DoD's $41.9M sole-source aircraft engine contract awarded to ITT Corporation raises value concerns

Contract Overview

Contract Amount: $41,896,499 ($41.9M)

Contractor: ITT Corporation

Awarding Agency: Department of Defense

Start Date: 2005-11-01

End Date: 2013-04-16

Contract Duration: 2,723 days

Daily Burn Rate: $15.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COMBINATION (TWO OR MORE)

Sector: Defense

Official Description: LRIP

Place of Performance

Location: CLIFTON, PASSAIC County, NEW JERSEY, 07014

State: New Jersey Government Spending

Plain-Language Summary

Department of Defense obligated $41.9 million to ITT CORPORATION for work described as: LRIP Key points: 1. The contract's sole-source nature limits price discovery and potentially increases costs for taxpayers. 2. Lack of competition suggests potential risks in contractor performance and innovation. 3. The extended duration of the contract (over 7 years) warrants scrutiny of ongoing necessity and pricing. 4. Awarded to a single bidder, this contract bypasses competitive processes designed to ensure best value. 5. The absence of small business set-asides or subcontracting goals may limit broader economic participation.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific, likely specialized, nature of aircraft engines and parts. Without competitive bids, it's difficult to ascertain if the $41.9 million price reflects fair market value or if a more competitive process could have yielded significant savings. The lack of transparency in pricing mechanisms for sole-source awards necessitates a closer look at cost justification and potential overpricing.

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. This approach is typically used when only one responsible source can fulfill the requirement. However, it bypasses the competitive dynamics that usually drive down prices and encourage innovation. The lack of multiple bidders means there was no direct price comparison or incentive for the contractor to offer its best possible pricing.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government does not benefit from the price reductions typically achieved through competitive bidding. This limits the government's ability to secure the most economical solution.

Public Impact

This contract directly supports U.S. Special Operations Command's aviation readiness and operational capabilities. The services provided ensure the continued functioning of critical aircraft engines and related parts for special operations missions. The contract's impact is primarily on the military's operational effectiveness rather than a broad public service. Workforce implications are likely concentrated within ITT Corporation and its direct suppliers in the aerospace manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to higher costs.
Extended contract duration without clear performance metrics could indicate complacency.
Lack of transparency in pricing for sole-source contracts makes value assessment difficult.
Absence of small business participation requirements misses opportunities for economic inclusion.

Positive Signals

Contract supports critical national defense requirements for U.S. Special Operations Command.
ITT Corporation is a known entity in the aerospace manufacturing sector, suggesting some level of established capability.
The contract was awarded by the Department of Defense, implying adherence to established procurement regulations.

Sector Analysis

This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector, a specialized segment of the broader aerospace industry. This sector is characterized by high barriers to entry, significant R&D investment, and often involves complex, high-value components. Spending in this area is critical for maintaining military aviation readiness. Comparable spending benchmarks are difficult to establish without knowing the specific engine type and required parts, but defense procurement in aerospace manufacturing represents a substantial portion of federal R&D and acquisition budgets.

Small Business Impact

This contract does not appear to have included small business set-asides, nor is there information indicating subcontracting goals for small businesses. Awarded as a sole-source contract, it bypasses the typical mechanisms for ensuring small business participation. This limits opportunities for small businesses to contribute to critical defense supply chains and potentially benefit from government contracts.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and auditing functions, including the Defense Contract Management Agency (DCMA) and potentially the Department of Defense Office of Inspector General (DoD OIG). Transparency is limited due to the sole-source nature, but accountability would be measured through contract performance monitoring and financial audits. The specific oversight mechanisms for sole-source, non-competed awards often focus on justification and necessity.

Related Government Programs

Defense Logistics Agency (DLA) Aviation
Naval Air Systems Command (NAVAIR) Contracts
Air Force Materiel Command (AFMC) Procurement
General Services Administration (GSA) Federal Supply Schedule

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Limited transparency in value assessment

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $41.9 million to ITT CORPORATION. LRIP

Who is the contractor on this award?

The obligated recipient is ITT CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (U.S. Special Operations Command).

What is the total obligated amount?

The obligated amount is $41.9 million.

What is the period of performance?

Start: 2005-11-01. End: 2013-04-16.

What specific aircraft engines and parts were covered under this contract, and what was the justification for a sole-source award?

The contract, identified by award number 336412, was for aircraft engines and engine parts. The specific justification for the sole-source award is not detailed in the provided data but is typically based on factors such as unique technical capabilities, urgent need, or the unavailability of other sources. For sole-source awards, the government must demonstrate that only one responsible source exists or can satisfy the agency's needs. Without further documentation, it's impossible to confirm the precise technical requirements or the validity of the sole-source justification. This lack of transparency is a common concern with non-competed contracts.

How does the $41.9 million contract value compare to similar sole-source awards for aircraft engine parts within the DoD?

Direct comparison of this $41.9 million contract value to similar sole-source awards for aircraft engine parts is challenging without specific details on the engine models, part types, quantities, and the period of performance. Sole-source contracts inherently lack a competitive benchmark, making 'fairness' of price difficult to assess externally. However, the total value over the contract's duration (approximately 7.5 years) suggests a significant investment. To assess value, one would need to compare the unit prices of specific parts against historical DoD pricing data for similar components, or against commercial off-the-shelf (COTS) pricing if applicable, while accounting for any specialized military requirements and the lack of competition.

What are the primary risks associated with awarding a contract of this magnitude on a sole-source basis?

The primary risks associated with awarding a $41.9 million contract on a sole-source basis include: 1) Inflated pricing: Without competition, the contractor may not have an incentive to offer the lowest possible price, potentially leading to overpayment by the government. 2) Reduced innovation: The lack of competitive pressure can stifle innovation and the development of more efficient or cost-effective solutions. 3) Performance complacency: The contractor may be less motivated to ensure optimal performance or timely delivery when there is no risk of losing future business to competitors. 4) Limited market intelligence: The government misses opportunities to gain insights into market capabilities and pricing structures that competition would reveal. 5) Potential for contractor lock-in: If the sole-source award is for specialized parts or services, the government may become dependent on that specific contractor.

What performance metrics or oversight mechanisms were likely in place to ensure ITT Corporation delivered value for this contract?

While specific performance metrics are not detailed, contracts of this nature typically include clauses related to quality control, delivery schedules, and technical specifications. Oversight would likely involve the Defense Contract Management Agency (DCMA), responsible for monitoring contractor performance, ensuring compliance with contract terms, and verifying quality. Financial oversight would involve audits to ensure proper billing and cost accounting. For sole-source contracts, the emphasis is often on ensuring the contractor meets the defined technical requirements and delivery timelines, as the competitive aspect of price and innovation is absent. However, the effectiveness of these mechanisms in ensuring 'value for money' is inherently limited without a competitive baseline.

How does this contract fit into the broader spending patterns for aircraft engine parts within the Department of Defense?

This $41.9 million contract represents a portion of the Department of Defense's substantial and ongoing investment in aviation sustainment and readiness. The DoD spends billions annually on aircraft maintenance, repair, and overhaul (MRO), including the procurement of engines and parts. Contracts for specialized components, especially for unique platforms like those used by special operations, often require specific manufacturers or authorized repair facilities. While this specific contract is sole-source, it reflects a broader trend of the DoD relying on established aerospace manufacturers and suppliers to maintain its vast and complex fleet. Understanding its place requires analyzing trends in defense aviation spending, particularly concerning engine lifecycle support and modernization efforts.

Industry Classification

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

Product/Service Code: INSTRUMENTS AND LABORATORY EQPT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COMBINATION (TWO OR MORE) (2)

Evaluated Preference: NONE

Contractor Details

Address: 77 RIVER RD, CLIFTON, NJ, 09

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $41,896,499

Exercised Options: $41,896,499

Current Obligation: $41,896,499

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: H9224106D0001

IDV Type: IDC

Timeline