Pratt & Whitney awarded $339M indefinite delivery contract for aircraft engines and parts by the Air Force

Contract Overview

Contract Amount: $339,451,664 ($339.5M)

Contractor: RTX Corporation

Awarding Agency: Department of Defense

Start Date: 2007-06-29

End Date: 2009-03-31

Contract Duration: 641 days

Daily Burn Rate: $529.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: F117 INDEFINITE DELIVERY INDEFINITE QUANTITY CONTRACT WITH PRATT & WHITNEY

Place of Performance

Location: EAST HARTFORD, HARTFORD County, CONNECTICUT, 06108

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $339.5 million to RTX CORPORATION for work described as: F117 INDEFINITE DELIVERY INDEFINITE QUANTITY CONTRACT WITH PRATT & WHITNEY Key points: 1. The contract was awarded on a sole-source basis, raising questions about potential price efficiencies. 2. The duration of the contract (641 days) suggests a need for ongoing support for aircraft engines. 3. The fixed-price with economic price adjustment structure may expose the government to cost fluctuations. 4. The contractor, RTX Corporation (Pratt & Whitney), is a major player in the aerospace industry. 5. The contract's value of over $339 million indicates significant investment in aviation sustainment.

Value Assessment

Rating: fair

Benchmarking the value of this indefinite delivery contract is challenging without specific task order details. However, the fixed-price with economic price adjustment (FPEPA) pricing structure can lead to cost overruns if economic conditions change unfavorably for the government. Comparing this to other sole-source engine support contracts would be necessary for a more precise value assessment. The absence of competition inherently limits the government's ability to negotiate the best possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities or when urgency dictates. The lack of competition means the government did not benefit from a bidding process that could drive down prices through market forces.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no competitive pressure to ensure the lowest possible price is achieved.

Public Impact

The U.S. Air Force is the primary beneficiary, receiving essential aircraft engine and engine parts. This contract supports the operational readiness and sustainment of Air Force aircraft fleets. The geographic impact is likely national, supporting Air Force bases and operations across the United States. The contract supports jobs within the aerospace manufacturing and maintenance sectors, primarily at Pratt & Whitney facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Economic price adjustment clause introduces cost uncertainty.
Lack of detailed task order information hinders granular value assessment.

Positive Signals

Contract awarded to a known and established engine manufacturer.
Indefinite delivery contract provides flexibility for ongoing needs.
Fixed-price component offers some cost predictability.

Sector Analysis

This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector, a critical component of the broader aerospace and defense industry. This sector is characterized by high barriers to entry, significant R&D investment, and a limited number of major global players. Spending in this area is essential for maintaining military aviation capabilities. Comparable spending benchmarks would involve analyzing other engine sustainment contracts for various aircraft platforms across different military branches.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Given the nature of aircraft engine manufacturing and support, it is likely that the prime contractor, Pratt & Whitney, would subcontract with other specialized firms. The extent to which small businesses benefit would depend on the subcontracting opportunities created by Pratt & Whitney, which are not detailed in this award notice.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Air Force contracting officers and program managers. The contract type (fixed-price with economic price adjustment) necessitates careful monitoring of economic indicators to manage price adjustments. Transparency is limited by the sole-source nature and the proprietary aspects of engine technology and pricing. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Engine Procurement
Aviation Maintenance Services
Defense Logistics Agency Contracts
Air Force Sustainment Programs

Risk Flags

Sole-source award
Economic Price Adjustment clause
Lack of competition

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $339.5 million to RTX CORPORATION. F117 INDEFINITE DELIVERY INDEFINITE QUANTITY CONTRACT WITH PRATT & WHITNEY

Who is the contractor on this award?

The obligated recipient is RTX CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $339.5 million.

What is the period of performance?

Start: 2007-06-29. End: 2009-03-31.

What is the historical spending pattern for aircraft engine and engine parts with Pratt & Whitney by the Department of Defense?

Analyzing historical spending with Pratt & Whitney for aircraft engines and parts by the Department of Defense requires access to comprehensive contract databases. However, it is generally known that the DoD has a long-standing and substantial relationship with Pratt & Whitney for various engine programs across different aircraft platforms, including fighter jets and transport aircraft. This relationship often involves multi-year sustainment contracts, spare parts orders, and engine overhauls. The total historical spending would likely be in the billions of dollars, reflecting the critical nature of these components to national defense and the high cost associated with advanced aerospace technology. Without specific data for this contract vehicle and related task orders, a precise historical trend is difficult to establish, but the consistent need for engine support suggests a recurring and significant expenditure.

How does the pricing structure (Fixed Price with Economic Price Adjustment) compare to other engine support contracts?

The Fixed Price with Economic Price Adjustment (FPEPA) pricing structure is common for long-term contracts involving materials or labor costs that are subject to market volatility. In the context of aircraft engines, this means the base price is fixed, but adjustments are made based on pre-defined economic indices (e.g., inflation rates, raw material costs). Compared to a firm Fixed Price (FP) contract, FPEPA offers the contractor some protection against unforeseen cost increases, potentially leading to a slightly higher initial price but reducing the risk of contract modifications or disputes due to cost escalations. Conversely, it offers less price certainty for the government than a pure FP contract. Other engine support contracts might utilize Cost Plus contracts, which offer less price control for the government but ensure the contractor is reimbursed for all allowable costs, or performance-based logistics contracts that tie payment to availability and performance metrics.

What are the potential risks associated with a sole-source award for critical aircraft components?

A sole-source award for critical aircraft components like engines and parts carries several potential risks. Primarily, the lack of competition can lead to inflated prices, as the government does not benefit from the price discovery mechanisms inherent in a competitive bidding process. This can result in a higher overall cost to the taxpayer. Secondly, it can reduce the incentive for the sole-source provider to innovate or improve efficiency, as they face no direct market pressure from competitors. There's also a risk of vendor lock-in, making it difficult and costly to switch providers in the future. Furthermore, if the sole-source provider experiences financial difficulties or operational issues, it could severely disrupt the supply chain for critical defense assets, potentially impacting national security readiness.

What is the typical performance period for indefinite delivery contracts of this nature?

The performance period for indefinite delivery contracts (IDCs) can vary significantly based on the nature of the goods or services required and the agency's strategic planning. For a contract like this, supporting aircraft engines and parts, the duration of 641 days (approximately 21 months) for the base period is relatively standard for an IDC that anticipates future task orders. IDCs are designed to provide a framework for fulfilling needs over a longer period, often with options to extend. The total potential duration, including any exercised options, could extend for several years, allowing the Air Force to procure engines and parts as needed without re-competing the basic contract vehicle each time. This flexibility is key to managing sustainment requirements efficiently.

How does the PSC code '336412' relate to the contract description?

The Product and Service Code (PSC) '336412' directly corresponds to 'Aircraft Engines and Engine Parts Manufacturing'. This code is assigned by the government to categorize the type of goods or services being procured. In this case, it accurately reflects the contract's purpose, which is to provide aircraft engines and related parts. The alignment between the PSC code and the contract description ensures that procurement data is accurately classified and searchable, facilitating analysis of spending within specific industry sectors and product categories. It confirms that the contract is for the manufacturing or supply of these specific aerospace components.

Industry Classification

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

Product/Service Code: ENGINES AND TURBINES AND COMPONENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp (UEI: 001344142)

Address: 400 MAIN ST, EAST HARTFORD, CT, 01

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $339,451,664

Exercised Options: $339,451,664

Current Obligation: $339,451,664

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA862607D2073

IDV Type: IDC

Timeline