DHS awards $36.7M P-3 Aircraft Maintenance Contract to Lockheed Martin, raising competition concerns

Contract Overview

Contract Amount: $36,655,026 ($36.7M)

Contractor: Lockheed Martin Aeronautical Systems Support Company

Awarding Agency: Department of Homeland Security

Start Date: 2020-04-01

End Date: 2020-12-31

Contract Duration: 274 days

Daily Burn Rate: $133.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: P-3 AIRCRAFT MAINTENANCE AND LOGISTICS SUPPORT

Place of Performance

Location: MARIETTA, COBB County, GEORGIA, 30063

State: Georgia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $36.7 million to LOCKHEED MARTIN AERONAUTICAL SYSTEMS SUPPORT COMPANY for work described as: P-3 AIRCRAFT MAINTENANCE AND LOGISTICS SUPPORT Key points: 1. Significant contract value of $36.7M for specialized aircraft maintenance. 2. Sole-source award to Lockheed Martin limits competitive pricing. 3. Potential risk associated with single-source provider for critical defense assets. 4. Spending falls within the broader Defense and Aerospace sector.

Value Assessment

Rating: questionable

The contract's cost-plus incentive fee structure allows for cost overruns, and the lack of competition makes it difficult to benchmark pricing against similar services. The awarded amount of $36.7M needs further scrutiny against industry standards for P-3 maintenance.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Lockheed Martin. This significantly limits price discovery and potentially leads to higher costs for taxpayers as there was no competitive pressure to drive down the price.

Taxpayer Impact: The lack of competition in this sole-source award likely results in a higher cost to taxpayers than if the contract had been competitively bid.

Public Impact

Taxpayers may be overpaying due to the absence of competitive bidding. The operational readiness of P-3 aircraft, crucial for border security, depends on this sole provider. Lack of transparency in pricing due to sole-source nature hinders public trust.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Cost-plus contract type
Lack of competition
Limited transparency

Positive Signals

Supports critical national security assets (P-3 aircraft)
Contract awarded to a known industry leader

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on maintenance and logistics for specialized aircraft. Spending benchmarks for such niche services are often difficult to establish due to proprietary technology and limited market players.

Small Business Impact

The contract was awarded to Lockheed Martin, a large prime contractor, and there is no indication of subcontracting opportunities for small businesses in the provided data. This award does not appear to directly benefit small businesses.

Oversight & Accountability

The sole-source nature of this award warrants close oversight to ensure fair pricing and performance. Accountability would involve tracking cost performance against incentives and ensuring the contractor meets all contractual obligations for P-3 maintenance.

Related Government Programs

Aircraft Manufacturing
Department of Homeland Security Contracting
U.S. Customs and Border Protection Programs

Risk Flags

Sole-source award lacks competition.
Cost-plus contract type can lead to cost overruns.
Limited transparency in pricing and performance.
Potential for contractor lock-in.
Reliance on a single provider for critical assets.

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $36.7 million to LOCKHEED MARTIN AERONAUTICAL SYSTEMS SUPPORT COMPANY. P-3 AIRCRAFT MAINTENANCE AND LOGISTICS SUPPORT

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN AERONAUTICAL SYSTEMS SUPPORT COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (U.S. Customs and Border Protection).

What is the total obligated amount?

The obligated amount is $36.7 million.

What is the period of performance?

Start: 2020-04-01. End: 2020-12-31.

What is the justification for awarding this contract on a sole-source basis, and what steps were taken to ensure fair and reasonable pricing?

The justification for a sole-source award typically involves unique capabilities or proprietary technology held by the contractor. However, without a competitive process, it is crucial for the agency to conduct thorough market research and price analysis to ensure the negotiated price is fair and reasonable. This includes comparing costs to similar services, analyzing labor rates, and scrutinizing material costs.

What are the risks associated with relying on a single contractor for critical aircraft maintenance, and are there contingency plans in place?

The primary risk is the potential for service disruptions, price gouging, or a decline in service quality due to the lack of competitive pressure. Contingency plans should include identifying potential alternative providers, developing in-house capabilities, or establishing robust performance metrics and penalties within the current contract to mitigate these risks.

How does the cost-plus incentive fee structure impact overall spending and contractor performance for P-3 aircraft maintenance?

A cost-plus incentive fee (CPIF) contract aims to incentivize the contractor to control costs by sharing savings or overruns with the government. While it can encourage efficiency, the inherent cost-reimbursement nature means the government still bears the base costs. The effectiveness depends on the clarity of the incentive targets and the government's ability to monitor performance and costs accurately.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: 70B02C20R00000045

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp

Address: 86 S COBB DR, MARIETTA, GA, 30063

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $63,179,261

Exercised Options: $36,655,026

Current Obligation: $36,655,026

Actual Outlays: $-20,683

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline