DoD's $130.9M contract for Heavy Helicopter Modification Systems awarded to Lockheed Martin Corporation

Contract Overview

Contract Amount: $130,898,840 ($130.9M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2018-09-27

End Date: 2022-12-31

Contract Duration: 1,556 days

Daily Burn Rate: $84.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: GEN 3 HEAVY HMDS REQUIREMENT

Place of Performance

Location: FORT WORTH, TARRANT County, TEXAS, 76108

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $130.9 million to LOCKHEED MARTIN CORPORATION for work described as: GEN 3 HEAVY HMDS REQUIREMENT Key points: 1. The contract value of $130.9 million represents a significant investment in aircraft modification capabilities. 2. Awarded to a single, established defense contractor, suggesting a focus on specialized expertise. 3. The firm-fixed-price structure aims to provide cost certainty for the government. 4. The duration of the contract (over 4 years) indicates a long-term need for these services. 5. The absence of a small business set-aside suggests the scope may not be easily divisible for smaller entities. 6. The contract falls under the Aircraft Manufacturing NAICS code, highlighting its specific industrial focus.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging without detailed cost breakdowns or comparisons to similar modification projects. The firm-fixed-price nature provides some cost control, but the overall value for money depends on the effectiveness and efficiency of the modifications delivered by Lockheed Martin. The base award amount of $84.1 million, with potential for more through delivery orders, requires careful monitoring of performance against cost.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This typically occurs when a specific contractor possesses unique capabilities, intellectual property, or is the only source capable of meeting the requirement. The lack of competition means there was no opportunity for price discovery through a bidding process, potentially leading to higher costs than if multiple vendors had competed.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without competing offers, the government could not leverage market forces to secure the most cost-effective solution.

Public Impact

The primary beneficiaries are the U.S. Department of the Navy, receiving critical upgrades for its helicopter fleet. The services delivered involve the modification of heavy helicopters, enhancing their operational capabilities and lifespan. The geographic impact is primarily within the operational theaters where these upgraded helicopters are deployed. Workforce implications include specialized technical roles within Lockheed Martin and potentially at Navy maintenance facilities involved in the integration of modifications.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Lack of transparency in the justification for sole-sourcing requires scrutiny.
Long contract duration could lead to scope creep or evolving requirements not fully captured in initial pricing.
Dependence on a single contractor for critical modifications poses a supply chain risk.

Positive Signals

Award to a prime defense contractor with established expertise in aircraft manufacturing.
Firm-fixed-price contract provides cost certainty for the government.
Delivery order structure allows for phased execution and potential flexibility in scope.
Contract supports the modernization and readiness of essential military assets.

Sector Analysis

This contract falls within the broader aerospace and defense sector, specifically focusing on aircraft manufacturing and modification. The market for specialized military aircraft modifications is often dominated by a few large, established prime contractors due to the high barriers to entry, including technical expertise, security clearances, and existing government relationships. Spending in this sub-sector is driven by defense modernization efforts and the need to extend the service life of existing platforms.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. This suggests that the primary contractor, Lockheed Martin, is expected to perform the majority of the work. The absence of small business participation in this specific award may limit opportunities for smaller firms within this particular contract's scope, though they may participate in other defense contracts.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm-fixed-price contract type, which obligates the contractor to deliver specified modifications within the agreed-upon price. Transparency regarding the justification for the sole-source award and ongoing performance monitoring would be key areas for oversight. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Department of Defense Aircraft Procurement
Naval Aviation Modernization Programs
Heavy Helicopter Fleet Support Contracts
Aerospace Manufacturing Services

Risk Flags

Sole-source award lacks competitive pricing pressure.
Potential for cost overruns in firm-fixed-price contracts if estimates are inaccurate.
Long contract duration may require adjustments for evolving requirements.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $130.9 million to LOCKHEED MARTIN CORPORATION. GEN 3 HEAVY HMDS REQUIREMENT

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $130.9 million.

