DoD awards $1.26B contract to Lockheed Martin for MH-60R helicopter components, with a significant portion for aircraft equipment

Contract Overview

Contract Amount: $1,258,780,576 ($1.3B)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2006-05-01

End Date: 2017-06-30

Contract Duration: 4,078 days

Daily Burn Rate: $308.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200608!421822!1700!N00019!NAVAL AIR SYSTEMS COMMAND !N0001906C0098 !A!N! !N! ! !20060501!20070131!002232973!002232973!834951691!N!LOCKHEED MARTIN CORPORATION !1801 STATE ROUTE 17C !OWEGO !NY!13827!55882!107!36!OWEGO !TIOGA !NEW YORK !+000051000000!N!N!000051000000!1520!AIRCRAFT ROTARY WING !A1C!OTHER AIRCRAFT EQUIPMENT !191 !MH-60R !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !D!U!J!1!001!N!1A!A!N!A! ! !N!C!N! ! ! !A!A!A!A!000!A!B!N! ! ! !Y!1719!N00019!0001! !

Place of Performance

Location: OWEGO, TIOGA County, NEW YORK, 13827

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $1.26 billion to LOCKHEED MARTIN CORPORATION for work described as: 200608!421822!1700!N00019!NAVAL AIR SYSTEMS COMMAND !N0001906C0098 !A!N! !N! ! !20060501!20070131!002232973!002232973!834951691!N!LOCKHEED MARTIN CORPORATION !1801 STATE ROUTE 17C !OWEGO !NY!13827!55882!107!36!OWEGO !TIOG… Key points: 1. Contract value exceeds $1.2 billion, primarily for aircraft equipment and components. 2. Awarded to a single, large defense contractor, indicating a lack of broad competition. 3. Long contract duration of over 10 years suggests a sustained need for these components. 4. The contract is a definitive contract, often used for complex or long-term requirements. 5. The primary product service code (PSC) is for aircraft rotary wing, aligning with helicopter support. 6. The contract was not competed, raising questions about potential cost efficiencies and value. 7. The geographic location of the contractor is in New York.

Value Assessment

Rating: fair

The total award amount of $1.26 billion over a decade is substantial. Without specific benchmarks for MH-60R components or comparable contracts, it's difficult to definitively assess value for money. However, the lack of competition suggests potential for higher pricing than a competitive award might yield. The firm-fixed-price nature provides cost certainty for the government, but the overall value hinges on the negotiated price against market rates for these specialized components.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This typically occurs when a specific contractor possesses unique capabilities, intellectual property, or is the sole provider of the required goods or services. The lack of competition limits the government's ability to leverage market forces to drive down prices and potentially explore innovative solutions from a wider range of suppliers.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is less pressure on the contractor to offer the most competitive pricing. It also limits opportunities for other businesses to compete for and win government contracts.

Public Impact

The primary beneficiary is the Department of Defense, specifically naval aviation units operating MH-60R helicopters. The contract delivers essential components and equipment for the sustainment and operation of MH-60R Seahawk helicopters. This contract supports the readiness and operational capability of naval air systems. The contract has implications for the aerospace manufacturing workforce, particularly at Lockheed Martin's facility in Owego, NY.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source nature limits opportunities for other businesses in the aerospace sector.
Long-term nature of the contract could reduce flexibility if requirements change.

Positive Signals

Award to a major defense contractor suggests established capabilities and reliability.
Firm-fixed-price contract provides cost predictability for the government.
Supports critical naval aviation assets, ensuring operational readiness.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft manufacturing and components. The market for specialized helicopter components like those for the MH-60R is often dominated by a few large prime contractors due to the complexity, high barriers to entry, and proprietary technology involved. Spending in this area is critical for maintaining military aviation readiness and technological superiority.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the sole-source nature and the prime contractor being Lockheed Martin, a large corporation, the direct impact on small businesses is likely minimal unless they are subcontractors. There is no explicit indication of subcontracting plans for small businesses within the provided data.

Oversight & Accountability

The Department of Defense employs various oversight mechanisms, including contract administration by the Defense Contract Management Agency (DCMA) and potential reviews by the Government Accountability Office (GAO) or the Inspector General. The firm-fixed-price structure provides some cost control, but the lack of competition necessitates vigilance in monitoring performance and ensuring fair pricing through contract clauses and audits.

