By Marina Malenic
Beating out a long-term incumbent, Lockheed Martin [LMT] has been awarded a 10-year, $5 billion contract to supply U.S. Special Operations Forces with logistics support, the Defense Department said on Monday.
L-3 Communications [LLL] had been in charge of the program for the past 20 years, which had provided the company approximately $400 million in annual revenue. The new contract is worth approximately $500 million in sales per year. Several competitors, including a Boeing [BA]-led team, competed for the work. Some industry analysts indicated that a protest is likely.
With tighter Pentagon budgets and new defense aviation starts seen slowing, logistics and other support contracts are seen as a valuable component of major aviation companies’ revenues.
The contract award debriefing is scheduled for Friday, when a detailed explanation of the decision will be provided, a Pentagon spokesman confirmed yesterday.
Special operations troops–Navy SEALs and Army Special Forces, as well as small numbers of newly trained Air Force and Marine Corps Special Operations troops–tend to use specialized equipment that is often needed in theater very quickly. Lockheed Martin will now be responsible for maintenance and repair of such items, many of which are housed in a Lexington, Ky., facility, and making sure they can be delivered to deployed forces in a timely manner.
The contract also covers aircraft, vehicle and equipment maintenance, according to a Lockheed Martin press statement. The company will be responsible for repairing and maintaining the fleet of Special Operations “aircraft, ground vehicles, weaponry and electronics equipment, to include managing a global supply chain of parts, warehouses and depots,” the statement reads. “The company will also manage and upgrade the Command’s critical infrastructure, from secure IT networks to worldwide facilities.”
John Surdo, Lockheed Martin’s manager for the program, said the company has a “robust transition plan” in place. “Once the transition is underway, we’ll partner with [Special Operations Forces Support Activity] to implement a continuous improvement program that will streamline and transform logistics and business operations.”
The company has acquired several logistics and government services companies in recent years. Most recently, it bought Eagle Group International LLC last year.
A spokeswoman for L-3 said the company would not comment on whether it plans a protest of the award until after Friday’s debriefing.