DoD awards $572M F117 engine sustainment contract to RTX Corporation, raising value concerns

Contract Overview

Contract Amount: $572,034,439 ($572.0M)

Contractor: RTX Corporation

Awarding Agency: Department of Defense

Start Date: 2020-10-05

End Date: 2021-09-30

Contract Duration: 360 days

Daily Burn Rate: $1.6M/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: F117 ENGINE SUSTAINMENT SERVICES

Place of Performance

Location: EAST HARTFORD, HARTFORD County, CONNECTICUT, 06118

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $572.0 million to RTX CORPORATION for work described as: F117 ENGINE SUSTAINMENT SERVICES Key points: 1. Contract awarded on a sole-source basis, limiting price competition and potentially increasing costs. 2. Significant contract value for sustainment services suggests a critical role for the F117 engine. 3. Lack of competition raises questions about whether the government secured the best possible value. 4. Performance period of one year (with options) indicates a focus on immediate sustainment needs. 5. Contractor, RTX Corporation, is a major defense contractor with extensive experience in engine sustainment. 6. The 'Other Aircraft Parts' NAICS code suggests a broad scope of services beyond just engine repair.

Value Assessment

Rating: questionable

The contract's value of $572 million for a one-year period is substantial. Without competitive bidding, it is difficult to benchmark the pricing against market rates or similar contracts. The sole-source nature means the government did not have the opportunity to solicit multiple offers, which is a primary mechanism for ensuring value for money in federal procurement. Further analysis would be needed to determine if the pricing is reasonable given the scope of services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, RTX Corporation, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. While sole-source awards can be justified under specific circumstances (e.g., urgency, unique capabilities), they inherently reduce price discovery and can lead to higher costs for the government.

Taxpayer Impact: The lack of competition means taxpayers may not be receiving the most cost-effective solution. Without competing offers, there is less pressure on the contractor to offer competitive pricing, potentially leading to overspending.

Public Impact

The Department of the Air Force benefits from the sustainment of critical F117 engines, ensuring operational readiness. Services likely include maintenance, repair, overhaul, and potentially spare parts for the F117 engine. The geographic impact is likely concentrated around Air Force bases where aircraft equipped with F117 engines are stationed. This contract supports jobs within RTX Corporation and its supply chain, particularly in specialized aerospace manufacturing and maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Lack of transparency in pricing due to non-competitive nature.
Contract duration of one year may not reflect long-term sustainment needs or cost efficiencies.
Reliance on a single contractor for critical engine sustainment could pose supply chain risks.

Positive Signals

Award to an experienced incumbent contractor (RTX Corporation) likely ensures continuity of essential services.
Firm Fixed Price contract type provides cost certainty for the government, assuming the scope is well-defined.
The substantial value indicates the critical importance of the F117 engine to Air Force operations.

Sector Analysis

The aerospace engine manufacturing and sustainment sector is highly specialized and dominated by a few large, experienced companies. Contracts for sustainment services are crucial for maintaining the operational readiness of military aircraft fleets. Benchmarking this contract's value would require comparing it to other sustainment contracts for similar engine types or fleet sizes, considering factors like hours of operation, complexity of maintenance, and parts required. The F117 engine likely powers a significant aircraft platform within the Air Force inventory.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Given the sole-source nature and the specialized requirements of engine sustainment, it is unlikely that significant subcontracting opportunities for small businesses would be mandated or easily achievable within this specific award. However, RTX Corporation, as a large prime contractor, may engage small businesses within its broader supply chain for parts or services not directly covered by this contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. The Defense Contract Management Agency (DCMA) would likely be involved in monitoring performance and ensuring compliance with contract terms. Transparency is limited due to the sole-source nature, but contract awards are generally reported in federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

F117 Engine Maintenance Contracts
Air Force Aircraft Sustainment Programs
Defense Logistics Agency (DLA) Aviation Support
Pratt & Whitney Engine Services (a division of RTX)

Risk Flags

Sole-source award
Lack of competitive pricing
Potential for cost overruns
Limited transparency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $572.0 million to RTX CORPORATION. F117 ENGINE SUSTAINMENT SERVICES

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 $572.0 million.

What is the period of performance?

Start: 2020-10-05. End: 2021-09-30.

What is the historical spending pattern for F117 engine sustainment services?

Analyzing historical spending for F117 engine sustainment is crucial for understanding trends and identifying potential anomalies. While specific data for this contract is limited to the current award amount, a review of past contracts awarded to RTX Corporation or its predecessors for similar services would provide context. This would involve examining contract values, durations, and the number of competitors over several fiscal years. Significant year-over-year increases or decreases, or a consistent trend of sole-source awards, could indicate evolving market conditions, changes in operational tempo, or potential issues with competition. Without access to historical contract databases detailing prior F117 sustainment efforts, a precise historical spending pattern cannot be established here, but such a review would be a key next step in a comprehensive analysis.

What specific services are included under the "F117 ENGINE SUSTAINMENT SERVICES" contract?

The contract title 'F117 ENGINE SUSTAINMENT SERVICES' and the associated NAICS code '336413 - Other Aircraft Parts and Auxiliary Equipment Manufacturing' suggest a broad scope of support for the F117 engine. This typically encompasses a range of activities essential for maintaining the engine's operational readiness and extending its service life. These services commonly include scheduled and unscheduled maintenance, component repair and overhaul, diagnostic testing, technical support, engineering services, and the provision of spare parts. It may also involve depot-level maintenance, modifications, and upgrades. The exact breakdown of services and their associated costs would be detailed in the contract's statement of work (SOW), which is not publicly available in this data snippet. Understanding the precise services is critical for evaluating the contract's value and necessity.

What are the risks associated with a sole-source award for critical defense sustainment?

Sole-source awards for critical defense sustainment, like the F117 engine services contract, carry several inherent risks. Foremost is the risk of inflated pricing, as the absence of competition removes the primary incentive for the contractor to offer the most cost-effective solution. This can lead to the government paying more than necessary, impacting overall budget efficiency. Another risk is a potential decline in service quality or innovation, as the contractor may face less pressure to continuously improve performance or invest in new technologies. Furthermore, over-reliance on a single supplier can create vulnerabilities in the supply chain; any disruption to the sole provider, whether due to financial instability, geopolitical issues, or unforeseen operational problems, could severely impact the availability of critical defense assets. Finally, sole-source awards can raise concerns about fairness and transparency in the procurement process.

How does the contractor's track record influence the assessment of this contract?

RTX Corporation, the awarded contractor, is a major player in the aerospace and defense industry, with a long history of producing and sustaining complex engine systems, including those for military aircraft. Their extensive experience and established infrastructure suggest a high likelihood of successfully delivering the required sustainment services for the F117 engine. This track record provides a degree of confidence in the contractor's technical capabilities and their ability to meet performance requirements. However, a strong track record does not automatically guarantee fair pricing or optimal value, especially in a sole-source scenario. A thorough assessment would also consider RTX's past performance on similar contracts, including any history of cost overruns, delivery delays, or quality issues, to provide a more nuanced view of the associated risks and potential benefits.

Can the value of this contract be benchmarked against similar sustainment contracts?

Benchmarking the value of this $572 million F117 engine sustainment contract is challenging without access to more detailed comparative data. Ideally, benchmarking would involve comparing the per-engine sustainment cost, cost per flight hour, or cost per maintenance action against similar contracts for engines of comparable size, complexity, and age, particularly those awarded competitively. Given that this contract is sole-source, direct price comparisons are difficult. However, one could look at RTX's other sustainment contracts for different engine types or for the same engine on different platforms (if applicable and competed). Additionally, industry reports on aerospace sustainment costs and government cost-estimating guides could provide general benchmarks. The specific platform powered by the F117 engine and its operational tempo would also be critical factors in any meaningful comparison.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 400 MAIN ST, EAST HARTFORD, CT, 06118

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $572,034,439

Exercised Options: $572,034,439

Current Obligation: $572,034,439

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA812418D0001

IDV Type: IDC

Timeline