. Integrating the Constellation into the broader Aegis engineering baseline is a significant systems engineering challenge managed in parallel with destroyer baseline maintenance, amplifying the workforce demand that drives the $75.6 million modification value. The Columbia, Maryland workforce provides program management and software integration support that complements the hardware-focused engineering in Moorestown, distributing workload across locations that reflect the specialized skills of each site's engineering team and allows Lockheed Martin to scale specific disciplines in response to milestone-driven demand spikes.
Contract Structure and Performance Incentives
The four-way contract type mix — award-fee, incentive-fee, and fixed-price elements alongside cost-plus-fixed-fee provisions — reflects NAVSEA's approach to managing a complex, multi-deliverable engineering engagement. Award-fee periods allow the government to score performance on criteria such as technical responsiveness, management effectiveness, and schedule adherence, evaluated by a Performance Evaluation Board that meets at defined intervals during the performance period. Incentive-fee provisions tie a portion of profit to specific, measurable outcomes such as integration milestone completions or defect rates in delivered software. Fixed-price-award-fee components apply to discrete, well-defined deliverables where cost can be accurately estimated at the outset of each performance period. This structure is increasingly standard in major combat systems engineering contracts as NAVSEA seeks to balance cost control against the inherent unpredictability of software-intensive system integration work where requirements can shift as threat intelligence is updated.
What It Means for Contractors
- Lockheed Martin will draw on its Aegis engineering workforce in Moorestown and Columbia; subcontracting opportunities center on software testing automation, cybersecurity vulnerability assessment, model-based systems engineering support, and combat system certification documentation for each Weapons System release cycle.
- Firms with NAVSEA combat system certifications and active Secret clearances should monitor SAM.gov for the follow-on solicitation expected in Q3–Q4 FY2026; past performance on Navy combat systems integration is a heavily weighted evaluation criterion in source selections of this type.
- The multi-type contract structure signals that NAVSEA applies award-fee and incentive-fee mechanisms selectively — subcontractors should understand which deliverables fall under which contract type to accurately project cost and profit when pricing teaming arrangements.
- Coast Guard combat system integration work, while smaller in volume than the Navy component, is a growing market as the USCG modernizes its surface fleet — firms with Navy Aegis heritage who have not engaged Coast Guard acquisition offices should consider doing so before the next full recompete cycle in the FY2027 timeframe.