Continuing its efforts to maintain a healthy supply chain, for the third week in a row Lockheed Martin [LMT] has accelerated payments to its subcontractor base to help it cope with the COVID-19 pandemic.
On Thursday the company said it has accelerated $50 million in payments to its suppliers, bringing to $156 million in accelerated payments from its own cash reserves to the companies that provide parts and services for its various programs.
On top of its own payments, Lockheed Martin said it is taking advantage of Defense Department policy changes in the past three weeks to pay its suppliers more quickly for their work due to challenges for businesses during the current health crisis.
“In addition, thanks to the DoD’s leadership and foresight in changing progress payment policy, we estimate that we will be able to flow down over $450 million in accelerated payments to our supply chain partners who are critical to supporting our economy and national security,” Lockheed Martin Chairman, President and CEO Marillyn Hewson, said in a statement.
The DoD last month changed its policy on progress payments, increasing them for large businesses from 80 to 90 percent and for small businesses from 90 to 95 percent, for work already performed under contracts.
“As we continue to face this unprecedented crisis, Lockheed Martin is driven by our commitment to the mission of our U.S. and allied customers,” Hewson said. “We will continue to maintain our operations for our men and women in uniform and we are resolved to find additional ways to contribute to the relieve and recovery of COVID-19.”
In late March and again in early April, Hewson announced a number of actions her company would be taking in response to the impacts the novel coronavirus was having on suppliers and the country.
In addition to accelerating payments to subcontractors, the company continues to hire employees, is donating $10 million to non-profit groups for COVID-19 relief, activated a disaster relief fund for its employees and retirees impacted by the virus, is offering engineering and technical capabilities to solve challenges across all levels of government, and donating its corporate aircraft, vehicles and facilities where needed to help with relief efforts.
Of the $10 million pledged in charity, Hewson said $6 million has been allocated so far, including $2 million through Project HOPE to deliver personal protection equipment to the Federal Emergency Management Agency destined for healthcare providers and first responders, $2 million to the Red Cross, and $2 million to a coronavirus emergency response fund.
She also said the company will use its corporate jets in an arrangement with the Department of Health and Human Services to fly government medical teams to “high-priority locations around the country.”