The Contract

The US Department of Defense Press Desk released today that Lockheed Martin [NYSE: LMT] has been awarded a Naval contract modification to the sum of $303,974,406 for lot I’s low-rate initial production of two CH-53K King Stallion helicopters.

 

Source Excerpt

Department of the Navy Contract:

“Sikorsky Aircraft Corp., a Lockheed Martin Co., Stratford, Connecticut, is being awarded $303,974,406 for fixed-price-incentive-firm, firm-fixed-price, cost-plus-fixed-fee modification P00004 to a previously awarded contract (N00019-16-C-0048).  The modification will provide for the Lot I low-rate initial production of two CH-53K Heavy Lift helicopters, associated aircraft and programmatic support, logistics support, peculiar support equipment, and spares.  Work will be performed in Stratford, Connecticut, and is expected to be completed in December 2021.  Fiscal 2017 aircraft procurement (Navy) funds in the amount of $303,974,406 will be obligated at time of award, none of which will expire at the end of the current fiscal year.  The Naval Air Systems Command, Patuxent River, Maryland, is the contracting activity.”

Source

 

Contract Interpretation

  • Firm-Fixed-Price: A contract with such a price is not subject to any adjustment due to costs in performing said contract. This is a maximum risk, full responsibility contract in which Sikorsky Aircraft theoretically could end up eating costs that exceed the amount they’ve initially agreed upon. More
  • Cost-Plus-Fixed-Fee: Such a contract provides for the payment of allowable incurred costs, to the maximum amount listed. This cost is negotiated on an initial basis, and due to being fixed, cannot be renegotiated or adjusted further. More

 

The CH-53K King Stallion

The CH-53K King Stallion is set to replace the CH-53E Super Stallion by 2030. The aircraft is the most powerful helicopter in the American armed forces, and is considered to be a more reliable powerhouse. Take a look:

Lockheed Martin announced the CH-53K King Stallion passed its Defense Acquisition Board assessment that approved for the aircraft to begin low-rate initial production on April 4, 2017. The CH-53K will be considered the most powerful helicopter in the Department of Defense and is scheduled to completely replace the CH-53E Super Stallion by 2030. (U.S. Marine Corps video by Lance Cpl. Molly Hampton)

 


Disclaimer

As of this moment, I do not own shares of Lockheed Martin. My opinions are entirely my own and may or may not reflect the opinions of my peers on TickHounds. I am not being compensated for sharing my due diligence in any way other than what tips may be accrued.

Most information for this post was retrieved from various sources listed throughout the post. For other sources, see below:

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