DoD's $79.4M MH-47 BLK II POST PRODUCTION contract awarded to Lockheed Martin Corporation

Contract Overview

Contract Amount: $79,425,496 ($79.4M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2020-03-12

End Date: 2023-09-22

Contract Duration: 1,289 days

Daily Burn Rate: $61.6K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MH-47 BLK II POST PRODUCTION

Place of Performance

Location: LEXINGTON, FAYETTE County, KENTUCKY, 40516

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $79.4 million to LOCKHEED MARTIN CORPORATION for work described as: MH-47 BLK II POST PRODUCTION Key points: 1. Value for money assessed through cost-plus-fixed-fee structure, allowing for performance incentives. 2. Competition dynamics indicate a full and open competition, suggesting a robust bidding process. 3. Risk indicators include the cost-plus-fixed-fee contract type, which can lead to cost overruns if not managed carefully. 4. Performance context is tied to post-production support for MH-47 Black Hawk helicopters. 5. Sector positioning within Defense, specifically supporting Special Operations Command aviation assets.

Value Assessment

Rating: fair

The contract's cost-plus-fixed-fee (CPFF) structure presents a moderate risk for cost control. While it allows for flexibility in addressing unforeseen technical challenges during post-production, it necessitates stringent oversight to prevent scope creep and ensure value. Benchmarking against similar aviation support contracts would be crucial to determine if the fixed fee component is competitive and if the overall cost aligns with industry standards for complex aircraft sustainment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple bidders were likely considered. The presence of a competitive bidding process is generally favorable for price discovery and can lead to more favorable terms for the government. The specific number of bidders and their proposals would provide further insight into the intensity of the competition and its impact on the final negotiated price.

Taxpayer Impact: A full and open competition suggests that taxpayers benefit from a potentially more competitive price, as multiple companies vied for the contract, driving down costs through market forces.

Public Impact

Directly benefits the U.S. Special Operations Command by ensuring the continued operational readiness of MH-47 Black Hawk helicopters. Services delivered include essential post-production support, likely encompassing maintenance, upgrades, and technical services. Geographic impact is primarily within Kentucky (st), where the contractor is located, but supports national defense operations. Workforce implications include skilled labor in aviation maintenance, engineering, and technical support roles within Lockheed Martin.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contract type requires diligent oversight to manage potential cost escalations.
Post-production support can be complex, with potential for unforeseen technical challenges impacting schedule and cost.
Reliance on a single contractor for critical post-production services could pose a risk if performance falters.

Positive Signals

Awarded under full and open competition, suggesting a competitive pricing environment.
Contractor, Lockheed Martin Corporation, is a major defense contractor with extensive experience in aviation programs.
Contract duration of over 3 years provides stability for program execution and support.

Sector Analysis

The defense aviation sector is characterized by high technological complexity, long product lifecycles, and significant government investment. Contracts for post-production support are critical for maintaining the readiness and operational effectiveness of advanced aircraft fleets. Spending in this area is substantial, with major defense contractors like Lockheed Martin playing a pivotal role. This contract fits within the broader ecosystem of sustainment services required to keep sophisticated military assets operational.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor is Lockheed Martin Corporation, a large aerospace and defense company. Subcontracting opportunities for small businesses may exist within the performance of this contract, but specific details regarding set-aside goals or subcontracting plans are not provided in the given data. The impact on the small business ecosystem would depend on the extent to which Lockheed Martin engages small businesses as subcontractors.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense and U.S. Special Operations Command. Given the CPFF structure, rigorous financial and performance monitoring by the contracting officer and their representatives is essential. Transparency is typically managed through contract reporting requirements and performance reviews. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

MH-60 Black Hawk Helicopter Support
Special Operations Aviation Programs
Defense Aviation Maintenance Services
Lockheed Martin Rotary and Mission Systems Contracts

Risk Flags

Cost-Plus-Fixed-Fee contract type requires robust oversight.
Broad 'All Other Support Services' classification may lack specificity.
Long contract duration increases exposure to performance and market risks.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $79.4 million to LOCKHEED MARTIN CORPORATION. MH-47 BLK II POST PRODUCTION

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (U.S. Special Operations Command).

What is the total obligated amount?

The obligated amount is $79.4 million.

What is the period of performance?

Start: 2020-03-12. End: 2023-09-22.

What is the historical spending pattern for MH-47 Black Hawk helicopter post-production support by the Department of Defense?

Analyzing historical spending for MH-47 Black Hawk helicopter post-production support reveals a consistent need for sustainment services due to the aircraft's critical role in special operations. Prior to this $79.4 million contract awarded in March 2020, the Department of Defense likely engaged in various contract vehicles for similar support. These could include previous indefinite-delivery/indefinite-quantity (IDIQ) contracts, sole-source awards to incumbent providers, or competitively bid contracts for specific upgrade or maintenance phases. The total historical spend would be influenced by factors such as the fleet size, operational tempo, planned obsolescence of components, and the introduction of new technologies or upgrades. Without access to specific historical contract data for this platform, it's difficult to provide exact figures, but it's reasonable to assume multi-million dollar annual expenditures for sustainment over the aircraft's operational lifespan.

How does the cost-plus-fixed-fee (CPFF) structure of this contract compare to other aviation support contracts within the DoD?

The Cost-Plus-Fixed-Fee (CPFF) contract structure is common within the Department of Defense, particularly for services where the scope of work may evolve or involve significant research and development elements, such as post-production support. Compared to fixed-price contracts, CPFF offers greater flexibility for the contractor to incur costs while the government pays those costs plus a predetermined fixed fee. This can be advantageous for complex, non-routine services like aircraft sustainment where unforeseen technical challenges are probable. However, it also shifts more cost risk to the government. In the aviation sector, CPFF is often used for sustainment, modification, and upgrade programs. Other contracts might utilize Firm-Fixed-Price (FFP) for well-defined services or Cost-Plus-Incentive-Fee (CPIF) to incentivize performance targets. The appropriateness of CPFF for this MH-47 post-production contract hinges on the predictability of the required services and the government's ability to effectively monitor costs and scope.

What is Lockheed Martin Corporation's track record with MH-47 helicopter programs and similar defense aviation contracts?

Lockheed Martin Corporation, through its various divisions and acquisitions (including Sikorsky), has a long and extensive track record with the MH-47 Chinook family of helicopters, including their development, production, and sustainment. As the prime contractor for many advanced rotorcraft and fixed-wing platforms, Lockheed Martin possesses deep institutional knowledge and technical expertise relevant to post-production support. Their history includes managing complex sustainment programs for large military fleets, often under challenging operational conditions. This experience suggests a strong capability to handle the technical intricacies and logistical demands of the MH-47 BLK II post-production contract. However, as with any large defense contractor, scrutiny of past performance, including any cost overruns or schedule delays on similar programs, is warranted to ensure optimal value and timely delivery.

What are the potential risks associated with the 'All Other Support Services' (NAICS 561990) classification for this contract?

The NAICS code 561990, 'All Other Support Services,' is a broad classification that can encompass a wide range of activities. For this MH-47 BLK II Post Production contract, this classification suggests that the services provided extend beyond highly specialized, narrowly defined categories. Potential risks associated with such a broad classification include a lack of specificity in the Statement of Work (SOW), which could lead to scope creep, disputes over deliverables, and difficulties in performance monitoring. It may also indicate that the services are a mix of different support functions, making it harder to benchmark costs or assess performance against industry standards. Effective contract management requires a very detailed SOW and clear performance metrics to mitigate the inherent ambiguity of a general support services code.

How does the contract duration (1289 days) impact the overall value and risk for the government?

A contract duration of 1289 days (approximately 3.5 years) for post-production support provides a significant period for the contractor, Lockheed Martin, to execute the required services. This extended duration can offer value by allowing for economies of scale, consistent application of expertise, and potentially more stable pricing over the contract term compared to multiple shorter-term contracts. It also provides the U.S. Special Operations Command with a predictable sustainment pipeline for their MH-47 fleet. However, a longer duration also increases the government's exposure to potential risks, such as contractor performance issues, technological obsolescence of the support services themselves, or unfavorable changes in market conditions that might have been better leveraged with shorter, more frequent competitive cycles. The CPFF structure further amplifies this risk, as cost increases over the extended period are borne by the government.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Other Support Services › All Other Support Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: H9225416R0001

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 5749 BRIAR HILL RD, LEXINGTON, KY, 40516

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: $79,425,496

Exercised Options: $79,425,496

Current Obligation: $79,425,496

Subaward Activity

Number of Subawards: 14

Total Subaward Amount: $2,050,477

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: H9225417D0001

IDV Type: IDC

Timeline