Navy awards $581M contract for MH-60R aircraft to Lockheed Martin, highlighting aircraft manufacturing sector

Contract Overview

Contract Amount: $581,427,300 ($581.4M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2022-08-23

End Date: 2026-12-18

Contract Duration: 1,578 days

Daily Burn Rate: $368.5K/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 $581.4 million to LOCKHEED MARTIN CORPORATION for work described as: MH-60R AIRCRAFT, STANDARD CONFIGURATION Key points: 1. Contract value of $581.4 million for MH-60R aircraft indicates significant investment in naval aviation capabilities. 2. Sole-source award to Lockheed Martin suggests a lack of readily available alternatives or specialized requirements. 3. Long contract duration of over 3 years points to a sustained need for these critical assets. 4. The contract falls under the Aircraft Manufacturing sector, a key area for defense industrial base. 5. Fixed-price contract type aims to provide cost certainty for the government, though flexibility may be limited. 6. Delivery order award mechanism suggests a phased approach to fulfilling the aircraft requirements.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific configuration details or comparable sole-source awards. However, the substantial dollar amount reflects the complexity and cost associated with advanced military aircraft. The firm fixed-price structure is intended to control costs, but the absence of competition limits the government's ability to negotiate the best possible price. Further analysis would require understanding the specific technological advancements and operational requirements driving this sole-source decision.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Lockheed Martin Corporation, was solicited. This typically occurs when a specific capability is required that only one contractor can provide, or for reasons of urgency or national security. The lack of competition means the government did not benefit from a competitive bidding process, which could potentially lead to higher prices than if multiple vendors had vied for the contract.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure. Without competing bids, there is less incentive for the contractor to offer the lowest possible price.

Public Impact

The primary beneficiaries are the U.S. Navy, which will receive advanced MH-60R Seahawk helicopters for maritime operations. These aircraft are crucial for various missions including anti-submarine warfare, anti-surface warfare, and search and rescue. The contract supports the operational readiness and strategic capabilities of the naval forces. Work associated with this contract likely supports a skilled workforce in the aerospace and defense manufacturing sector, particularly in New York where the contractor is located.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price negotiation and potentially increases costs for taxpayers.
Lack of competition may reduce incentives for innovation and efficiency from the contractor.
Long-term nature of the contract could tie the government to a specific technology or vendor for an extended period.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
MH-60R aircraft are a proven and critical asset for naval operations.
Contract ensures continued supply of essential military hardware for national defense.

Sector Analysis

The MH-60R Seahawk is a key platform in the naval aviation sector, primarily used for anti-submarine and anti-surface warfare. The global market for military helicopters is substantial, with significant government spending allocated to maintaining and modernizing fleets. This contract with Lockheed Martin, a major defense contractor, fits within the broader landscape of defense procurement for advanced rotary-wing aircraft, reflecting ongoing investment in naval superiority and technological advancement in this specialized industry.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the sole-source nature and the specialized manufacturing of military aircraft, it is unlikely that significant subcontracting opportunities for small businesses will be mandated or readily available through this specific award. Further investigation into Lockheed Martin's broader subcontracting plans would be needed to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract will be managed by the Department of the Navy, likely through its contracting officers and program management teams. Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency may be limited due to the sole-source nature of the award, but contract performance metrics and delivery schedules are typically monitored. The Inspector General of the Department of Defense may also have jurisdiction for audits and investigations.

Related Government Programs

MH-60S Seahawk Helicopter Program
Naval Air Systems Command (NAVAIR) Procurement
Defense Contract Management Agency (DCMA) Oversight
Aerospace Manufacturing Industry Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Long-term contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $581.4 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 $581.4 million.

What is the period of performance?

Start: 2022-08-23. End: 2026-12-18.

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

Historical spending on MH-60R aircraft procurement by the Department of the Navy has been substantial, reflecting the platform's critical role in naval operations. While specific annual figures fluctuate based on program needs and budget allocations, the Navy has consistently invested in acquiring and maintaining its MH-60R fleet. For instance, prior delivery orders and contracts for the MH-60R program have cumulatively amounted to billions of dollars over the years. This $581.4 million award represents a significant, but not unprecedented, investment within this ongoing procurement effort. Analyzing past spending patterns reveals a sustained commitment to this platform, underscoring its strategic importance and the long-term nature of fleet modernization and replacement cycles.

How does the per-unit cost of the MH-60R aircraft in this contract compare to previous awards or market benchmarks?

Determining the precise per-unit cost for the MH-60R aircraft within this $581.4 million contract is not feasible without knowing the exact number of aircraft being procured. However, MH-60R helicopters are highly sophisticated military assets with complex avionics and mission systems, making them inherently expensive. Previous awards for MH-60R aircraft have typically ranged from tens of millions to over $50 million per unit, depending on the specific configuration, upgrades, and support packages included. Given this is a sole-source award, direct price comparison to competitive bids is impossible. The firm fixed-price nature aims for cost control, but without competitive benchmarking, it's difficult to definitively assess if this award represents optimal value for money compared to a fully competed scenario.

What are the primary risks associated with a sole-source award for critical defense assets like the MH-60R?

The primary risks associated with a sole-source award for critical defense assets like the MH-60R aircraft include potential cost overruns and reduced incentive for contractor efficiency. Without competitive pressure, the sole-source provider, Lockheed Martin in this case, may not be as motivated to minimize costs or maximize efficiency as they would be in a competitive environment. This can lead to higher prices for the government and, consequently, taxpayers. Furthermore, sole-source awards can limit technological innovation by locking the government into a specific vendor's capabilities, potentially hindering the adoption of newer, more advanced solutions that might emerge from a broader market. There's also a risk of vendor lock-in, making it difficult and costly to switch providers in the future.

What is Lockheed Martin's track record in delivering MH-60R aircraft to the U.S. Navy?

Lockheed Martin Corporation has a long and established track record as the prime contractor for the MH-60R Seahawk helicopter program, delivering these aircraft to the U.S. Navy for many years. The MH-60R is a derivative of the Black Hawk helicopter, and Lockheed Martin has been responsible for its production, integration of advanced mission systems, and ongoing support. The Navy has historically relied on Lockheed Martin for the MH-60R fleet, utilizing them extensively for various maritime missions. While specific on-time delivery rates and performance metrics for individual contracts can vary, the overall relationship and Lockheed Martin's capability to produce and deliver these complex aircraft are well-demonstrated. This sustained partnership indicates a high level of confidence in their ability to meet the Navy's requirements.

How does this contract align with the Department of Defense's broader strategy for naval aviation modernization?

This contract aligns with the Department of Defense's (DoD) broader strategy for naval aviation modernization by ensuring the continued supply of the MH-60R Seahawk helicopter. The MH-60R is a cornerstone platform for the Navy's maritime combat capabilities, essential for anti-submarine warfare (ASW), anti-surface warfare (ASuW), and search and rescue (SAR) missions. Modernizing and maintaining a robust fleet of these versatile aircraft is crucial for projecting power, ensuring freedom of navigation, and responding to global threats. The DoD's strategy emphasizes maintaining technological superiority and operational readiness, which is directly supported by investments in platforms like the MH-60R. This award ensures that the Navy can sustain its current fleet and replace aging airframes, thereby upholding its strategic objectives in contested maritime environments.

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

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: $581,427,300

Exercised Options: $581,427,300

Current Obligation: $581,427,300

Subaward Activity

Number of Subawards: 850

Total Subaward Amount: $237,480,994

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