Related Government Programs

MH-60R Seahawk Helicopter Program
Naval Air Systems Command Procurement
Aerospace Component Manufacturing
Defense Contractor Support Services

Risk Flags

Sole-source award
Lack of competition
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.26 billion to LOCKHEED MARTIN CORPORATION. 200608!421822!1700!N00019!NAVAL AIR SYSTEMS COMMAND !N0001906C0098 !A!N! !N! ! !20060501!20070131!002232973!002232973!834951691!N!LOCKHEED MARTIN CORPORATION !1801 STATE ROUTE 17C !OWEGO !NY!13827!55882!107!36!OWEGO !TIOGA !NEW YORK !+000051000000!N!N!000051000000!1520!AIRCRAFT ROTARY WING !A1C!OTHER AIRCRAFT EQUIPMENT !191 !MH-60R !336411!E! !3! ! ! ! ! !999

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 $1.26 billion.

What is the period of performance?

Start: 2006-05-01. End: 2017-06-30.

What is the historical spending trend for MH-60R components from Lockheed Martin?

Historical spending data for this specific contract indicates a total award value of $1,258,780,575.81. The contract period spans from May 1, 2006, to June 30, 2017, a duration of over 10 years. The data shows a significant portion of the funding allocated towards 'AIRCRAFT ROTARY WING' and 'OTHER AIRCRAFT EQUIPMENT'. While this single data point represents a substantial investment, a comprehensive trend analysis would require examining prior and subsequent contracts for MH-60R components, as well as overall program spending, to identify patterns of increasing, decreasing, or stable investment over time.

How does the pricing of this contract compare to similar sole-source awards for helicopter components?

Benchmarking the pricing of this $1.26 billion sole-source contract against similar awards is challenging without access to detailed pricing structures and market data for comparable sole-source procurements. Sole-source contracts inherently lack the price discovery mechanism of competition. However, the firm-fixed-price (FFP) nature suggests that the government and contractor agreed on a set price, aiming to mitigate cost overruns. A thorough comparison would involve analyzing the specific components, quantities, and the contractor's cost structure relative to industry standards, which is not fully detailed in the provided summary data.

What are the key performance indicators (KPIs) for this contract, and how has Lockheed Martin performed against them?

The provided data does not explicitly list the Key Performance Indicators (KPIs) established for this contract. However, as a firm-fixed-price contract for aircraft components, typical KPIs would likely revolve around on-time delivery, quality standards (e.g., defect rates), and adherence to technical specifications. Lockheed Martin's performance against these unstated KPIs would be monitored by the Naval Air Systems Command and potentially the Defense Contract Management Agency (DCMA). Without performance reports or contractually defined metrics, assessing their performance is not possible from this data alone.

What is the risk associated with relying on a single contractor for such a critical component supply?

The primary risk associated with relying on a single contractor (sole-source) for critical components like those for the MH-60R is the potential for supply chain disruption. If the contractor faces production issues, financial instability, or geopolitical challenges, it could significantly impact the operational readiness of the helicopters. Furthermore, the lack of competition can lead to price escalation over time and reduced leverage for the government in negotiating terms. This dependency necessitates robust government oversight and contingency planning.

What is the total value of contracts awarded to Lockheed Martin for MH-60R related items by the Naval Air Systems Command?

The provided data represents a single definitive contract awarded to Lockheed Martin Corporation for MH-60R related items, with a total value of $1,258,780,575.81. This contract specifically covers 'AIRCRAFT ROTARY WING' and 'OTHER AIRCRAFT EQUIPMENT'. To determine the total value of contracts awarded to Lockheed Martin for MH-60R related items by the Naval Air Systems Command, one would need to aggregate data from all contracts issued to this contractor for this specific helicopter platform over its lifecycle. This would involve searching historical contract databases for all relevant awards.

What is the significance of the 'OTHER AIRCRAFT EQUIPMENT' classification in this contract?

The 'OTHER AIRCRAFT EQUIPMENT' classification (PSC code A1C) signifies that the contract covers a broad range of components and equipment for aircraft that do not fall under more specific categories. For the MH-60R helicopter, this could include avionics, structural parts, power systems, or mission-specific equipment. Its inclusion alongside 'AIRCRAFT ROTARY WING' suggests a comprehensive procurement strategy aimed at ensuring all necessary parts and systems for the helicopter's operation and maintenance are supplied under this single, large award.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

Address: 1801 STATE ROUTE 17C, OWEGO, NY, 13827

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline