Homeland Security awards $22M for P-3 aircraft parts, with Lockheed Martin as the sole awardee

Contract Overview

Contract Amount: $22,065,092 ($22.1M)

Contractor: Lockheed Martin Aeronautical Systems Support Company

Awarding Agency: Department of Homeland Security

Start Date: 2012-04-09

End Date: 2013-04-08

Contract Duration: 364 days

Daily Burn Rate: $60.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: TWO WING SETS FOR US CBP'S P-3 AIRCRAFT, TWO HORIZONTAL STABLIZER LEADING EDGES, TWO INBOARD NACELLE UPPER LONGERONS.

Place of Performance

Location: MARIETTA, COBB County, GEORGIA, 30062

State: Georgia Government Spending

Plain-Language Summary

Department of Homeland Security obligated $22.1 million to LOCKHEED MARTIN AERONAUTICAL SYSTEMS SUPPORT COMPANY for work described as: TWO WING SETS FOR US CBP'S P-3 AIRCRAFT, TWO HORIZONTAL STABLIZER LEADING EDGES, TWO INBOARD NACELLE UPPER LONGERONS. Key points: 1. The contract value represents a significant investment in maintaining critical aviation assets for border security. 2. The award to Lockheed Martin suggests a reliance on established manufacturers for specialized aircraft components. 3. The fixed-price nature of the contract aims to control costs, but the single awardee warrants scrutiny for potential price inflation. 4. The short duration of the delivery order indicates a focus on immediate component needs rather than long-term sustainment. 5. The lack of small business involvement raises questions about broader economic participation in defense contracting. 6. The specific components procured are vital for the operational readiness of the P-3 aircraft fleet.

Value Assessment

Rating: fair

The contract value of $22,065,092 for aircraft parts appears substantial. Benchmarking against similar contracts for P-3 component replacements is difficult without more specific part details and market data. However, the award to a single, large incumbent contractor like Lockheed Martin can sometimes lead to higher pricing than a more competitive environment might yield. The fixed-price structure provides some cost certainty, but the overall value for money depends on the necessity and urgency of these specific parts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. However, the data only shows one awardee, Lockheed Martin. This could mean that while competition was allowed, Lockheed Martin was the only or the most competitive bidder for these specific, specialized aircraft parts. Further analysis would be needed to determine the number of bids received and the extent of actual competition.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it encourages multiple vendors to offer their best prices, potentially leading to cost savings. However, if only one capable bidder exists for highly specialized parts, the competitive pressure may be limited, impacting price discovery.

Public Impact

The primary beneficiaries are U.S. Customs and Border Protection (CBP) and the Department of Homeland Security, ensuring the operational readiness of their P-3 aircraft fleet. The services delivered involve the manufacturing and supply of critical structural components for these aircraft. The geographic impact is primarily national, supporting federal law enforcement and border security operations. The contract supports jobs within the aerospace manufacturing sector, specifically at Lockheed Martin's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for limited competition despite 'full and open' designation if only one bidder was truly capable.
Reliance on a single contractor for critical components could create supply chain vulnerabilities.
Lack of specific details on the parts makes it difficult to assess if the price is competitive.

Positive Signals

Awarded under full and open competition, suggesting an attempt to solicit the best value.
Fixed-price contract type helps to control costs and provides budget certainty.
Procurement of essential aircraft parts directly supports national security and border protection missions.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, a critical industry for national security. The market for specialized aircraft parts is often dominated by original equipment manufacturers (OEMs) due to proprietary designs and manufacturing expertise. Spending in this area is driven by the need to maintain aging fleets of sophisticated aircraft, such as the P-3, which are essential for surveillance and interdiction missions. Comparable spending benchmarks would typically involve analyzing other contracts for similar aircraft component sustainment.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Given the specialized nature of aircraft manufacturing and the award to a large prime contractor, it is unlikely that significant subcontracting opportunities for small businesses exist directly related to the manufacturing of these specific components. However, the overall ecosystem of defense contracting often involves small businesses in lower-tier supply chains or support services.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Homeland Security's contracting and procurement offices, as well as the U.S. Customs and Border Protection. Inspector General oversight is also a standard mechanism for federal contracts to ensure accountability and prevent fraud. Transparency is facilitated through contract databases like FPDS, although detailed justifications for sole-source awards or specific pricing breakdowns are not always publicly available.

Related Government Programs

Aircraft Sustainment Programs
Aerospace Component Manufacturing
Homeland Security Aviation Assets
Border Patrol Aircraft Operations
Defense Logistics Agency (DLA) Aviation

Risk Flags

Potential for sole-source dependency despite full and open competition.
Aging aircraft platform may incur higher sustainment costs.
Lack of small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $22.1 million to LOCKHEED MARTIN AERONAUTICAL SYSTEMS SUPPORT COMPANY. TWO WING SETS FOR US CBP'S P-3 AIRCRAFT, TWO HORIZONTAL STABLIZER LEADING EDGES, TWO INBOARD NACELLE UPPER LONGERONS.

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 $22.1 million.

What is the period of performance?

Start: 2012-04-09. End: 2013-04-08.

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

Lockheed Martin has a long history with the P-3 Orion aircraft, having been the original manufacturer. Their track record with sustainment contracts for this platform is extensive, encompassing various upgrades, maintenance, and component replacements over decades. This includes support for P-3 variants used by different military and civilian agencies. Their deep institutional knowledge and established supply chains for P-3 parts make them a logical, often sole-source, provider for many critical components. However, this long-standing relationship can also lead to concerns about cost competitiveness compared to potential new entrants or alternative sustainment strategies.

How does the $22 million award compare to historical spending on P-3 aircraft parts?

Without specific details on the exact parts procured, a direct comparison of the $22 million award to historical spending is challenging. However, the P-3 Orion is an aging aircraft platform, and its sustainment costs, including parts replacement, are known to be significant. Agencies like CBP and the Navy have historically allocated substantial budgets towards keeping these aircraft operational. A single delivery order of this magnitude suggests a need for major components, potentially indicating a period of increased maintenance or a specific upgrade requirement. Analyzing annual spending trends for P-3 sustainment by CBP over the past decade would provide better context for whether this award is within expected ranges or represents an anomaly.

What are the primary risks associated with this contract?

The primary risks associated with this contract include potential cost overruns if the fixed-price contract does not adequately account for unforeseen manufacturing challenges or material cost increases. There is also a risk of supply chain disruption if Lockheed Martin faces production issues. Given that Lockheed Martin is the original manufacturer, there's a risk of limited competition driving up prices over time, especially if future needs arise for similar components. Furthermore, the reliance on specific, potentially proprietary, parts could create vendor lock-in, making it difficult and costly to switch providers or find alternatives for future procurements.

How effective is the P-3 aircraft platform for CBP's mission, and does this contract support that effectiveness?

The P-3 aircraft platform has been a workhorse for CBP's aviation assets, particularly for long-endurance maritime surveillance, drug interdiction, and homeland security missions. Its robust design and sensor capabilities make it well-suited for covering vast areas of responsibility. This contract, by providing essential wing sets and stabilizer leading edges, directly supports the operational readiness and effectiveness of the P-3 fleet. Ensuring the availability of these critical components is vital for maintaining the aircraft's airworthiness and its ability to perform its demanding surveillance and interdiction roles, thereby contributing directly to CBP's mission success.

What is the typical lead time for manufacturing specialized aircraft components like those for the P-3?

The typical lead time for manufacturing specialized aircraft components, such as wing sets and stabilizer leading edges for a platform like the P-3, can vary significantly. Factors influencing lead time include the complexity of the part, the availability of raw materials, the manufacturer's current production schedule, and whether the parts are already in the company's inventory or require new production runs. For major structural components, lead times can range from several months to over a year. Lockheed Martin, as the OEM, likely has established processes and potentially some inventory, but the specific order volume and production capacity would dictate the exact delivery timeline, which in this case was within a year (364 days).

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Lockheed Martin Corp (UEI: 834951691)

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: $22,065,092

Exercised Options: $22,065,092

Current Obligation: $22,065,092

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HSBP1008D01906

IDV Type: IDC

Timeline