Lockheed Martin Team Wins $10.2-Billion Air Force Pact

A team led by Lockheed Martin Corp. won a contract valued at $10.2 billion to repair and overhaul U.S. Air Force planes, the Air Force said Friday.

The nation’s top defense contractor beat a team led by No. 7 contractor United Technologies Corp.’s Pratt & Whitney for the 15-year contract, the largest of its kind, the Air Force said. The work is for engines in F-16 and F-15 fighter jets, C-130 and C-5 transports, and Navy P-3 Orion surveillance planes.

The work previously has been performed solely by the San Antonio Air Logistics Center at Kelly Air Force Base in Texas. The base and logistics center are now slated for closing, and private industry will use it after the Air Force leaves.

“This contract will enable the government to save approximately $2 billion over the potential 15-year life of the contract, and it launches Lockheed Martin’s future for engine repair and overhaul, which is a business we have very much wanted to expand our presence in,” said Lockheed Martin spokesman Lee Whitney.

Though disappointing for Pratt, losing the work isn’t a big blow, mainly because the company is expanding its commercial servicing business, which is higher-margin, JSA Research analyst Paul Nisbet said. He rates Lockheed a “buy” and United Technologies a “hold.”

Lockheed Martin’s Greenville, S.C.-based Aircraft & Logistics Center will transfer much of the work to the Oklahoma Air Logistics Center at Tinker Air Force Base. Lockheed Martin and Tinker are teamed on the contract. Tinker will get about 1,500 jobs; Kelly will retain 1,400 jobs.