DoD awards $575M for MH-60R aircraft, with Lockheed Martin as sole source provider

Contract Overview

Contract Amount: $574,897,719 ($574.9M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2021-04-12

End Date: 2026-11-30

Contract Duration: 2,058 days

Daily Burn Rate: $279.3K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MH-60R AIRCRAFT, STANDARD CONFIGURATION

Place of Performance

Location: OWEGO, TIOGA County, NEW YORK, 13827

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $574.9 million to LOCKHEED MARTIN CORPORATION for work described as: MH-60R AIRCRAFT, STANDARD CONFIGURATION Key points: 1. Value for money is difficult to assess due to sole-source nature and lack of competitive benchmarking. 2. Competition dynamics are non-existent, as the contract was awarded on a sole-source basis. 3. Risk indicators include potential for cost overruns and limited leverage for price negotiation. 4. Performance context is tied to the ongoing sustainment and production of critical naval aircraft. 5. Sector positioning places this contract within the broader defense aerospace manufacturing industry.

Value Assessment

Rating: questionable

Benchmarking the value of this sole-source contract is challenging without competitive bids. The firm fixed-price structure offers some cost certainty, but the absence of competition limits the government's ability to secure the best possible pricing. The total value of $575 million over its period of performance suggests a significant investment in these critical assets.

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 typically occurs when a single contractor possesses unique capabilities or intellectual property essential for the requirement. The lack of bidders means the government did not benefit from a competitive process to drive down prices or encourage innovation.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure. The government has limited leverage to negotiate favorable terms or pricing compared to a competitive scenario.

Public Impact

The U.S. Navy benefits from the continued supply and support of MH-60R Seahawk helicopters, vital for anti-submarine warfare, anti-surface warfare, and search and rescue missions. This contract ensures the availability of advanced maritime helicopters for naval operations, enhancing national security. The geographic impact is primarily within the United States, supporting manufacturing and supply chains. Workforce implications include sustained employment in specialized aerospace manufacturing roles at Lockheed Martin and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price negotiation and potential for cost savings.
Lack of competition may reduce incentives for contractor efficiency and innovation.
Long-term sustainment costs for specialized aircraft can be substantial and difficult to predict.

Positive Signals

Firm fixed-price contract provides cost certainty for the base award.
MH-60R is a proven and critical platform for naval aviation.
Contract ensures continued availability of essential defense capabilities.

Sector Analysis

This contract falls within the defense aerospace manufacturing sector, a significant segment of the broader aerospace and defense industry. The market for military helicopters is dominated by a few major players, and the MH-60R is a specialized platform. Comparable spending benchmarks would involve other large, sole-source defense platform procurements, which often represent substantial investments due to their complexity and strategic importance.

Small Business Impact

Information regarding small business set-asides or subcontracting plans for this specific sole-source award is not readily available. However, large defense contracts often include provisions for small business participation, either through direct subcontracting or as part of the prime contractor's overall small business goals. The impact on the small business ecosystem would depend on the extent to which Lockheed Martin engages small businesses in its supply chain for this program.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices. Accountability measures are embedded in the contract terms, including performance requirements and payment schedules. Transparency is generally limited for sole-source awards, though contract details are often made public through federal procurement databases. 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) Contracts
Defense Contract Management Agency (DCMA) Oversight
Aerospace Manufacturing Industry Spending

Risk Flags

Sole-source award
Potential for cost growth without competition
Reliance on a single supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $574.9 million to LOCKHEED MARTIN CORPORATION. MH-60R AIRCRAFT, STANDARD CONFIGURATION

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 $574.9 million.

What is the period of performance?

Start: 2021-04-12. End: 2026-11-30.

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

Lockheed Martin has been the prime contractor for the MH-60R Seahawk helicopter program for many years, responsible for its production and sustainment. The company has a long history of delivering these aircraft to the U.S. Navy and allied nations. Their track record includes meeting production schedules and incorporating upgrades over the life of the program. However, as with many large defense programs, there have been instances of cost adjustments and schedule modifications over time, which are typical in complex, long-term defense manufacturing.

How does the value of this contract compare to similar sole-source defense aircraft procurements?

The $575 million value for this delivery order is substantial, reflecting the complexity and strategic importance of the MH-60R helicopter. Comparing it directly to other sole-source procurements requires careful consideration of the specific aircraft type, quantity, configuration, and contract duration. However, large sole-source awards for advanced military platforms, such as fighter jets, bombers, or specialized helicopters, frequently run into hundreds of millions or even billions of dollars. The value is consistent with the high cost of developing, manufacturing, and sustaining advanced defense systems where competition is limited.

What are the primary risks associated with this sole-source contract?

The primary risks associated with this sole-source contract stem from the lack of competition. This can lead to higher-than-necessary costs for the government, as there is less pressure on the contractor to offer the most competitive pricing. There's also a risk of reduced innovation or efficiency if the contractor faces no competitive threat. Furthermore, reliance on a single source can create supply chain vulnerabilities if the contractor experiences production issues or financial instability. The government's negotiating leverage is also diminished in a sole-source environment.

How effective is the MH-60R program in meeting naval aviation requirements?

The MH-60R Seahawk is widely regarded as a highly effective multi-mission helicopter that meets critical naval aviation requirements. It is designed for a broad range of missions, including anti-submarine warfare (ASW), anti-surface warfare (ASuW), vertical replenishment, search and rescue (SAR), and medical evacuation. Its advanced sensor suite, including sonar and radar, along with its weapon systems, make it a versatile platform for the U.S. Navy. Its continued procurement and long service life indicate its effectiveness and suitability for the demanding maritime environment.

What are the historical spending patterns for the MH-60R program?

Historical spending on the MH-60R program has been significant, reflecting its status as a key component of the U.S. Navy's aviation fleet. Over the years, the Navy has procured hundreds of MH-60R aircraft, with total program costs accumulating into the tens of billions of dollars when considering research, development, procurement, and sustainment. Spending has typically occurred through annual appropriations and multi-year procurement contracts, with individual delivery orders like this one contributing to the overall expenditure. The consistent demand for this platform suggests a sustained level of investment.

What is the justification for awarding this contract on a sole-source basis?

The justification for awarding this contract on a sole-source basis likely stems from the unique capabilities and established production line of the MH-60R helicopter, manufactured by Lockheed Martin. As a highly specialized and integrated weapons system, transitioning to a different platform or manufacturer would involve immense costs, extensive requalification, and significant delays in capability delivery. The government typically justifies sole-source awards when only one responsible source can provide the required supplies or services, often due to proprietary technology, unique manufacturing processes, or the need for commonality with existing fleets.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

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: $574,897,719

Exercised Options: $574,897,719

Current Obligation: $574,897,719

Subaward Activity

Number of Subawards: 995

Total Subaward Amount: $162,872,249

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001921G0017

IDV Type: BOA

Timeline