Over $2.3 billion awarded to Lockheed Martin for MH-60R aircraft, raising questions about competition and value

Contract Overview

Contract Amount: $2,356,006,918 ($2.4B)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2018-11-14

End Date: 2029-03-30

Contract Duration: 3,789 days

Daily Burn Rate: $621.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MH-60R AIRCRAFT

Place of Performance

Location: OWEGO, TIOGA County, NEW YORK, 13827

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $2.36 billion to LOCKHEED MARTIN CORPORATION for work described as: MH-60R AIRCRAFT Key points: 1. Significant contract value awarded to a single large defense contractor. 2. Lack of competition suggests potential for higher costs and reduced innovation. 3. Long contract duration may indicate a need for sustained support but also locks in pricing. 4. Firm Fixed Price contract type offers cost certainty but limits flexibility. 5. Contract awarded by the Department of the Navy, a major defense spender. 6. The MH-60R aircraft is a critical component of naval aviation capabilities.

Value Assessment

Rating: questionable

The total contract value of over $2.3 billion for MH-60R aircraft is substantial. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The firm fixed price nature provides cost certainty for the government, but the absence of competition raises concerns about whether the most advantageous pricing was secured. Further analysis would be needed to compare unit costs to historical data or other government procurements of similar rotary-wing aircraft.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This approach is typically used when only one responsible source can provide the required supplies or services. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms. It also means that potential alternative solutions or innovations from other manufacturers were not considered.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without multiple bids, there is less incentive for the contractor to offer the lowest possible price, potentially leading to inefficient use of public funds.

Public Impact

The primary beneficiaries are the U.S. Navy's aviation units, which receive critical MH-60R helicopters for various missions. Services delivered include the manufacturing and potential sustainment of MH-60R aircraft. The geographic impact is primarily within the United States, with potential global deployment of the aircraft. Workforce implications include jobs in aerospace manufacturing and related support industries, predominantly at Lockheed Martin facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Sole-source award limits opportunities for other manufacturers and potential innovation.
Long contract duration could lock in potentially suboptimal pricing over time.
Dependence on a single contractor for critical defense assets poses a risk.

Positive Signals

Firm Fixed Price contract provides cost certainty for the government.
Award to a major defense contractor suggests established capability and reliability.
Sustained contract duration indicates a long-term need for these aircraft.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product development cycles. This contract falls within the aircraft manufacturing sub-sector, a critical part of the defense industrial base. Spending in this area is heavily influenced by government procurement priorities and geopolitical factors. Comparable spending benchmarks would typically involve analyzing other large-scale military aircraft procurements, though direct comparisons are often difficult due to unique specifications and mission requirements.

Small Business Impact

This contract does not appear to involve 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 limited to subcontracting opportunities. The extent to which Lockheed Martin will utilize small businesses for subcontracting is not specified in the provided data, but it is a crucial area for ensuring broader economic impact and competition within the supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management structures, including the Department of the Navy. Accountability measures are inherent in the contract terms, particularly the firm fixed price structure. Transparency is often limited in sole-source defense contracts, but reporting requirements may exist. Inspector General jurisdiction would apply to investigate any potential fraud, waste, or abuse.

Related Government Programs

MH-60S Seahawk Helicopter Program
Naval Air Systems Command (NAVAIR) Contracts
Department of Defense Aircraft Procurement
Lockheed Martin Defense Contracts
Rotary-Wing Aircraft Manufacturing

Risk Flags

Sole-source award lacks competitive pricing.
High contract value requires robust oversight.
Long contract duration may not reflect evolving needs.
Dependence on a single supplier.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $2.36 billion to LOCKHEED MARTIN CORPORATION. MH-60R AIRCRAFT

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 $2.36 billion.

What is the period of performance?

Start: 2018-11-14. End: 2029-03-30.

What is the historical spending trend for MH-60R aircraft procurements by the Department of the Navy?

Historical spending data for MH-60R aircraft procurements by the Department of the Navy would reveal patterns of investment in this platform. Analyzing past contract awards, including their values, durations, and whether they were competed, can provide context for the current $2.3 billion award. For instance, if previous awards were significantly smaller or consistently competed, the current sole-source, large-value contract might warrant closer scrutiny regarding its justification and pricing. Understanding the lifecycle costs, including sustainment and upgrades, over previous years is also crucial for a comprehensive view of the program's financial trajectory and the government's long-term commitment.

What specific justification was provided for awarding this contract on a sole-source basis?

The justification for a sole-source award typically stems from specific circumstances outlined in federal acquisition regulations, such as the uniqueness of the technology, the unavailability of alternatives, or the need for compatibility with existing systems. For the MH-60R aircraft, the justification likely relates to its specialized capabilities, integration with naval platforms, and the extensive development and testing already invested by Lockheed Martin. A detailed review of the Justification and Approval (J&A) document would be necessary to understand the precise rationale, assess its validity, and determine if any viable competitive alternatives were genuinely unavailable or impractical to pursue within the required timeframe and mission parameters.

How does the per-unit cost of the MH-60R aircraft under this contract compare to similar naval helicopters?

Benchmarking the per-unit cost of the MH-60R against similar naval helicopters is essential for assessing value for money. This comparison should ideally include aircraft with comparable capabilities, such as multi-mission roles (anti-submarine warfare, anti-surface warfare, search and rescue), payload capacity, and operational range. However, direct comparisons can be challenging due to the MH-60R's specific design and integration with U.S. Navy systems. If publicly available data on the unit cost of the MH-60R is limited, analysis might involve examining historical Navy procurements of the same aircraft type or looking at costs of comparable platforms from international partners or other branches of the U.S. military, while accounting for differences in configuration and contract terms.

What are the key performance metrics and delivery milestones associated with this contract?

The key performance metrics and delivery milestones for this contract are critical for monitoring the contractor's progress and ensuring the government receives the expected value. These would typically include specifications related to aircraft performance (e.g., speed, range, payload capacity, system reliability), adherence to production schedules, quality control standards, and successful completion of testing and acceptance procedures. The contract documents would outline specific delivery dates for individual aircraft or batches, as well as any associated support services. Tracking these metrics allows the Department of the Navy to assess the contractor's performance, identify potential delays or issues early, and ensure the timely delivery of operational assets.

What is Lockheed Martin's track record with the MH-60R program and similar defense contracts?

Lockheed Martin has a long-standing and extensive track record with the MH-60R Seahawk program, having been the prime contractor responsible for its development, production, and sustainment. Their experience includes delivering numerous aircraft to the U.S. Navy and allied nations, demonstrating a deep understanding of the platform's complexities and operational requirements. Historically, Lockheed Martin is a major defense contractor with a broad portfolio of complex aerospace and defense systems. While their performance on the MH-60R has generally been viewed positively in terms of capability delivery, like any large defense program, there may have been instances of cost overruns or schedule adjustments in past contracts. Assessing their overall performance requires reviewing program-specific data, delivery history, and any past performance evaluations or disputes.

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

Solicitation ID: N0001918R1045

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

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

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: $2,356,006,919

Exercised Options: $2,356,006,919

Current Obligation: $2,356,006,918

Actual Outlays: $27,704,887

Subaward Activity

Number of Subawards: 1848

Total Subaward Amount: $2,216,527,522

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline