DoD's $48.7M aircraft engine contract to ITT Corporation lacked competition, raising value concerns
Contract Overview
Contract Amount: $48,748,417 ($48.7M)
Contractor: ITT Corporation
Awarding Agency: Department of Defense
Start Date: 2010-02-16
End Date: 2013-06-01
Contract Duration: 1,201 days
Daily Burn Rate: $40.6K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: FY2010 PRODUCTION BUY
Place of Performance
Location: CLIFTON, PASSAIC County, NEW JERSEY, 07014
Plain-Language Summary
Department of Defense obligated $48.7 million to ITT CORPORATION for work described as: FY2010 PRODUCTION BUY Key points: 1. The contract was awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. A significant portion of the contract value was allocated to a single award, indicating a concentrated effort. 3. The duration of the contract suggests a long-term need for these aircraft engine parts. 4. The fixed-price nature of the contract shifts some risk to the contractor but doesn't guarantee optimal pricing without competition. 5. The award to ITT Corporation, a large established company, may have implications for smaller businesses in the supply chain. 6. The lack of a small business set-aside raises questions about opportunities for smaller firms in this procurement.
Value Assessment
Rating: questionable
Benchmarking the value of this contract is challenging due to the sole-source award and lack of publicly available comparable contract data. The fixed-price structure provides some cost certainty, but without competitive bidding, it's difficult to ascertain if the government secured the best possible price. The raw dollar amount of over $48 million for aircraft engine parts suggests a substantial investment, and the absence of competition means taxpayers may have paid a premium.
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 can provide the required goods or services, or in cases of urgent need. The lack of competition means there were no other bidders to compare against, and the government did not benefit from the price reductions that often result from a competitive bidding process.
Taxpayer Impact: The absence of competition means taxpayers did not benefit from potential cost savings that could have been achieved through a bidding process. This could lead to higher overall spending for the Department of Defense.
Public Impact
The U.S. Special Operations Command benefits from the supply of critical aircraft engine parts, ensuring operational readiness. This contract supports the maintenance and operation of aircraft essential for special operations missions. The geographic impact is primarily within New Jersey, where ITT Corporation is located, potentially supporting local jobs and the regional economy. The contract likely impacts a specialized workforce within ITT Corporation and its supply chain involved in aircraft engine manufacturing and repair.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to higher prices for taxpayers.
- Sole-source awards can reduce transparency in pricing.
- Limited opportunities for other vendors to participate in this significant contract.
- Potential for complacency in performance due to lack of competitive pressure.
Positive Signals
- Award to an established contractor like ITT Corporation suggests a level of trust in their capabilities.
- Fixed-price contract provides some cost predictability for the government.
- The contract duration indicates a stable, long-term supply chain for critical components.
Sector Analysis
The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government investment. Aircraft engine manufacturing and parts fall within this specialized segment. Spending in this area is crucial for maintaining military readiness and technological superiority. Comparable spending benchmarks are difficult to establish without more specific details on the engine type and parts, but multi-million dollar contracts for specialized components are common within the DoD.
Small Business Impact
This contract does not appear to have a small business set-aside, as indicated by 'sb: false'. Consequently, there are no explicit requirements for subcontracting with small businesses mandated within this award. This means that opportunities for small businesses to participate in this specific procurement are limited unless they are part of ITT Corporation's existing supply chain or are independently contracted by them. The overall impact on the small business ecosystem for this contract is likely minimal.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of Defense's contracting and financial management regulations. Given it was a sole-source award, the justification for this procurement method would be subject to review. Accountability measures would focus on ITT Corporation's adherence to the firm-fixed-price terms and delivery schedules. Transparency is limited due to the non-competitive nature of the award, and Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse.
Related Government Programs
- Aircraft Maintenance and Repair
- Special Operations Forces Equipment Procurement
- Defense Logistics Agency Contracts
- Aerospace Manufacturing Support
Risk Flags
- Lack of Competition
- Sole-Source Award Justification Needed
- Potential for Overpricing
- Limited Small Business Participation
Tags
defense, department-of-defense, u.s.-special-operations-command, itt-corporATION, aircraft-engine-parts, sole-source, not-competed, firm-fixed-price, new-jersey, fy2010, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $48.7 million to ITT CORPORATION. FY2010 PRODUCTION BUY
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 $48.7 million.
What is the period of performance?
Start: 2010-02-16. End: 2013-06-01.
What is the specific type of aircraft engine and parts covered by this contract?
The provided data indicates the contract is for 'Aircraft Engine and Engine Parts Manufacturing' (nd: 'Aircraft Engine and Engine Parts Manufacturing') and falls under the Product Service Code (PSC) which is blank in the provided data. Without the specific PSC or a more detailed description, it is impossible to identify the exact type of aircraft engine or the specific parts being procured. This level of detail is crucial for understanding the criticality and technical specifications of the components, which in turn impacts cost analysis and potential alternatives.
What was the justification for awarding this contract on a sole-source basis?
The data explicitly states the contract type was 'NOT COMPETED' (ct: 'NOT COMPETED'), which is synonymous with a sole-source award in this context. The specific justification for this sole-source determination is not provided in the data. Typically, sole-source awards require a formal justification, such as the existence of only one responsible source, urgent and compelling circumstances, or specific national security requirements that preclude competition. Without this justification, it is difficult to assess the validity of the non-competitive award and whether it was truly necessary.
How does the contract's duration (1201 days) compare to typical procurement cycles for similar aircraft engine parts?
A contract duration of 1201 days, approximately 3.3 years, is relatively long for the procurement of specific parts, suggesting either a long-term supply agreement for ongoing operational needs or a production run for a significant quantity. Typical procurement cycles for individual parts can range from months to a few years, depending on complexity, manufacturing lead times, and the criticality of the component. For major engine components or a sustained supply, a multi-year contract is not unusual, but it also implies a long-term commitment of funds and potentially less flexibility to adapt to technological changes or market price fluctuations.
What is ITT Corporation's track record with the Department of Defense, specifically regarding aircraft engine components?
ITT Corporation (co: 'ITT CORPORATION') has a history of contracting with the Department of Defense (ag: 'Department of Defense'). While the provided data confirms this specific $48.7 million contract, it does not detail ITT's broader track record in aircraft engine components. A comprehensive assessment would require reviewing their past performance on similar contracts, including delivery timeliness, quality of products, and adherence to specifications. Their status as a large, established company suggests they have the capacity and experience, but specific performance metrics are needed for a full evaluation.
Are there any publicly available benchmarks for the unit cost of similar aircraft engine parts that could be used to assess the value of this contract?
Publicly available, granular unit cost benchmarks for specific aircraft engine parts are generally not accessible due to proprietary information, the highly specialized nature of the components, and national security considerations. The provided data does not include unit costs or quantities, making direct benchmarking impossible. Value assessment in such cases relies heavily on the justification for sole-source awards, comparisons to similar (though not identical) contracts if available, and internal cost analyses by the procuring agency. Without more specific data or comparable contracts, assessing the precise value-for-money is challenging.
What are the potential risks associated with a sole-source award of this magnitude for critical defense components?
The primary risk associated with a sole-source award of this magnitude ($48.7 million) for critical defense components is the potential for inflated pricing due to the lack of competitive pressure. This can lead to inefficient use of taxpayer funds. Other risks include reduced innovation, as the sole provider may have less incentive to improve products or processes, and a potential lack of flexibility if the government's needs change. Furthermore, reliance on a single supplier can create supply chain vulnerabilities if that supplier experiences production issues or financial instability.
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: FIRM FIXED PRICE (J)
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: $48,748,417
Exercised Options: $48,748,417
Current Obligation: $48,748,417
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: H9224106D0001
IDV Type: IDC
Timeline
Start Date: 2010-02-16
Current End Date: 2013-06-01
Potential End Date: 2013-06-01 00:00:00
Last Modified: 2012-05-22
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