DoD's $3.65B F119 Engine Sustainment Contract Awarded to RTX Corporation Raises Value Concerns

Contract Overview

Contract Amount: $3,648,685,783 ($3.6B)

Contractor: RTX Corporation

Awarding Agency: Department of Defense

Start Date: 2008-01-01

End Date: 2022-05-31

Contract Duration: 5,264 days

Daily Burn Rate: $693.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: F119 ENGINE LONG TERM SUSTAINMENT PROGRAM FOR THE RAPTOR ENGINE (SPARE)

Place of Performance

Location: EAST HARTFORD, HARTFORD County, CONNECTICUT, 06118

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $3.65 billion to RTX CORPORATION for work described as: F119 ENGINE LONG TERM SUSTAINMENT PROGRAM FOR THE RAPTOR ENGINE (SPARE) Key points: 1. Significant long-term investment in engine sustainment highlights critical infrastructure needs. 2. Sole-source award to RTX Corporation limits competitive pressure on pricing. 3. Extended contract duration suggests a need for robust performance monitoring. 4. The 'Other Support Activities for Air Transportation' classification indicates a broad scope of services. 5. Focus on sustainment rather than new procurement may reflect budget priorities or fleet maturity.

Value Assessment

Rating: questionable

The contract's total value of over $3.6 billion over its life raises questions about value for money, especially given the lack of competition. Benchmarking against similar long-term sustainment contracts for complex aerospace systems is difficult without more detailed cost breakdowns. However, the cost-plus-fixed-fee structure can incentivize contractors to manage costs, but the absence of competitive bidding means there's no external market validation of the pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, RTX Corporation, was considered. This approach is typically used when a single source is uniquely qualified or when urgency precludes full and open competition. The lack of competition means the government did not benefit from a bidding process that could drive down prices through market forces.

Taxpayer Impact: Taxpayers are potentially paying a premium due to the absence of competitive pricing. Without alternative bids, it's harder to ensure the most cost-effective solution was secured.

Public Impact

The primary beneficiaries are the U.S. Air Force and its F119 engine fleet, ensuring operational readiness. Services delivered include maintenance, repair, and overhaul of critical engine components. The geographic impact is primarily within the United States, supporting Air Force bases. Workforce implications include sustaining specialized technical jobs within RTX Corporation and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Long contract duration increases exposure to potential cost overruns.
Cost-plus-fixed-fee contract type requires careful oversight to prevent contractor inefficiency.
Lack of detailed public cost data hinders independent value assessment.

Positive Signals

Ensures critical sustainment for a key military asset.
RTX Corporation's established expertise in F119 engines.
Long-term nature provides stability for program planning.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on the sustainment of advanced jet engines. The market for such specialized services is often dominated by original equipment manufacturers due to proprietary knowledge and technical requirements. Comparable spending benchmarks are difficult to establish publicly due to the unique nature of military engine sustainment programs and the limited number of qualified providers.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting goals for small businesses. As a sole-source award to a large prime contractor, the direct impact on small business set-asides is minimal. However, RTX Corporation may engage small businesses for specific components or services, but this is not detailed in the provided information.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices, with potential involvement from the Air Force's Inspector General. Accountability measures would be defined within the contract terms, focusing on performance metrics and delivery schedules. Transparency is limited due to the sole-source nature and the proprietary aspects of engine sustainment.

Related Government Programs

F-22 Raptor Sustainment Programs
Pratt & Whitney Engine Support Contracts
Department of Defense Aviation Maintenance Contracts
Long-Term Service Agreements for Military Aircraft

Risk Flags

Sole-source award
High contract value
Long contract duration
Cost-plus contract type

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $3.65 billion to RTX CORPORATION. F119 ENGINE LONG TERM SUSTAINMENT PROGRAM FOR THE RAPTOR ENGINE (SPARE)

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 $3.65 billion.

What is the period of performance?

Start: 2008-01-01. End: 2022-05-31.

What is the historical spending trend for the F119 engine sustainment program?

Historical spending data for the F119 engine sustainment program prior to this specific $3.65 billion award is not detailed in the provided information. However, the contract's start date of 2008 and end date of 2022 suggests a long-standing relationship for sustainment. The total value of $3,648,685,783.01 over approximately 14 years indicates an average annual spend of roughly $260 million. This sustained level of investment points to the critical and ongoing need for maintaining the F119 engines, which power the F-22 Raptor. Without prior contract values, it's difficult to ascertain if this represents an increase, decrease, or stable spending pattern, but the significant total amount underscores the program's importance and cost.

How does the cost-plus-fixed-fee (CPFF) contract type impact value for money in this context?

The Cost-Plus-Fixed-Fee (CPFF) contract type used for the F119 engine sustainment program has a mixed impact on value for money. The 'cost-plus' element means the contractor is reimbursed for allowable costs incurred, plus a fixed fee representing profit. This structure is often used for complex projects where the scope or costs are uncertain, providing flexibility. The 'fixed fee' provides the contractor with an incentive to control costs, as their profit is predetermined and not tied to the total cost. However, the absence of competition in this sole-source award significantly undermines the potential for value. Without competing bids, the government lacks a benchmark to assess if the costs and the fixed fee are reasonable. The CPFF structure, while offering some cost control incentives, can still lead to higher overall costs compared to fixed-price contracts or competitively bid agreements, especially when market pressures are absent.

What are the risks associated with a sole-source award for long-term engine sustainment?

A sole-source award for long-term engine sustainment carries several significant risks. Primarily, the lack of competition means the government is reliant on a single provider, RTX Corporation in this case, potentially leading to inflated prices and reduced incentives for efficiency and innovation. There's a risk of vendor lock-in, where switching providers becomes prohibitively expensive or technically infeasible. Furthermore, without competitive benchmarking, it's challenging to verify the reasonableness of costs and profits over the contract's extended duration. The government may also have less leverage in negotiating terms and conditions. Over the long term, this can result in a higher total cost of ownership for the F119 engine fleet, impacting the defense budget and potentially diverting funds from other critical areas.

What is RTX Corporation's track record with the F119 engine?

RTX Corporation, through its subsidiary Pratt & Whitney, has a long and established track record with the F119 engine, as it is the original equipment manufacturer (OEM). The F119 powers the F-22 Raptor fighter jet, a highly advanced aircraft. Pratt & Whitney has been responsible for the design, development, and production of the F119 engine since its inception. Consequently, they possess unique technical expertise, proprietary data, and specialized tooling required for its sustainment, including maintenance, repair, and overhaul. This deep historical involvement and specialized knowledge are likely key factors contributing to the sole-source nature of the sustainment contract, as few, if any, other entities could provide the same level of support.

How does this contract compare to other long-term sustainment contracts in the aerospace sector?

Comparing this $3.65 billion, 14-year F119 engine sustainment contract to others in the aerospace sector is challenging without specific details on scope, engine type, and performance metrics. However, long-term sustainment contracts for complex military aircraft engines are typically multi-billion dollar agreements due to the high cost of technology, specialized labor, and extensive support infrastructure required. Contracts often involve Original Equipment Manufacturers (OEMs) like RTX due to proprietary knowledge. The 'sole-source' aspect is common in military sustainment where only the OEM can provide adequate support. Value for money in such contracts is often debated, with critics pointing to high costs and proponents highlighting the necessity of OEM support for mission readiness. The duration and total value are substantial, reflecting the strategic importance and operational demands placed on the F-22 fleet.

What are the potential performance risks for the F119 engine sustainment program?

Potential performance risks for the F119 engine sustainment program, despite RTX Corporation's expertise, include the inherent complexity of advanced jet engines, which can lead to unexpected failures or maintenance challenges. Aging components and extended operational hours increase the likelihood of wear and tear, potentially requiring more extensive repairs than initially forecast. Supply chain disruptions for specialized parts could impact turnaround times for repairs. Furthermore, the effectiveness of the 'cost-plus-fixed-fee' structure relies heavily on accurate cost estimation and diligent oversight by the Air Force to ensure efficient resource utilization. Any degradation in engine performance or availability directly impacts the F-22 Raptor's combat readiness, representing a critical risk to national security.

Industry Classification

NAICS: Transportation and Warehousing › Support Activities for Air Transportation › Other Support Activities for Air Transportation

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rockwell Collins Australia PTY Limited

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

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $4,162,230,542

Exercised Options: $4,160,185,019

Current Obligation: $3,648,685,783

Actual Outlays: $32,247,778

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $45,900

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline