Lockheed Martin awarded $764.9M for P-3 Orion aircraft component modifications, impacting defense electronics

Contract Overview

Contract Amount: $76,487,918 ($76.5M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2001-08-06

End Date: 2007-05-30

Contract Duration: 2,123 days

Daily Burn Rate: $36.0K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200112!001358!1700!AC522 !NAVAL AIR SYSTEMS COMMAND !N0001901C0160 !A!N!*!N! !20010806!20060330!078669280!078669280!834951691!N!LOCKHEED MARTIN CORPORATION !3333 PILOT KNOB RD !EAGAN !MN!55121!17288!037!27!EAGAN !DAKOTA !MINNESOTA !+000073400000!Y!N!000000000000!K016!MODIFICATION OF EQ/AIRCRAFT COMPS & ACCYS !A7 !ELECTRONICS AND COMMUNICATION !2APC!P-3 ORION !334511!*!*!3! ! ! !*!*!*!B!*!*!N!Z!D !N!J!1!001!N!1A!A!Y!A! ! !N!C!N! ! ! !A!A!A!A!* !A!C!N! ! ! !Y! ! !0001!

Place of Performance

Location: SAINT PAUL, DAKOTA County, MINNESOTA, 55121

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $76.5 million to LOCKHEED MARTIN CORP for work described as: 200112!001358!1700!AC522 !NAVAL AIR SYSTEMS COMMAND !N0001901C0160 !A!N!*!N! !20010806!20060330!078669280!078669280!834951691!N!LOCKHEED MARTIN CORPORATION !3333 PILOT KNOB RD !EAGAN !MN!55121!17288!037!27!EAGAN !DAKOT… Key points: 1. Contract value represents significant investment in maintaining aging P-3 Orion fleet. 2. Sole-source award suggests limited market alternatives for specialized aircraft components. 3. Long contract duration indicates ongoing need for sustainment and upgrades. 4. Fixed-price contract type shifts performance risk to the contractor. 5. Focus on electronics and communication systems highlights critical mission support. 6. Geographic concentration in Minnesota for contractor operations.

Value Assessment

Rating: fair

The contract value of $764.9 million over its period of performance is substantial, reflecting the complexity and specialized nature of aircraft component modification. Without direct comparable contracts for the same P-3 Orion components, a precise value-for-money assessment is challenging. However, the fixed-price nature of the contract aims to control costs, but the sole-source award mechanism may limit competitive pressure that could drive down prices. Further analysis would require benchmarking against similar sustainment contracts for other legacy aircraft platforms.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that only one contractor, Lockheed Martin Corporation, was deemed capable of performing the required modifications. This approach is often used when specialized knowledge, proprietary technology, or unique capabilities are necessary, and competition is not feasible or practical. The lack of competition means that pricing was not subjected to market forces, potentially leading to higher costs for the government compared to a competed contract.

Taxpayer Impact: The sole-source nature of this award means taxpayers did not benefit from competitive bidding, which typically results in lower prices. The government relied on negotiation to secure a fair price, but the absence of multiple offers limits the government's leverage.

Public Impact

The primary beneficiaries are the U.S. Navy and potentially other operators of the P-3 Orion aircraft, ensuring continued operational readiness. Services delivered include the modification of equipment and aircraft components, specifically related to electronics and communication systems. The geographic impact is primarily centered around Lockheed Martin's facility in Eagan, Minnesota, where the work is performed. Workforce implications include employment for skilled technicians, engineers, and support staff involved in aircraft modification and sustainment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Long contract duration may indicate a lack of viable alternatives or a need for sustained support for an aging platform.
Modification of existing components, rather than new development, could imply obsolescence issues with the current systems.

Positive Signals

Fixed-price contract type provides cost certainty and shifts risk to the contractor.
Focus on critical electronics and communication systems ensures mission capability.
Contractor's established relationship with the platform suggests expertise in P-3 Orion sustainment.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft sustainment and modification. The P-3 Orion is a long-serving maritime patrol aircraft, and contracts for its maintenance and upgrades are crucial for maintaining fleet readiness. The market for specialized aircraft component modification is often dominated by a few key players with the necessary technical expertise and security clearances. Comparable spending benchmarks would involve looking at other sustainment contracts for legacy military aircraft.

Small Business Impact

There is no indication of small business set-asides or subcontracting plans within the provided data. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely limited unless Lockheed Martin actively engages them for specific components or services. Further investigation into subcontracting opportunities would be necessary to assess the broader impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with contract terms and quality standards. The fixed-price nature of the contract provides a degree of cost control. Transparency is facilitated through contract databases, but detailed performance metrics and specific oversight activities are not publicly available.

Related Government Programs

P-3 Orion Sustainment Programs
Naval Aviation Component Modernization
Defense Electronics and Communication Systems
Aerospace Manufacturing and Modification

Risk Flags

Sole-source award may lead to higher costs.
Contract duration is lengthy, potentially indicating reliance on aging technology.
Lack of competition limits market price discovery.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $76.5 million to LOCKHEED MARTIN CORP. 200112!001358!1700!AC522 !NAVAL AIR SYSTEMS COMMAND !N0001901C0160 !A!N!*!N! !20010806!20060330!078669280!078669280!834951691!N!LOCKHEED MARTIN CORPORATION !3333 PILOT KNOB RD !EAGAN !MN!55121!17288!037!27!EAGAN !DAKOTA !MINNESOTA !+000073400000!Y!N!000000000000!K016!MODIFICATION OF EQ/AIRCRAFT COMPS & ACCYS !A7 !ELECTRONICS AND COMMUNICATION !2APC!P-3 ORION !334511!*!*!3! ! ! !*!*!*!B!*!*!N!

Who is the contractor on this award?

The obligated recipient is LOCKHEED MARTIN CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $76.5 million.

What is the period of performance?

Start: 2001-08-06. End: 2007-05-30.

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

Lockheed Martin Corporation has a long-standing history with the P-3 Orion aircraft, having been the original manufacturer and a primary contractor for its sustainment and upgrades over several decades. Their involvement includes various modifications, maintenance, and support services aimed at extending the operational life of the P-3 fleet. Given their deep institutional knowledge and established infrastructure for this specific platform, their track record is generally considered strong within the context of legacy aircraft support. However, specific performance metrics and past issues related to cost overruns or schedule delays on similar contracts would require a deeper dive into historical contract data and performance reviews.

How does the $764.9 million contract value compare to similar P-3 Orion sustainment efforts?

Directly comparing the $764.9 million value to identical P-3 Orion sustainment efforts is challenging without access to specific contract details for comparable periods and scopes of work. However, the magnitude of this award suggests a significant, multi-year effort focused on critical component modifications. Sustainment contracts for legacy aircraft platforms can range from tens to hundreds of millions of dollars, depending on the scope, duration, and complexity of the required services. This particular contract's value is substantial and aligns with the ongoing need to maintain aging, but still vital, military assets like the P-3 Orion. Benchmarking against contracts for other long-serving aircraft like the C-130 or older fighter jets might offer broader context.

What are the primary risks associated with this sole-source contract for the government?

The primary risk for the government with this sole-source contract is the potential for inflated pricing due to the lack of competitive bidding. Without competing offers, the government has less leverage to negotiate the lowest possible price. There's also a risk of contractor complacency or reduced incentive to innovate or improve efficiency, as there is no direct competition to spur such actions. Furthermore, reliance on a single source can create vulnerabilities if the contractor experiences financial difficulties, operational disruptions, or decides to exit the market, potentially leaving the government without viable alternatives for critical support.

How effective is the fixed-price contract type in managing costs for this type of aircraft modification?

The fixed-price contract type is generally considered effective in managing costs for well-defined scopes of work, as it shifts the financial risk of cost overruns to the contractor. For aircraft component modifications where the requirements are clearly specified, this structure provides budget certainty for the government. However, if unforeseen technical challenges arise during the modification process that were not adequately anticipated in the initial scope, the contractor may seek change orders, which can increase the overall cost. The effectiveness also depends on the contractor's ability to accurately estimate costs and manage their own internal expenses throughout the contract period.

What are the historical spending patterns for P-3 Orion sustainment and modification by the Navy?

Historical spending on P-3 Orion sustainment and modification by the Navy has been substantial over the aircraft's long service life. As a critical platform for maritime patrol and reconnaissance, significant investments have been made to maintain its operational readiness and upgrade its systems to meet evolving threats and technological advancements. Spending has likely fluctuated over the years, with peaks during major upgrade programs and consistent levels for routine maintenance and component replacements. The transition to newer platforms like the P-8 Poseidon has influenced overall spending trends, but dedicated sustainment for the remaining P-3 fleet continues to represent a significant budgetary item.

What is the significance of the 'Electronics and Communication' focus within this contract?

The emphasis on 'Electronics and Communication' systems within this contract is highly significant, as these are critical components for the P-3 Orion's mission effectiveness. Modernizing or modifying these systems can enhance the aircraft's capabilities in areas such as surveillance, intelligence gathering, navigation, and communication with other assets. In an era where electronic warfare and advanced sensor technology are paramount, ensuring these systems are up-to-date and functioning optimally is crucial for maintaining a strategic advantage and fulfilling the P-3's role in national security. This focus indicates a priority on maintaining the 'eyes and ears' of the aircraft.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Contractor Details

Address: 3333 PILOT KNOB RD, EAGAN, MN, 02

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

Contract Characteristics

Cost or Pricing Data: YES

Timeline