DoD awards $46.7M contract for MH-60M Block #1 Kits and Installs to Lockheed Martin

Contract Overview

Contract Amount: $46,698,921 ($46.7M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2023-03-07

End Date: 2027-03-25

Contract Duration: 1,479 days

Daily Burn Rate: $31.6K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MH-60M BLOCK #1 KITS AND INSTALLS

Place of Performance

Location: LEXINGTON, FAYETTE County, KENTUCKY, 40516

State: Kentucky Government Spending

Plain-Language Summary

Department of Defense obligated $46.7 million to LOCKHEED MARTIN CORPORATION for work described as: MH-60M BLOCK #1 KITS AND INSTALLS Key points: 1. Contract awarded to a single, large defense contractor, indicating a focus on established capabilities. 2. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed carefully. 3. Delivery Order under a larger contract suggests ongoing program support rather than a new initiative. 4. The duration of the contract (approx. 4 years) indicates a long-term need for these services. 5. The specific NAICS code (561990) points to a broad category of support services, requiring further detail on the exact nature of the kits and installs.

Value Assessment

Rating: fair

The contract value of $46.7 million for MH-60M Block #1 Kits and Installs appears to be within a reasonable range for specialized aviation support services. However, without specific details on the kits and installation scope, a precise value-for-money assessment is challenging. Comparing this to similar block upgrade contracts for other helicopter platforms or previous MH-60M upgrade cycles would provide better benchmarking. The Cost Plus Fixed Fee (CPFF) contract type introduces inherent risk for cost control, as the contractor is reimbursed for allowable costs plus a fixed fee, potentially leading to higher final costs than fixed-price contracts if not rigorously overseen.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. The specific number of bidders is not provided, but the fact that it was competed openly is a positive sign for price discovery. Full and open competition generally leads to a more competitive bidding environment, which can result in better pricing and terms for the government.

Taxpayer Impact: Taxpayers benefit from the potential for competitive pricing and a wider pool of qualified vendors vying for the contract, which can drive down costs and improve service quality.

Public Impact

The primary beneficiaries are U.S. Special Operations Command (SOCOM) and its aviation units, which will receive upgraded MH-60M helicopters. The services delivered include the provision and installation of Block #1 kits, likely enhancing the capabilities or addressing obsolescence issues of the MH-60M aircraft. The geographic impact is primarily within Kentucky (ST/SN), where the contractor is located, but the ultimate operational impact is global for SOCOM's missions. This contract supports specialized aviation maintenance and upgrade workforces, potentially requiring skilled technicians and engineers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee contract type can lead to cost overruns if not closely monitored.
Lack of specific details on 'Block #1 Kits and Installs' makes it difficult to assess the precise scope and value.
The contract is a Delivery Order, implying it's part of a larger, potentially unstated, contract vehicle.

Positive Signals

Awarded under full and open competition, indicating a competitive bidding process.
Contractor (Lockheed Martin) is a major defense prime with extensive experience in aviation systems.
The contract supports critical Special Operations aviation assets.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on helicopter modernization and support services. The market for military aircraft upgrades and maintenance is substantial, driven by the need to maintain fleet readiness and incorporate new technologies. Lockheed Martin is a dominant player in this sector, particularly with its extensive portfolio of rotary-wing aircraft programs. Benchmarking this contract's value would involve comparing it to similar upgrade packages for other military helicopters or previous modernization efforts on the MH-60 platform, considering factors like technological advancements and inflation.

Small Business Impact

The contract was awarded to Lockheed Martin Corporation, a large prime contractor, and there is no indication of a small business set-aside (SB=false). This suggests that small businesses are unlikely to be direct recipients of this prime contract. However, Lockheed Martin may engage small businesses as subcontractors for specific components or services, depending on their subcontracting plan and the nature of the work involved. The impact on the small business ecosystem would depend on the extent of any subcontracting opportunities generated by this award.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense and U.S. Special Operations Command. As a Cost Plus Fixed Fee contract, rigorous financial oversight and performance monitoring are crucial to ensure costs remain reasonable and the fixed fee is earned appropriately. Transparency is typically managed through contract reporting mechanisms and performance reviews. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

MH-60 Seahawk Helicopter Program
Special Operations Forces Aviation Support
Defense Aviation Modernization Contracts
Lockheed Martin Rotary Wing Contracts

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight to manage costs.
Extended contract duration increases risk of obsolescence and cost escalation.
Specific details of 'Block #1 Kits and Installs' are not publicly defined, hindering full assessment.
Potential for limited competition despite 'Full and Open' designation if few bids were received.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $46.7 million to LOCKHEED MARTIN CORPORATION. MH-60M BLOCK #1 KITS AND INSTALLS

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 $46.7 million.

What is the period of performance?

Start: 2023-03-07. End: 2027-03-25.

What specific capabilities or upgrades does the 'MH-60M BLOCK #1 KITS AND INSTALLS' entail, and how do these compare to previous or planned upgrades for the MH-60M fleet?

The provided data does not detail the specific components or functionalities included in the 'MH-60M BLOCK #1 KITS AND INSTALLS'. Typically, block upgrades for military aircraft address obsolescence, introduce new technologies, enhance performance, or improve survivability. For the MH-60M, which is a variant used by Special Operations Forces, these upgrades could range from avionics modernization, communication systems, sensor integration, or structural enhancements. Without further documentation, it's difficult to ascertain the precise nature of Block #1 or how it advances the platform beyond its current configuration. Comparing it to prior upgrades would require historical data on previous block designations and their associated improvements. Understanding the 'why' behind Block #1 – whether it's driven by new mission requirements, technological advancements, or end-of-life component replacements – is key to assessing its strategic value.

How does the Cost Plus Fixed Fee (CPFF) contract structure for this $46.7 million award potentially impact cost control and value for the government?

The Cost Plus Fixed Fee (CPFF) contract structure means the contractor, Lockheed Martin, will be reimbursed for all allowable costs incurred in performing the work, plus a predetermined fixed fee. While this structure is often used when the scope of work is not precisely defined or involves significant uncertainty, it places a substantial burden on the government to meticulously monitor and audit the contractor's costs. The 'fixed fee' component incentivizes the contractor to control costs to some extent, as their profit is capped. However, the primary risk lies in potential cost overruns if allowable costs exceed initial estimates. Effective government oversight, including detailed cost accounting surveillance and negotiation of fair fee percentages, is critical to mitigate this risk and ensure the government receives good value. Without robust oversight, CPFF contracts can be susceptible to escalating costs compared to fixed-price alternatives.

Given the award to Lockheed Martin, a sole-source provider for many MH-60 components, what are the implications of this contract's 'Full and Open Competition' designation?

The designation of 'Full and Open Competition' for this $46.7 million contract, despite being awarded to Lockheed Martin Corporation, is significant. It implies that the solicitation was broadly advertised, and multiple companies were eligible and encouraged to submit proposals. Even if Lockheed Martin is the incumbent or has unique expertise, the competitive process theoretically allows other qualified firms to challenge for the work. This designation suggests that the government actively sought competitive bids, which can lead to better pricing, innovative solutions, and improved terms for the taxpayer. The actual level of competition (i.e., the number of bids received) is crucial; a 'full and open' solicitation with only one responsive bidder might still limit true price discovery. However, the process itself signals an intent to leverage market forces, which is generally favorable compared to a sole-source award.

What is the historical spending pattern for MH-60M Block #1 Kits and Installs or similar upgrade programs, and how does this $46.7 million award fit within that context?

The provided data does not include historical spending patterns for MH-60M Block #1 Kits and Installs. This specific award represents a single delivery order valued at $46.7 million, with a performance period extending to March 2027. To understand the historical context, one would need to examine prior contracts for MH-60M upgrades, potentially including earlier block upgrades or modifications. Analyzing the total spending on MH-60M sustainment and modernization over several fiscal years, identifying trends in contract values, and comparing the scope of work across different awards would be necessary. This $46.7 million award could represent a significant portion of annual upgrade spending, a routine maintenance cycle, or a new initiative, depending on the historical baseline. Without access to broader contract databases or historical program information, placing this award in a long-term spending context remains speculative.

What are the potential risks associated with the duration of this contract (nearly 4 years) and its delivery order nature for the U.S. Special Operations Command?

The nearly four-year duration (1479 days) of this delivery order, combined with its nature as a component of a potentially larger contract vehicle, presents several risks for U.S. Special Operations Command (SOCOM). Firstly, the extended timeline increases the risk of technological obsolescence; the 'Block #1 Kits' might be outdated by the time installation is complete, or new requirements may emerge during the performance period that are not addressed. Secondly, the CPFF contract type, over such a long duration, amplifies the potential for cost growth if not managed with extreme diligence. Thirdly, reliance on a single contractor (Lockheed Martin) for an extended period, even if initially competed, can reduce flexibility and potentially stifle innovation from other market players. Finally, if this delivery order is part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract, the total spending could exceed initial projections, requiring careful monitoring of the overall contract ceiling and SOCOM's evolving needs.

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: $46,698,921

Exercised Options: $46,698,921

Current Obligation: $46,698,921

Subaward Activity

Number of Subawards: 26

Total Subaward Amount: $3,495,885

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