Lockheed Martin awarded $835M contract for MH-60S aircraft components, with a significant portion for parts and auxiliary equipment

Contract Overview

Contract Amount: $537,596,178 ($537.6M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2003-12-29

End Date: 2016-02-29

Contract Duration: 4,445 days

Daily Burn Rate: $120.9K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200407!000007!1700!AC524 !NAVAL AIR SYSTEMS COMMAND !N0001904C0028 !A!N! !N! ! !20031229!20071231!002232973!002232973!834951691!N!LOCKHEED MARTIN CORPORATION !1801 STATE RT 17C !OWEGO !NY!13827!55882!107!36!OWEGO !TIOGA !NEW YORK !+000040085585!N!Y!000489673750!1680!MSL AIRCRAFT ACCESSORIES AND COMPONENTS !A1C!OTHER AIRCRAFT EQUIPMENT !282 !MH-60S !336413!E! !3! ! ! ! ! !99990909!B!C!Y!A! !D!U!J!1!001!N!1A!A!W!F! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! !Y! !PMA299!0001! !

Place of Performance

Location: OWEGO, TIOGA County, NEW YORK, 13827

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $537.6 million to LOCKHEED MARTIN CORPORATION for work described as: 200407!000007!1700!AC524 !NAVAL AIR SYSTEMS COMMAND !N0001904C0028 !A!N! !N! ! !20031229!20071231!002232973!002232973!834951691!N!LOCKHEED MARTIN CORPORATION !1801 STATE RT 17C !OWEGO !NY!13827!55882!107!36!OWEGO !TIOG… Key points: 1. Contract value exceeds $834 million, primarily for aircraft components and auxiliary equipment. 2. Awarded to Lockheed Martin Corporation, a major defense contractor with extensive experience. 3. Contract duration spans over 13 years, indicating a long-term need for these components. 4. The contract type is Firm Fixed Price, which shifts cost risk to the contractor. 5. Competition was full and open after exclusion of sources, suggesting a complex procurement process. 6. The North American Industry Classification System (NAICS) code points to 'Other Aircraft Parts and Auxiliary Equipment Manufacturing'.

Value Assessment

Rating: good

The contract value of over $834 million for aircraft components and auxiliary equipment appears substantial. Benchmarking against similar long-term contracts for specialized aircraft parts is challenging without more granular data on specific components. However, the firm fixed-price nature of the contract suggests that the government has negotiated a price that includes contractor risk, potentially offering good value if performance is met. The duration of the contract (over 13 years) implies a consistent need and potentially economies of scale for the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'Full and Open Competition After Exclusion of Sources.' This indicates that while the competition was intended to be broad, certain sources were excluded, possibly due to specific technical requirements, security concerns, or prior relationships. The exact number of bidders is not specified, but the 'full and open' designation suggests multiple interested parties were considered.

Taxpayer Impact: The 'full and open' competition, even with exclusions, generally aims to foster price discovery and ensure taxpayers receive competitive pricing. However, the exclusion of sources warrants further scrutiny to ensure it did not unduly limit competition and potentially increase costs.

Public Impact

The primary beneficiaries are the U.S. Navy, which utilizes the MH-60S helicopter for various missions. The contract ensures the continued supply of critical aircraft components and auxiliary equipment necessary for naval aviation operations. The contract's geographic impact is centered around Lockheed Martin's facility in Owego, New York, supporting local and regional employment. Workforce implications include sustained employment for skilled labor in aerospace manufacturing at the contractor's site.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (over 13 years) could lead to complacency or price creep if not actively managed.
The 'exclusion of sources' in the competition type requires further investigation to ensure fair market access.
Reliance on a single large contractor, Lockheed Martin, for such a significant value of components.

Positive Signals

Firm Fixed Price contract structure shifts cost risk to the contractor, potentially protecting taxpayer funds.
The contract supports a critical military asset (MH-60S helicopter), ensuring operational readiness.
Award to a major defense contractor like Lockheed Martin suggests access to established supply chains and expertise.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts and auxiliary equipment. The market for such components is characterized by high technical barriers to entry, stringent quality control, and long-standing relationships between manufacturers and government agencies. Spending in this area is driven by military modernization, fleet readiness, and the operational demands of naval aviation. Comparable spending benchmarks would typically involve other large-scale, long-term contracts for aircraft systems and components awarded by the Department of Defense.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large-value contract awarded to a major prime contractor, there may be subcontracting opportunities for small businesses within Lockheed Martin's supply chain. However, the direct award does not appear to prioritize small business participation.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). Accountability measures are embedded in the Firm Fixed Price structure, requiring the contractor to deliver specified components within the agreed price. Transparency is facilitated through contract databases, though detailed performance metrics are often not publicly disclosed. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

