DoD awards $477M to Lockheed Martin for SH-60 Seahawk development, extending contract over 13 years

Contract Overview

Contract Amount: $477,306,884 ($477.3M)

Contractor: Lockheed Martin Corporation

Awarding Agency: Department of Defense

Start Date: 1996-10-08

End Date: 2009-12-31

Contract Duration: 4,832 days

Daily Burn Rate: $98.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 199710!1700!0025!AC524!NAVAL AIR SYSTEMS COMMAND !N0001993C0196 !A!*!P00020 !19961008!19980131!002232973!931114334!834951691!N!03640!LOCKHEED MARTIN CORPORATION !1801 STATE ROUTE 17C !OWEGO !NY!13827!55882!107!36!OWEGO !TIOGA !NEW YORK !0001!+000009811800!N!N!000000000000!AC15!RDTE/AIRCRAFT-ENG/MANUF DEVELOP !A1A!AIRFRAMES AND SPARES !2AHV!SH-60 SEAHAWK !8711!3!*!*!C!B!N!Z!D !N!U!1!001!N!1A!A!Y!Z!* !* !N!C!*!A!A!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: OWEGO, TIOGA County, NEW YORK, 13827

State: New York Government Spending

Plain-Language Summary

Department of Defense obligated $477.3 million to LOCKHEED MARTIN CORPORATION for work described as: 199710!1700!0025!AC524!NAVAL AIR SYSTEMS COMMAND !N0001993C0196 !A!*!P00020 !19961008!19980131!002232973!931114334!834951691!N!03640!LOCKHEED MARTIN CORPORATION !1801 STATE ROUTE 17C !OWEGO !NY!13827!55882!107!36!OWEGO !TIOGA … Key points: 1. Contract awarded for research, development, testing, and evaluation of aircraft systems. 2. Significant contract duration suggests long-term program needs and potential for follow-on work. 3. Sole-source award raises questions about competition and potential for cost efficiencies. 4. Contractor's extensive experience in aerospace and defense likely influenced award decision. 5. Focus on SH-60 Seahawk platform indicates continued reliance on this critical naval asset. 6. Geographic concentration of contractor operations in New York may have local economic implications.

Value Assessment

Rating: fair

The total value of $477.3 million over a 13-year period represents a substantial investment in aircraft development. Benchmarking this against similar R&D contracts for naval helicopters is challenging due to the long duration and specific platform focus. The cost-plus-fixed-fee structure implies that while the contractor's fee is fixed, the government bears the risk of cost overruns, which warrants careful monitoring. Without detailed cost breakdowns or comparisons to alternative solutions, assessing the precise value-for-money is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically justified when a specific contractor possesses unique capabilities, intellectual property, or is the only source capable of meeting the requirement. The lack of competition means that price discovery through a competitive bidding process was bypassed, potentially leading to higher costs for the government compared to a competed contract.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. The government did not benefit from the potential cost savings that can arise from multiple bidders vying for the contract.

Public Impact

The U.S. Navy benefits from continued development and sustainment of the SH-60 Seahawk helicopter fleet. This contract supports advanced research and development in aircraft engineering and manufacturing. The primary geographic impact is concentrated in Owego, New York, where Lockheed Martin's facility is located. Workforce implications include employment for engineers, technicians, and support staff at the contractor's site.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings.
Long contract duration increases exposure to potential cost overruns under cost-plus-fixed-fee structure.
Lack of transparency in specific R&D cost elements hinders detailed value assessment.
Extended period of performance may not reflect current market efficiencies or technological advancements.

Positive Signals

Contractor is a major defense manufacturer with extensive experience in naval aviation.
SH-60 Seahawk platform is a proven and critical asset for naval operations.
Contract supports ongoing modernization and sustainment of essential military capabilities.
Long-term nature of the contract provides program stability for the Navy.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on aircraft research, development, and manufacturing. The aerospace and defense market is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. Spending in this area is driven by national security requirements and technological advancements. Comparable spending benchmarks would typically involve other major platform development contracts for military aircraft, often awarded to large, established defense contractors.

Small Business Impact

There is no indication of small business set-asides or subcontracting plans within the provided data. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely minimal unless the prime contractor voluntarily engages them for subcontracting opportunities. Further analysis would be needed to determine if small businesses are involved in the supply chain for this contract.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). The cost-plus-fixed-fee structure necessitates robust financial oversight to monitor expenditures and ensure compliance with contract terms. Transparency is often limited in R&D contracts, but periodic reporting and audits are standard mechanisms for accountability. Inspector General offices within the DoD may conduct audits to ensure efficiency and prevent fraud.

