DoD awards $36.4M for CH-53K helicopter spare parts to Lockheed Martin, a sole-source contract

Contract Overview

Contract Amount: $36,404,277 ($36.4M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2022-08-30

End Date: 2025-12-31

Contract Duration: 1,219 days

Daily Burn Rate: $29.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CH-53K HELICOPTER SPARE PARTS

Place of Performance

Location: STRATFORD, FAIRFIELD County, CONNECTICUT, 06614

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $36.4 million to LOCKHEED MARTIN CORPORATION for work described as: CH-53K HELICOPTER SPARE PARTS Key points: 1. Contract awarded for essential spare parts to maintain the operational readiness of the CH-53K King Stallion helicopter fleet. 2. Sole-source award to Lockheed Martin Corporation, the prime contractor for the CH-53K program, raises questions about price competition. 3. The contract duration extends over three years, indicating a sustained need for these critical components. 4. The award is a delivery order under an existing contract, suggesting a pre-established relationship and procurement vehicle. 5. Focus on spare parts highlights the ongoing operational and sustainment costs associated with advanced military platforms. 6. The specific parts procured are not detailed, but are crucial for the CH-53K's mission capabilities.

Value Assessment

Rating: fair

Benchmarking the value for this sole-source contract is challenging without competitive bids. The price of $36.4 million for spare parts over approximately 3.3 years suggests a significant investment in maintaining the CH-53K fleet. Without comparative pricing from other manufacturers or previous contract data for similar parts, it's difficult to definitively assess if this represents excellent value. However, given the specialized nature of helicopter parts and the sole-source award to the original equipment manufacturer, prices may reflect development costs and proprietary technology.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to Lockheed Martin Corporation. As the prime contractor for the CH-53K helicopter, Lockheed Martin is the only known source for these specific spare parts. This lack of competition means that the Department of the Navy did not solicit bids from other potential suppliers, which can limit price discovery and potentially lead to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without alternative quotes, there is less pressure on the contractor to offer the most cost-effective pricing.

Public Impact

The U.S. Marine Corps, as the primary operator of the CH-53K, will benefit from the availability of these spare parts, ensuring the operational readiness of their heavy-lift helicopter fleet. These parts are critical for maintaining the CH-53K's ability to perform missions such as troop transport, cargo movement, and humanitarian assistance/disaster relief. The contract supports the sustainment of a key strategic asset for national defense. Workforce implications include continued employment for personnel involved in the manufacturing and supply chain of these specialized helicopter components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of transparency in specific part pricing makes value assessment difficult.
Dependence on a single supplier for critical components can create supply chain risks.
The long-term sustainment costs for advanced platforms like the CH-53K require careful monitoring.

Positive Signals

Ensures operational readiness of the CH-53K King Stallion helicopter fleet.
Supports the sustainment of a critical heavy-lift aviation asset for the U.S. military.
Awarded to the original equipment manufacturer, likely ensuring part compatibility and quality.
Provides necessary components for ongoing training and operational missions.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government investment. The CH-53K helicopter is a state-of-the-art heavy-lift aircraft, and its sustainment requires specialized parts manufactured to stringent military specifications. Spending on spare parts is a crucial component of overall defense budgets, ensuring that aging fleets remain operational and new platforms can be effectively maintained. The market for such specialized parts is often dominated by the original equipment manufacturers due to proprietary designs and intellectual property.

Small Business Impact

This contract does not appear to involve a small business set-aside, as it is a sole-source award to Lockheed Martin Corporation. There is no explicit information provided regarding subcontracting opportunities for small businesses within this specific delivery order. However, large prime contractors like Lockheed Martin are generally expected to have subcontracting plans that include small businesses for various components and services across their programs.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Navy's contracting and program management offices. Accountability measures are typically embedded in the contract terms, including delivery schedules and quality standards. Transparency regarding the specific pricing of individual spare parts is limited due to the sole-source nature of the award. The Inspector General of the Department of Defense may conduct audits or investigations into contract spending to ensure compliance and identify potential waste or fraud.

Related Government Programs

CH-53K Helicopter Program
Department of Defense Aircraft Procurement
Aviation Logistics and Sustainment
Lockheed Martin Defense Contracts

Risk Flags

Sole Source Award
Potential for Price Escalation
Supply Chain Dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.4 million to LOCKHEED MARTIN CORPORATION. CH-53K HELICOPTER SPARE PARTS

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 $36.4 million.

What is the period of performance?

Start: 2022-08-30. End: 2025-12-31.

What is the historical spending trend for CH-53K helicopter spare parts with Lockheed Martin?

Analyzing historical spending trends for CH-53K helicopter spare parts requires access to detailed contract databases and historical award data. As the CH-53K is a relatively new platform compared to some legacy aircraft, extensive historical spending data might be limited. However, initial awards for spare parts and sustainment are expected as the fleet grows and enters full operational capability. Typically, spending on spare parts increases as the number of operational aircraft grows and flight hours accumulate. Without specific historical data for this contract vehicle or related sole-source awards, it's difficult to establish a precise trend. Future spending will likely depend on the operational tempo, attrition rates, and planned upgrades for the CH-53K fleet.

How does the pricing of these spare parts compare to similar helicopter components from other manufacturers?

Direct comparison of pricing for these specific CH-53K spare parts to similar components from other manufacturers is challenging due to the sole-source nature of this award and the highly specialized design of the CH-53K. Helicopter spare parts, especially for advanced military platforms, are often proprietary and manufactured to exacting standards, which can lead to higher costs. Benchmarking would ideally involve comparing prices for components with similar functionality, size, weight, and performance specifications across different helicopter types. However, the unique capabilities and design of the CH-53K limit direct comparability. Without competitive bids or access to detailed cost breakdowns, assessing whether Lockheed Martin's pricing is competitive against a hypothetical market is speculative.

What are the key performance indicators (KPIs) used to evaluate the contractor's performance on this contract?

Key performance indicators (KPIs) for a contract like this typically revolve around ensuring the timely delivery of high-quality spare parts that meet all specified technical requirements. Common KPIs would include on-time delivery rates, adherence to quality standards (e.g., defect rates, compliance with specifications), and responsiveness to the government's needs. For spare parts, ensuring availability and minimizing backorders are also critical. The contract likely includes clauses for performance assessments, and failure to meet these KPIs could result in penalties or impact future contract awards. The Department of the Navy would monitor these metrics to ensure the operational readiness of the CH-53K fleet is maintained.

What is the risk associated with relying on a sole-source supplier for critical helicopter components?

Relying on a sole-source supplier for critical helicopter components presents several risks. Firstly, it eliminates price competition, potentially leading to higher costs for the government as the contractor faces less pressure to offer competitive pricing. Secondly, it creates a dependency on a single supplier, making the supply chain vulnerable to disruptions caused by the supplier's production issues, financial instability, or geopolitical factors. Thirdly, it can reduce the government's leverage in negotiating terms and pricing. For critical components like helicopter parts, any disruption can directly impact aircraft availability and mission readiness, necessitating robust inventory management and contingency planning by the procuring agency.

What is the total estimated value of the CH-53K program, and how does this spare parts contract fit into the overall budget?

The total estimated value of the CH-53K program is substantial, encompassing the development, procurement, and sustainment of the aircraft fleet. While this specific contract for spare parts is valued at $36.4 million, it represents a portion of the broader sustainment and logistics budget for the program. The overall program cost includes the acquisition of the helicopters themselves, which can run into billions of dollars, as well as ongoing operational and support costs. Spare parts procurement is a critical, albeit smaller, component of the total lifecycle cost. This contract fits into the sustainment phase, ensuring that the operational fleet has the necessary components to remain mission-capable throughout its service life.

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: NOT COMPETED

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: $36,404,277

Exercised Options: $36,404,277

Current Obligation: $36,404,277

Subaward Activity

Number of Subawards: 98

Total Subaward Amount: $11,093,996

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001919G0029

IDV Type: BOA

Timeline