What is the period of performance?

Start: 2018-09-27. End: 2022-12-31.

What is the specific justification provided by the Department of the Navy for awarding this contract on a sole-source basis to Lockheed Martin Corporation?

The provided data indicates the contract was 'NOT COMPETED'. Typically, sole-source justifications for large defense contracts are based on factors such as the unique capabilities of the contractor, the need to maintain compatibility with existing systems, the urgency of the requirement, or the lack of adequate competition. For a contract of this magnitude and specificity, it's likely that Lockheed Martin possesses proprietary technology, specialized manufacturing processes, or extensive experience with the specific heavy helicopter platforms requiring modification, making them the only viable source. A formal Justification for Other than Full and Open Competition (JOFOC) would contain the detailed rationale, often citing specific FAR (Federal Acquisition Regulation) exceptions.

How does the $130.9 million contract value compare to historical spending on similar heavy helicopter modification programs within the Department of the Navy?

Direct comparison of the $130.9 million contract value to historical spending on similar heavy helicopter modification programs requires access to detailed historical contract databases and specific program information. However, as a significant award to a prime defense contractor, it aligns with the typical scale of major platform modification efforts. The value suggests a substantial upgrade or a large number of modifications. Benchmarking would involve identifying contracts for modifications of comparable helicopter classes (e.g., CH-53, MH-60 variants) over the past 5-10 years, analyzing their total obligated amounts, contract types, and scope of work to determine if this award represents a typical, higher, or lower investment for such services.

What are the key performance indicators (KPIs) and risk mitigation strategies associated with this firm-fixed-price contract for Lockheed Martin?

For a firm-fixed-price contract, key performance indicators (KPIs) would likely revolve around meeting technical specifications for the modifications, adhering to delivery schedules, and maintaining quality standards. Lockheed Martin's risk lies primarily in cost overruns; if the cost of performing the modifications exceeds their estimates, their profit margin shrinks or they incur a loss. Risk mitigation strategies employed by the contractor would include thorough planning, accurate cost estimation, efficient supply chain management, robust quality control processes, and proactive problem-solving to address any technical challenges that arise during the modification process. The government's KPIs would focus on receiving fully functional, upgraded helicopters on time and within budget.

What is the anticipated impact of these helicopter modifications on the operational readiness and capabilities of the U.S. Navy's fleet?

The modifications under this contract are expected to significantly enhance the operational readiness and capabilities of the U.S. Navy's heavy helicopter fleet. These upgrades could include improvements in avionics, structural integrity, power systems, payload capacity, survivability features, or mission-specific equipment. By extending the service life and enhancing the performance of these critical assets, the Navy can maintain its operational tempo, improve mission effectiveness in demanding environments, and potentially reduce the need for premature fleet replacement. Enhanced capabilities translate directly to improved mission success rates for tasks such as troop transport, cargo delivery, search and rescue, and special operations.

Given the sole-source nature, what mechanisms are in place to ensure Lockheed Martin's pricing is fair and reasonable?

Even in sole-source procurements, the government has mechanisms to ensure pricing is fair and reasonable, although they differ from competitive scenarios. The contracting officer must still obtain sufficient cost or pricing data from the contractor, especially for contracts exceeding certain thresholds (like this one). This data is then analyzed to determine if the proposed price reflects a fair and reasonable reflection of the contractor's costs plus a reasonable profit. Techniques include cost realism analysis (evaluating the accuracy and reasonableness of the contractor's cost estimates), price analysis (comparing proposed prices to historical prices, other published prices, or independent government estimates), and potentially forward pricing rate agreements. If the contractor refuses to furnish necessary data, the government may not be obligated to award the contract.

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

Address: 1 LOCKHEED BLVD, FORT WORTH, TX, 76108

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: $130,898,840

Exercised Options: $130,898,840

Current Obligation: $130,898,840

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001914G0020

IDV Type: BOA

Timeline