Related Government Programs

Naval Air Systems Command (NAVAIR) Contracts
SH-60 Seahawk Helicopter Program
Department of Defense Research and Development
Aerospace Manufacturing Contracts
Lockheed Martin Defense Contracts

Risk Flags

Sole-source award lacks competitive justification.
Cost-plus-fixed-fee structure transfers cost overrun risk to the government.
Extended contract duration increases exposure to long-term financial and technical risks.
Limited public data on specific R&D deliverables and cost breakdowns.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $477.3 million to LOCKHEED MARTIN CORPORATION. 199710!1700!0025!AC524!NAVAL AIR SYSTEMS COMMAND !N0001993C0196 !A!*!P00020 !19961008!19980131!002232973!931114334!834951691!N!03640!LOCKHEED MARTIN CORPORATION !1801 STATE ROUTE 17C !OWEGO !NY!13827!55882!107!36!OWEGO !TIOGA !NEW YORK !0001!+000009811800!N!N!000000000000!AC15!RDTE/AIRCRAFT-ENG/MANUF DEVELOP !A1A!AIRFRAMES AND SPARES !2AHV!SH-60 SEAHAWK !8711!3!*!*!C!B!N!Z!D !N!U!1!0

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $477.3 million.

What is the period of performance?

Start: 1996-10-08. End: 2009-12-31.

What is Lockheed Martin's track record with the SH-60 Seahawk program and similar naval aviation contracts?

Lockheed Martin has a long and established history with the SH-60 Seahawk program, serving as the prime contractor for its development and production for decades. Their track record includes successful delivery of numerous variants and upgrades for various branches of the U.S. military and international partners. The company is a major player in the naval aviation sector, with extensive experience in complex aircraft systems, including research, development, testing, and manufacturing. This deep institutional knowledge and proven performance with the specific platform likely contributed to the sole-source nature of this contract, as they possess unique expertise and historical data related to the SH-60's evolution and operational requirements. Their broader portfolio includes other significant naval and rotorcraft programs, underscoring their capability in this domain.

How does the $477.3 million contract value compare to historical spending on SH-60 Seahawk development and sustainment?

The $477.3 million awarded to Lockheed Martin represents a significant, but not unprecedented, investment over its extended performance period. Historical spending on the SH-60 program, encompassing development, production, and sustainment across multiple decades, would likely total billions of dollars. This specific contract appears to cover a lengthy R&D phase, potentially including upgrades, modifications, or new capabilities for the platform. To provide a precise comparison, one would need to aggregate all prior contracts related to SH-60 R&D and sustainment awarded to Lockheed Martin and other entities. However, given the platform's longevity and critical role, such substantial, long-term R&D funding is consistent with the lifecycle of major defense assets.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract of this magnitude and duration?

The primary risks associated with this contract structure are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher costs than if the contract were competed. The government does not benefit from the price discovery mechanism inherent in competitive bidding. Secondly, the cost-plus-fixed-fee (CPFF) structure shifts the financial risk of cost overruns to the government. While the contractor's fee is fixed, they are incentivized to control costs to maximize their profit margin on that fee, but the government bears the ultimate burden if actual costs exceed estimates. The long duration (over 13 years) exacerbates these risks, increasing the potential for cost escalation due to inflation, unforeseen technical challenges, or changes in program scope over time. Robust government oversight is crucial to mitigate these risks.

What does the extended contract performance period (1996-2009) suggest about the program's evolution and the DoD's long-term planning?

The extended performance period from October 1996 to January 2009 (over 13 years) indicates that this contract was likely a foundational element for a significant, long-term development effort for the SH-60 Seahawk platform. Such extended durations are common in major defense acquisition programs where technological development, testing, and integration are complex and time-consuming. It suggests that the Department of Defense had a strategic, multi-year vision for the evolution of the SH-60, anticipating the need for ongoing research, upgrades, and potentially new variants. This long-term commitment provides program stability for the contractor and allows for incremental development, adapting to evolving threats and operational requirements over the platform's lifecycle.

Are there any indications of performance issues or concerns related to Lockheed Martin's execution on this specific contract?

Based on the provided data snippet, there are no explicit indicators of performance issues or concerns. The data primarily includes contract award details, financial figures, and basic descriptive information. To assess performance, one would need access to contract performance reports, quality assurance reviews, delivery records, and any documented disputes or corrective actions. Given the contract's long duration and its nature as a sole-source R&D award, performance monitoring would have been a continuous process by the contracting agency. Without specific performance metrics or historical CPARS (Contractor Performance Assessment Reporting System) data, a definitive statement on performance cannot be made.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

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

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline