DHS awards $762.7M for P-3 aircraft maintenance, with Lockheed Martin as primary contractor

Contract Overview

Contract Amount: $762,695,109 ($762.7M)

Contractor: Lockheed Martin Aeronautical Systems Support Company

Awarding Agency: Department of Homeland Security

Start Date: 2009-08-01

End Date: 2019-12-31

Contract Duration: 3,804 days

Daily Burn Rate: $200.5K/day

Competition Type: FULL AND OPEN COMPETITION

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, 30062

State: Georgia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $762.7 million to LOCKHEED MARTIN AERONAUTICAL SYSTEMS SUPPORT COMPANY for work described as: P-3 AIRCRAFT MAINTENANCE AND LOGISTICS SUPPORT Key points: 1. Contract awarded via full and open competition, suggesting a competitive bidding process. 2. Long duration of the contract (over 10 years) indicates a sustained need for these services. 3. Cost-plus incentive fee contract type allows for shared risk and reward between government and contractor. 4. Primary contractor, Lockheed Martin, has significant experience in aerospace and defense. 5. The contract supports critical homeland security operations related to border protection. 6. The North American Industry Classification System (NAICS) code points to aircraft engine manufacturing, suggesting a focus on specialized parts and maintenance.

Value Assessment

Rating: fair

The total award amount of $762.7 million over approximately 10 years averages to about $76 million annually. Benchmarking this against similar long-term, complex aircraft maintenance contracts is challenging without more specific service details. However, the cost-plus incentive fee structure aims to control costs by incentivizing the contractor to stay within or below target costs. The initial award value provides a ceiling, but the final cost will depend on performance and achieved efficiencies.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit a bid. This typically leads to a more robust selection process and potentially better pricing due to market forces. The number of bidders is not specified, but the competitive nature suggests multiple entities vied for this significant contract.

Taxpayer Impact: A full and open competition generally benefits taxpayers by fostering a competitive environment that can drive down costs and improve service quality through innovation.

Public Impact

The U.S. Customs and Border Protection (CBP) benefits directly from this contract, ensuring the operational readiness of P-3 aircraft. These aircraft are crucial for maritime patrol, drug interdiction, and border surveillance missions. The contract supports specialized maintenance and logistics, ensuring the safety and effectiveness of these vital assets. Geographic impact is primarily national, supporting CBP's nationwide operational requirements. Workforce implications include the need for skilled technicians and logistics personnel, likely concentrated where maintenance facilities are located.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long-term nature of the contract could lead to contractor lock-in if not managed carefully.
Cost-plus contracts can sometimes incentivize higher spending if not rigorously overseen.
Reliance on a single primary contractor for critical maintenance could pose a risk if performance degrades.

Positive Signals

Awarded through full and open competition, indicating a competitive process.
Cost-plus incentive fee structure aligns contractor and government interests towards efficiency.
Contractor's extensive experience in aerospace likely ensures high-quality service delivery.
Sustained funding for critical homeland security assets demonstrates commitment to national security.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft maintenance and logistics support. The market for such services is substantial, driven by government procurement needs for maintaining aging fleets and ensuring operational readiness. Lockheed Martin is a major player in this sector, with a long history of supporting complex military and civilian aircraft. Comparable spending benchmarks would involve analyzing other large-scale sustainment contracts for similar aircraft types or platforms within defense and homeland security agencies.

Small Business Impact

The provided data indicates that small business participation (sb) is false, and there is no specific small business set-aside (ss) mentioned. This suggests the contract was not specifically targeted towards small businesses. Subcontracting opportunities for small businesses may exist, but they are not explicitly detailed in this summary. The impact on the small business ecosystem would depend on whether Lockheed Martin actively seeks small business subcontractors for specialized components or services.

Oversight & Accountability

Oversight for this contract would primarily fall under the U.S. Customs and Border Protection (CBP) contracting officers and program managers. As a cost-plus incentive fee contract, performance metrics and cost controls would be key areas of oversight. Transparency is generally facilitated through contract award databases and reporting requirements. While specific Inspector General (IG) jurisdiction isn't detailed here, the DHS Office of Inspector General typically has oversight over agency spending and contract performance.

Related Government Programs

P-3 Orion Aircraft Operations
Homeland Security Aircraft Procurement
Maritime Patrol Aircraft Sustainment
Aerospace Logistics Support Services
Department of Homeland Security Aviation Assets

Risk Flags

Long contract duration
Cost-plus contract type
Sole primary contractor reliance

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $762.7 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 $762.7 million.

What is the period of performance?

Start: 2009-08-01. End: 2019-12-31.

What is Lockheed Martin's track record with similar P-3 aircraft sustainment contracts?

Lockheed Martin has a long and established history with the P-3 Orion aircraft, having been the original manufacturer. Their experience spans decades, encompassing production, upgrades, and sustainment for various military branches and international partners. This includes extensive work on engine maintenance, airframe repair, avionics upgrades, and logistical support. Their deep institutional knowledge of the P-3 platform suggests a strong capability to fulfill the requirements of this DHS contract. Past performance reviews and contract close-outs for similar sustainment efforts would provide more granular detail on their performance regarding cost, schedule, and quality.

How does the annual cost of this contract compare to other large-scale aircraft maintenance contracts?

The approximate annual cost of $76 million for this P-3 aircraft maintenance and logistics support contract needs to be contextualized within the broader landscape of defense and homeland security aviation sustainment. Large, complex aircraft platforms like the P-3, especially those used for critical surveillance and interdiction missions, often incur significant annual operating and sustainment costs. Contracts for similar long-endurance patrol aircraft, such as the P-8 Poseidon or specialized surveillance aircraft, can range from tens to hundreds of millions of dollars annually, depending on fleet size, age, utilization rates, and the scope of services (e.g., depot-level maintenance, component repair, supply chain management). Without specific details on the number of aircraft supported and the exact services rendered, a precise comparison is difficult, but $76 million annually appears within the expected range for sustaining a specialized, high-demand aircraft fleet.

What are the primary risks associated with a cost-plus incentive fee (CPIF) contract for aircraft maintenance?

The primary risks with a CPIF contract for aircraft maintenance revolve around cost control and performance definition. While the incentive fee structure aims to align contractor and government interests by rewarding cost savings or performance improvements, there's a risk that the target costs set by the government may be too high, leading to excessive profits for the contractor without true efficiency gains. Conversely, if targets are too aggressive or performance metrics are poorly defined, the contractor may cut corners on quality or safety to meet objectives, potentially leading to reduced aircraft readiness or increased long-term maintenance costs. Effective oversight is crucial to ensure that the incentive structure genuinely drives value and that the contractor's performance meets all required standards, not just the incentivized ones.

How effective is the P-3 aircraft platform for U.S. Customs and Border Protection's mission?

The P-3 Orion aircraft platform has been a workhorse for U.S. Customs and Border Protection (CBP) and its predecessor agencies for decades, primarily due to its long endurance, robust sensor capabilities, and ability to operate effectively over large maritime and border areas. Its effectiveness stems from its suitability for persistent surveillance, maritime patrol, counter-narcotics interdiction, and search and rescue operations. The P-3's ability to loiter for extended periods allows CBP to maintain constant vigilance over vast expanses of the U.S. Exclusive Economic Zone and international waters. While newer platforms are being introduced, the P-3's proven capabilities and the ongoing investment in its sustainment underscore its continued importance and effectiveness in fulfilling critical homeland security missions.

What is the historical spending trend for P-3 aircraft maintenance and logistics support by DHS?

Historical spending data for P-3 aircraft maintenance and logistics support by the Department of Homeland Security (DHS) would likely show consistent, significant investment over the years, reflecting the platform's critical role in border security and maritime patrol. Prior to the consolidation under DHS, agencies like the U.S. Customs Service and the U.S. Coast Guard (which operates its own P-3 variants) would have had separate, substantial budgets for aircraft sustainment. Since DHS's formation, spending has been consolidated under U.S. Customs and Border Protection (CBP) for its P-3 fleet. Annual expenditures can fluctuate based on major maintenance cycles, upgrades, and operational tempo. The $762.7 million awarded over roughly ten years suggests an average annual commitment that aligns with the ongoing need to maintain a fleet of these specialized aircraft, likely reflecting a stable or slightly increasing trend in sustainment costs due to aging platforms and evolving mission requirements.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT LAUNCHING, LANDING, GROUND HANDLING AND SERVICING EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: HSBP1008R1145

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

Financial Breakdown

Contract Ceiling: $945,110,702

Exercised Options: $762,695,109

Current Obligation: $762,695,109

Actual Outlays: $219,976

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Timeline