MH-60S Seahawk Helicopter Program
Naval Air Systems Command (NAVAIR) Procurement
Defense Logistics Agency (DLA) Aviation Support
Aerospace Component Manufacturing Contracts
Department of Defense Aircraft Parts Procurement

Risk Flags

Long-term contract duration
Exclusion of sources in competition
High contract value

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $537.6 million to LOCKHEED MARTIN CORPORATION. 200407!000007!1700!AC524 !NAVAL AIR SYSTEMS COMMAND !N0001904C0028 !A!N! !N! ! !20031229!20071231!002232973!002232973!834951691!N!LOCKHEED MARTIN CORPORATION !1801 STATE RT 17C !OWEGO !NY!13827!55882!107!36!OWEGO !TIOGA !NEW YORK !+000040085585!N!Y!000489673750!1680!MSL AIRCRAFT ACCESSORIES AND COMPONENTS !A1C!OTHER AIRCRAFT EQUIPMENT !282 !MH-60S !336413!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 $537.6 million.

What is the period of performance?

Start: 2003-12-29. End: 2016-02-29.

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

Analyzing historical spending for MH-60S components from Lockheed Martin requires accessing detailed contract databases over several years. This specific contract, valued at over $834 million, spans from December 2003 to February 2016 (original and extended periods). Prior to this definitive contract, there may have been other contracts, task orders, or modifications related to MH-60S components. A comprehensive review would involve looking at all contracts awarded to Lockheed Martin for this specific platform or related parts by NAVAIR and other relevant agencies. Without access to that granular historical data, it's difficult to establish a precise trend, but the substantial value of this single contract suggests a significant and ongoing investment in these components over its duration.

How does the per-unit cost of components under this contract compare to industry benchmarks?

Determining the per-unit cost for components under this contract is not feasible with the provided data. The contract value of $834,951,691 represents the total award amount for a broad category of 'Other Aircraft Parts and Auxiliary Equipment' for the MH-60S helicopter. It does not break down costs by individual part number or type. To compare per-unit costs to industry benchmarks, one would need a detailed bill of materials, specific part identification, and access to market pricing data for those exact components. Such detailed information is typically proprietary or requires specialized market intelligence tools beyond the scope of this analysis.

What are the specific risks associated with a Firm Fixed Price contract of this magnitude and duration?

A Firm Fixed Price (FFP) contract of this magnitude ($834M+) and duration (over 13 years) carries several risks. For the government, the primary risk is that the contractor may cut corners on quality or performance to maximize profit if the initial price was set too high or if unforeseen cost increases occur. Conversely, if the contractor underestimated costs, they might face financial distress, potentially impacting delivery schedules. For the contractor, the risk is bearing the full burden of cost overruns due to inflation, material price fluctuations, or unforeseen technical challenges. Given the long duration, effective cost management and risk mitigation strategies by both parties are crucial to ensure successful contract performance and value for money.

What is the track record of Lockheed Martin in delivering similar aircraft components to the U.S. Navy?

Lockheed Martin has an extensive and generally strong track record in delivering complex aerospace and defense systems, including aircraft components, to the U.S. Navy and other branches of the military. As a primary contractor for numerous platforms, including the MH-60 series helicopters (which they acquired through Sikorsky), they possess deep expertise in design, manufacturing, and sustainment. While specific performance metrics for every contract are not always public, Lockheed Martin is a long-standing, major defense contractor known for its capabilities in producing high-value, technologically advanced components. Any significant issues or failures would typically be well-documented within defense procurement oversight channels.

How does the competition level ('Full and Open Competition After Exclusion of Sources') impact price discovery and potential cost savings?

The competition level, 'Full and Open Competition After Exclusion of Sources,' presents a nuanced impact on price discovery. 'Full and Open' implies the intent to solicit offers from all responsible sources, which generally promotes competitive pricing. However, the 'exclusion of sources' clause indicates that certain potential bidders were deliberately not considered. The reasons for exclusion (e.g., specific technical qualifications, security clearances, proprietary technology) are critical. If exclusions were justified and necessary for the requirement, the remaining competition could still yield competitive prices. If exclusions were arbitrary or overly restrictive, it could limit the number of bidders, potentially reducing competitive pressure and leading to higher prices than might be achieved in a truly unrestricted competition.

What is the significance of the NAICS code 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' in understanding this contract's scope?

The NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' provides a clear classification for the goods and services procured under this contract. It signifies that the contract is not for the entire aircraft assembly but rather for the specialized components, sub-assemblies, and auxiliary equipment that support the operation and maintenance of aircraft, in this case, the MH-60S helicopter. This classification helps in understanding the supply chain dynamics, identifying relevant industry players, and benchmarking spending against similar manufacturing activities within the broader aerospace sector. It suggests a focus on parts like avionics, hydraulics, structural components, or other specialized equipment rather than the airframe itself.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

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

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NOT OBTAINED - WAIVED

Timeline