DoD awards $413.8M for MH-60R aircraft, a sole-source contract to Lockheed Martin

Contract Overview

Contract Amount: $413,783,898 ($413.8M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 2023-10-26

End Date: 2029-07-30

Contract Duration: 2,104 days

Daily Burn Rate: $196.7K/day

Competition Type: NOT COMPETED

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 $413.8 million to LOCKHEED MARTIN CORPORATION for work described as: MH-60R AIRCRAFT, STANDARD CONFIGURATION Key points: 1. This contract represents a significant investment in naval aviation capabilities. 2. The sole-source nature of this award warrants scrutiny regarding price justification. 3. Long-term sustainment and upgrade potential are key risk indicators for this platform. 4. The MH-60R is a critical asset for anti-submarine and anti-surface warfare missions. 5. This award falls within the broader defense sector's aircraft manufacturing sub-sector. 6. The duration of the contract suggests a long-term commitment to this aircraft type.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging without competitive data. The base award amount of $413.8 million for 2104 days (approximately 5.7 years) suggests a significant per-unit cost. However, without comparable bids or market analysis for similar advanced naval helicopters, a definitive value-for-money assessment is difficult. The firm-fixed-price structure offers some cost certainty, but the absence of competition raises concerns about potential overpricing.

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 approach is typically justified when a unique capability is required or when only one source can provide the necessary goods or services. The lack of competition limits the government's ability to leverage market forces to achieve the lowest possible price and may indicate a reliance on a single supplier for this critical platform.

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

Public Impact

The U.S. Navy benefits from the continued supply of MH-60R Seahawk helicopters, crucial for maritime security operations. These helicopters provide essential capabilities for anti-submarine warfare (ASW), anti-surface warfare (ASW), and search and rescue (SAR) missions. The geographic impact is primarily within naval aviation bases and operational theaters worldwide. The contract supports jobs within Lockheed Martin's aerospace manufacturing facilities, particularly in New York. This award ensures the readiness of naval forces to address evolving threats.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Long contract duration (over 5 years) could lead to cost overruns if not managed effectively.
Reliance on a single supplier for a critical defense asset poses supply chain risks.
Potential for scope creep or unexercised options to increase the total contract value over time.

Positive Signals

Firm-fixed-price contract provides cost certainty for the base award amount.
MH-60R is a proven, mature platform with extensive operational history.
The contract ensures the continued availability of a vital asset for national security.
Long-term contract allows for predictable planning and sustainment of naval aviation capabilities.

Sector Analysis

The MH-60R Seahawk is a medium-lift multi-role naval helicopter manufactured by Lockheed Martin. This contract falls within the broader aerospace and defense industry, specifically the aircraft manufacturing sub-sector. The global market for military helicopters is substantial, driven by defense modernization efforts worldwide. Comparable spending benchmarks would involve other large, sole-source or limited-competition awards for advanced military aircraft platforms, which often run into hundreds of millions or billions of dollars.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Lockheed Martin, as a large prime contractor, may engage small businesses as subcontractors. However, the absence of a specific set-aside means that opportunities for small businesses to directly compete for the prime contract are limited. The subcontracting plan, if any, will determine the extent of small business participation.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Navy's contracting and program management offices. The Department of Defense's Inspector General may conduct audits or investigations into contract performance and pricing, particularly given the sole-source nature. Transparency is facilitated through contract award databases, but detailed justifications for sole-source awards are often not publicly disclosed in full.

Related Government Programs

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

Risk Flags

Sole-source award
Potential for cost overruns
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $413.8 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 $413.8 million.

What is the period of performance?

Start: 2023-10-26. End: 2029-07-30.

What is the historical spending trend for MH-60R aircraft under Lockheed Martin?

Historical spending data for MH-60R aircraft procured by the Department of Defense from Lockheed Martin indicates a consistent and substantial investment over several years. While specific figures vary annually based on delivery schedules and contract modifications, the total value of contracts awarded for this platform typically runs into hundreds of millions of dollars per fiscal year. This sustained expenditure reflects the platform's critical role in naval aviation and the long-term sustainment requirements. Analyzing past awards reveals a pattern of multi-year contracts and delivery orders, often with sole-source or limited competition justifications, underscoring the platform's specialized nature and Lockheed Martin's established position as the primary supplier.

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

Determining an exact per-unit cost for the MH-60R in this specific contract is difficult due to the aggregate nature of the award and the absence of competitive benchmarking. However, historical data and industry reports suggest that advanced naval helicopters like the MH-60R typically have per-unit costs ranging from $20 million to over $50 million, depending on configuration, avionics, and support packages. This range can fluctuate significantly based on the quantity ordered and the specific contract terms. Without a direct comparison of bids from competing manufacturers for a similarly equipped naval helicopter, it's challenging to definitively state if this contract's pricing is optimal. The sole-source nature of this award further complicates direct per-unit cost comparisons.

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

The primary risks associated with a sole-source contract for critical defense assets like the MH-60R revolve around cost, innovation, and supplier dependency. Without competition, the government loses the leverage to negotiate the lowest possible price, potentially leading to higher costs for taxpayers. There is also a reduced incentive for the sole provider to innovate aggressively or improve efficiency, as there is no competitive pressure. Furthermore, reliance on a single supplier creates significant supply chain vulnerability; any disruption in the supplier's operations could have severe consequences for national security. This dependency can also lead to lock-in, where switching suppliers becomes prohibitively expensive or technically infeasible.

What is the operational effectiveness and mission capability of the MH-60R Seahawk?

The MH-60R Seahawk is widely recognized as a highly effective and versatile naval helicopter, fulfilling critical roles in modern naval warfare. Its primary missions include anti-submarine warfare (ASW), anti-surface warfare (ASUW), maritime surveillance, and combat search and rescue (CSAR). Equipped with advanced sensors such as dipping sonar, radar, and acoustic processors, it can detect, classify, and track submarines and surface vessels. Its armament typically includes torpedoes and Hellfire missiles, enabling it to engage threats effectively. The MH-60R's robust design, advanced avionics, and multi-mission capabilities make it a cornerstone asset for carrier strike groups and surface combatants, contributing significantly to maritime domain awareness and force protection.

How does the Department of Defense justify sole-source awards for aircraft manufacturing?

The Department of Defense (DoD) justifies sole-source awards for aircraft manufacturing through specific regulatory exceptions outlined in the Federal Acquisition Regulation (FAR). Common justifications include: "only one responsible source and no other supplies or services will satisfy agency requirements" (FAR 6.302-1), often due to unique technical capabilities, proprietary technology, or essential system integration. Another justification can be "international agreement" or "authorized by statute." For complex platforms like the MH-60R, the justification often centers on the highly specialized nature of the aircraft, the extensive research and development investment already made by the incumbent contractor, and the need for commonality and interoperability with existing fleets. These justifications require rigorous documentation and approval processes to ensure they are valid and that competition is not being improperly excluded.

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

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: $514,872,098

Exercised Options: $505,660,098

Current Obligation: $413,783,898

Subaward Activity

Number of Subawards: 154

Total Subaward Amount: $88,745,622

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