Lockheed Martin awarded $161M for P-3 Orion aircraft components, with a significant portion for modifications

Contract Overview

Contract Amount: $161,273,068 ($161.3M)

Contractor: Lockheed Martin Corp

Awarding Agency: Department of Defense

Start Date: 2001-10-01

End Date: 2008-10-30

Contract Duration: 2,586 days

Daily Burn Rate: $62.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200208!000408!1700!AC522 !NAVAL AIR SYSTEMS COMMAND !N0001999C1275 !A!N! !N!P00005 !20000119!20020530!078669280!078669280!834951691!N!LOCKHEED MARTIN CORPORATION !3333 PILOT KNOB RD !SAINT PAUL !MN!55121!58000!123!27!ST. PAUL !RAMSEY !MINNESOTA !+000025821274!N!N!000000000000!K016!MODIFICATION OF EQ/AIRCRAFT COMPS & ACCYS !A1C!OTHER AIRCRAFT EQUIPMENT !2APC!P-3 ORION !336411!E! !3! ! !D! ! !99990909!B! ! !A! !A!N!J!2!002!B! !A!Y!A! ! !N!C!N! ! ! !C!C!A!A!000!A!C!N! ! ! !Y! !N00019!0001!

Place of Performance

Location: SAINT PAUL, DAKOTA County, MINNESOTA, 55121

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $161.3 million to LOCKHEED MARTIN CORP for work described as: 200208!000408!1700!AC522 !NAVAL AIR SYSTEMS COMMAND !N0001999C1275 !A!N! !N!P00005 !20000119!20020530!078669280!078669280!834951691!N!LOCKHEED MARTIN CORPORATION !3333 PILOT KNOB RD !SAINT PAUL !MN!55121!58000!123!27!ST. PAUL !RAMSE… Key points: 1. Contract value of over $161 million for aircraft components and modifications. 2. Awarded to Lockheed Martin Corporation, a major defense contractor. 3. Contract duration spans over 7 years, indicating a long-term need. 4. Primarily focused on 'Other Aircraft Equipment' and modifications. 5. Awarded as a definitive contract with a firm fixed-price structure. 6. No small business set-aside was utilized for this contract.

Value Assessment

Rating: fair

The total award of $161,273,068.05 for aircraft components and modifications appears substantial. Benchmarking this against similar contracts for P-3 Orion parts and services is difficult without more granular data on the specific components and modification types. However, the duration of the contract (over 7 years) suggests a significant scope of work. The firm fixed-price nature of the contract shifts risk to the contractor, which can be beneficial for the government if costs are well-managed.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source procurement, meaning it was not competed among multiple vendors. Sole-source awards are typically justified when only one vendor can provide the required goods or services, often due to proprietary technology, unique capabilities, or existing system integration. The lack of competition means the government did not benefit from potential price reductions or innovative solutions that might arise from a competitive bidding process.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing the award, there is less assurance that the price reflects the best possible value achievable in a market environment.

Public Impact

The primary beneficiary is the U.S. Navy, which operates the P-3 Orion aircraft. Services delivered include the modification of equipment and aircraft components for the P-3 Orion. The geographic impact is likely concentrated around naval air stations and maintenance facilities where P-3 Orions are operated and maintained. Workforce implications include employment for engineers, technicians, and support staff at Lockheed Martin and its subcontractors involved in aircraft modification and component manufacturing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential innovation.
Long contract duration could lead to cost overruns if not managed effectively.
Focus on modifications suggests potential aging of the P-3 Orion fleet, requiring ongoing investment.

Positive Signals

Firm fixed-price contract shifts cost risk to the contractor.
Award to a major defense contractor like Lockheed Martin suggests access to specialized expertise for P-3 Orion systems.
Contract addresses a specific, long-term need for aircraft sustainment and upgrades.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft parts and modification services. The market for specialized military aircraft components and sustainment is often dominated by a few large prime contractors due to the complexity, security requirements, and long-standing relationships with government agencies. Spending in this area is driven by the need to maintain and modernize aging fleets, such as the P-3 Orion, which has been in service for decades.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements mentioned in the provided data. The award to a large prime contractor like Lockheed Martin suggests that the bulk of the work will be performed by the prime or its large subcontractors, potentially limiting opportunities for small businesses in this specific procurement. Further analysis of subcontracting plans would be needed to fully assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management and administration structures, likely through the Defense Contract Management Agency (DCMA). Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver specified goods and services within the agreed-upon price. Transparency is generally maintained through contract award databases and reporting requirements, though detailed performance metrics may not always be publicly accessible.

Related Government Programs

P-3 Orion Sustainment Programs
Naval Aviation Component Manufacturing
Aerospace Modification Services
Defense Logistics Agency (DLA) Aviation

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns on long-term contracts
Aging aircraft platform requiring continuous investment

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $161.3 million to LOCKHEED MARTIN CORP. 200208!000408!1700!AC522 !NAVAL AIR SYSTEMS COMMAND !N0001999C1275 !A!N! !N!P00005 !20000119!20020530!078669280!078669280!834951691!N!LOCKHEED MARTIN CORPORATION !3333 PILOT KNOB RD !SAINT PAUL !MN!55121!58000!123!27!ST. PAUL !RAMSEY !MINNESOTA !+000025821274!N!N!000000000000!K016!MODIFICATION OF EQ/AIRCRAFT COMPS & ACCYS !A1C!OTHER AIRCRAFT EQUIPMENT !2APC!P-3 ORION !336411!E! !3! ! !D! ! !99990909!B

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 $161.3 million.

What is the period of performance?

Start: 2001-10-01. End: 2008-10-30.

What specific modifications are included in this contract for the P-3 Orion aircraft components?

The provided data indicates the contract is for 'MODIFICATION OF EQ/AIRCRAFT COMPS & ACCYS' for the P-3 Orion. However, the specific nature of these modifications is not detailed. Typically, such modifications could include upgrades to avionics, structural enhancements, integration of new sensor systems, or improvements to operational efficiency and safety. Without further documentation, such as the contract's Statement of Work (SOW) or technical exhibits, the precise scope of modifications remains unspecified. These modifications are crucial for extending the operational life of aging aircraft like the P-3 Orion and ensuring they meet current mission requirements.

How does the $161 million award compare to historical spending on P-3 Orion modifications and components?

Comparing the $161 million award to historical spending requires access to detailed historical contract data for the P-3 Orion program. The P-3 Orion has a long service history, and numerous contracts have been awarded over the decades for its sustainment, modification, and component replacement. This specific award, covering a period from 2001 to 2008, represents a significant investment. To benchmark it effectively, one would need to aggregate spending on similar modification and component contracts over comparable timeframes, adjusting for inflation and the evolving technological landscape. Given the P-3's age, ongoing modification contracts are expected, but the relative size of this award would need to be assessed against the total lifecycle cost of the platform.

What are the primary risks associated with a sole-source award of this magnitude for aircraft modifications?

The primary risk associated with a sole-source award of this magnitude is the potential for inflated pricing due to the lack of competitive pressure. Without competing the contract, the government may not achieve the best possible price. Another risk is reduced incentive for the contractor to innovate or improve efficiency, as there is no direct competition to spur such actions. Furthermore, sole-source awards can create vendor lock-in, making it difficult and costly to switch providers in the future. There's also a risk that the contractor may not have the most cost-effective or technically superior solution available compared to what might have emerged from a competitive process.

What is the expected impact of these modifications on the P-3 Orion's operational capabilities?

The modifications under this contract are expected to enhance or sustain the operational capabilities of the P-3 Orion aircraft. While specific details are not provided, modifications to aircraft components and equipment typically aim to improve reliability, maintainability, safety, and performance. For a platform like the P-3 Orion, which has been in service for many years, modifications often involve upgrading outdated systems (e.g., avionics, communication, sensor suites) to meet modern mission requirements, improve fuel efficiency, reduce the logistical footprint, or extend the airframe's service life. These upgrades are crucial for ensuring the P-3 remains a viable asset for its intended roles, such as maritime patrol and anti-submarine warfare.

What is Lockheed Martin's track record with the P-3 Orion program and similar aircraft modification contracts?

Lockheed Martin has a long and extensive track record with the P-3 Orion program, as they were the original manufacturer of the aircraft. This deep historical involvement provides them with unparalleled institutional knowledge regarding the P-3's design, systems, and maintenance requirements. Consequently, they are well-positioned to undertake modification and component contracts for the platform. Their experience extends to numerous other military aircraft programs, where they have consistently managed complex modifications, upgrades, and sustainment efforts. This established expertise suggests a high likelihood of successful contract performance, although the specific outcomes of past contracts, including cost and schedule adherence, would require detailed review.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 3333 PILOT KNOB RD, SAINT PAUL, MN, 55121

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

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline