Air Force awards $717.5M for aircraft engines, with RTX Corporation as the contractor

Contract Overview

Contract Amount: $717,483,026 ($717.5M)

Contractor: RTX Corporation

Awarding Agency: Department of Defense

Start Date: 2004-02-04

End Date: 2009-11-30

Contract Duration: 2,126 days

Daily Burn Rate: $337.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 200405!000027!5700!GU75 !ASC/YFK !FA861104C2852 !A!N! !N! ! !20040204!20061231!001447952!835551474!001344142!N!UNITED TECHNOLOGIES CORP !400 MAIN STREET !EAST HARTFORD !CT!06108!22700!003!09!EAST HARTFORD !HARTFORD !CONN !+000000648521!N!N!000000648521!2840!GAS TURBINES AND JET ENGINES, ACFT&COMPS !A1C!OTHER AIRCRAFT EQUIPMENT !265 !F-22 !921110!E! !3! ! ! ! ! !99990909!B! ! !A! !D!U!J!1!001!N!1G!Z!N!A! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! !Y! ! !0001! !

Place of Performance

Location: EAST HARTFORD, HARTFORD County, CONNECTICUT, 06118

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $717.5 million to RTX CORPORATION for work described as: 200405!000027!5700!GU75 !ASC/YFK !FA861104C2852 !A!N! !N! ! !20040204!20061231!001447952!835551474!001344142!N!UNITED TECHNOLOGIES CORP !400 MAIN STREET !EAST HARTFORD !CT!06108!22700!003!09!EAST HARTFORD !HART… Key points: 1. Contract awarded to a single entity suggests limited competition, potentially impacting price. 2. The contract's value is substantial, indicating a significant need for these specialized components. 3. Long duration of the contract (over 5 years) implies a sustained requirement for engine parts. 4. The specific product service code points to a niche manufacturing area within aerospace. 5. The firm-fixed-price nature of the contract shifts cost risk to the contractor.

Value Assessment

Rating: fair

The total award amount of $717.5 million over approximately five years for aircraft engines and components is a significant expenditure. Benchmarking this against similar contracts for specialized aerospace parts is challenging without more granular data on specific engine models and quantities. However, the lack of competition (sole-source) raises concerns about whether the government achieved the best possible price. The firm-fixed-price contract type, while providing cost certainty, means the government pays the agreed price regardless of the contractor's actual costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor was solicited. This typically occurs when there is a unique capability, a critical need, or a lack of viable alternatives. The absence of a competitive bidding process means that price discovery through market forces was not utilized, potentially leading to higher costs for the government compared to a fully competed contract.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings that can arise from competitive bidding, as the government did not explore alternative pricing from multiple suppliers.

Public Impact

The primary beneficiaries are the U.S. Air Force and potentially other Department of Defense entities requiring these specific aircraft engines and components. The contract delivers critical parts for maintaining and operating military aircraft, ensuring operational readiness. The geographic impact is primarily centered around the contractor's facilities in Connecticut, but the end-use is national for Air Force operations. This contract supports specialized manufacturing jobs within the aerospace sector, particularly in engine component production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially leading to suboptimal pricing for taxpayers.
Lack of transparency in the sole-source justification makes it difficult to assess if alternatives were truly unavailable.
Long contract duration could mask inefficiencies if not actively managed and reviewed.
Firm-fixed-price contracts can sometimes incentivize contractors to cut corners on quality if not rigorously overseen.

Positive Signals

Award to a known entity (United Technologies Corp., now RTX) suggests a reliance on established expertise and supply chains.
Firm-fixed-price contract provides budget certainty for the Air Force, simplifying financial planning.
The contract specifies a clear product/service (Aircraft Engine and Engine Parts Manufacturing), indicating a well-defined requirement.

Sector Analysis

This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector, a highly specialized and technologically advanced segment of the aerospace industry. The market is characterized by high barriers to entry due to significant R&D costs, complex manufacturing processes, and stringent quality requirements. Major players often have long-standing relationships with defense agencies. Comparable spending benchmarks would likely be in the hundreds of millions to billions of dollars for similar long-term engine support contracts.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss': false and 'sb': false. The prime contractor, RTX Corporation, is a large aerospace manufacturer. There is no explicit information regarding subcontracting plans for small businesses within this data snippet. Without specific subcontracting goals or reporting, the direct impact on the small business ecosystem is unclear, though large prime contracts often involve a tiered supply chain where small businesses may participate.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Given the sole-source nature, enhanced scrutiny may be applied to ensure fair pricing and performance. Inspector General (IG) investigations could be initiated if fraud, waste, or abuse is suspected. Transparency is limited due to the sole-source justification, but contract modifications and performance reports would be subject to internal review and potentially Freedom of Information Act (FOIA) requests.

Related Government Programs

F-22 Raptor Program
Pratt & Whitney Engine Support Contracts
Aerospace Manufacturing and Repair Contracts
Department of Defense Aircraft Procurement

Risk Flags

Sole-source award lacks competitive justification.
Potential for price escalation due to lack of competition.
Dependency on a single supplier for critical components.
Long contract duration requires ongoing performance monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $717.5 million to RTX CORPORATION. 200405!000027!5700!GU75 !ASC/YFK !FA861104C2852 !A!N! !N! ! !20040204!20061231!001447952!835551474!001344142!N!UNITED TECHNOLOGIES CORP !400 MAIN STREET !EAST HARTFORD !CT!06108!22700!003!09!EAST HARTFORD !HARTFORD !CONN !+000000648521!N!N!000000648521!2840!GAS TURBINES AND JET ENGINES, ACFT&COMPS !A1C!OTHER AIRCRAFT EQUIPMENT !265 !F-22 !921110!E! !3! ! ! ! ! !99990

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 $717.5 million.

What is the period of performance?

Start: 2004-02-04. End: 2009-11-30.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data indicates the contract was 'NOT COMPETED'. Sole-source justifications typically stem from reasons such as the existence of only one responsible source, urgent and compelling needs where competition is not feasible, or when the acquisition is for a specific type of specialized equipment or service for which only one vendor has the necessary capability or proprietary rights. Without further documentation, the precise reason for this sole-source award to United Technologies Corp. (RTX) for aircraft engines and components remains unspecified in the provided data. This lack of competition raises questions about whether alternative suppliers or more competitive pricing options were thoroughly explored.

How does the $717.5 million award compare to historical spending on similar aircraft engine components for the F-22 program?

The provided data shows a single award of $717,483,026.17 for 'GAS TURBINES AND JET ENGINES, ACFT&COMPS' related to the 'F-22' program, awarded in 2004 with an end date in 2009. To compare this to historical spending, one would need to access historical contract databases (like FPDS or USAspending) for the F-22 program and similar engine component contracts awarded by the Air Force over different periods. This specific award represents a significant investment over its contract duration. Analyzing trends would require looking at the total spend on engine parts for the F-22 across multiple contracts and years, considering inflation and changes in operational tempo or fleet size.

What are the key performance indicators (KPIs) or metrics used to evaluate the contractor's performance under this contract?

The provided data snippet does not contain specific details regarding the Key Performance Indicators (KPIs) or metrics used to evaluate United Technologies Corp.'s (RTX) performance under this contract. Typically, for defense contracts involving critical components like aircraft engines, performance is measured against criteria such as on-time delivery, quality defect rates, adherence to technical specifications, and responsiveness to repair or maintenance needs. The contract type (Firm Fixed Price) implies that meeting the defined scope, schedule, and price are paramount. However, the specific metrics and their targets would be detailed in the contract's Statement of Work (SOW) or Performance Work Statement (PWS), which are not included here.

What is the risk associated with relying on a single contractor for such critical aerospace components?

Relying on a single contractor for critical aerospace components like aircraft engines and their parts presents several risks. Firstly, it creates a dependency that can lead to supply chain vulnerabilities; any disruption at the contractor's facility (e.g., labor issues, natural disasters, financial instability) could halt the supply of essential parts. Secondly, the lack of competition inherent in a sole-source award can reduce the incentive for the contractor to innovate or offer competitive pricing, potentially leading to higher costs for the government over the long term. Thirdly, it limits the government's options if the contractor's performance deteriorates or if strategic needs change, making it difficult to transition to an alternative supplier.

Can the government terminate this contract if performance is unsatisfactory, despite it being sole-source?

Yes, the government generally retains the right to terminate contracts, including sole-source ones, if performance is unsatisfactory. Contracts typically include termination clauses, such as 'Termination for Convenience' (T4C) and 'Termination for Default' (T4D). Termination for Default can be invoked if the contractor fails to meet the contract's terms and conditions, such as failing to deliver goods on time or meet quality standards. Termination for Convenience allows the government to terminate the contract for its own reasons, often without fault of the contractor, though it usually involves compensating the contractor for work performed. The specific terms of termination would be detailed within the contract document itself.

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: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp (UEI: 001344142)

Address: 400 MAIN STREET, EAST HARTFORD, CT, 06108

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $729,472,359

Exercised Options: $729,472,359

Current Obligation: $717,483,026

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline