DoD's $1.35B F-22 sustainment contract awarded to RTX Corp. raises value concerns

Contract Overview

Contract Amount: $1,353,542,573 ($1.4B)

Contractor: RTX Corporation

Awarding Agency: Department of Defense

Start Date: 2018-01-01

End Date: 2018-12-31

Contract Duration: 364 days

Daily Burn Rate: $3.7M/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SCAT 1, F-22, SUSTAINMENT PROGRAM FOR THE RAPTOR ENGINE (SPARE 2)

Place of Performance

Location: EAST HARTFORD, HARTFORD County, CONNECTICUT, 06118

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $1.35 billion to RTX CORPORATION for work described as: SCAT 1, F-22, SUSTAINMENT PROGRAM FOR THE RAPTOR ENGINE (SPARE 2) Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. High contract value suggests significant ongoing support needs for the F-22 fleet. 3. Performance period of one year may indicate a need for more agile contracting. 4. Lack of competition raises questions about achieving optimal value for taxpayer dollars. 5. The sustainment program is critical for maintaining the operational readiness of a key Air Force asset. 6. Contract type (Cost Plus Fixed Fee) can incentivize cost overruns if not closely managed.

Value Assessment

Rating: questionable

This contract's value of over $1.35 billion for a single year of sustainment for the F-22 Raptor engine program is substantial. Without competitive bidding, it is difficult to benchmark the pricing against market rates or alternative providers. The Cost Plus Fixed Fee (CPFF) contract type, while common for complex sustainment, carries inherent risks of cost escalation if not rigorously overseen. Compared to other major defense sustainment contracts, the lack of competition here is a significant factor in assessing value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This approach is typically used when only one responsible source can provide the required services, often due to proprietary technology, unique capabilities, or urgent needs. The absence of multiple bidders means that price discovery through market forces was not leveraged, potentially leading to higher costs than if competition had been present.

Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competitive pressure to drive down costs. The government did not benefit from the potential cost savings that typically arise from a competitive bidding process.

Public Impact

The primary beneficiaries are the U.S. Air Force and its F-22 Raptor fighter jet fleet, ensuring operational readiness. Services delivered include sustainment, maintenance, and support for the F-22 engine, crucial for mission capability. The geographic impact is national, supporting a critical component of U.S. air superiority capabilities. Workforce implications include specialized technical jobs in aerospace engineering, maintenance, and logistics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure on pricing.
CPFF contract type can lead to cost overruns without strict oversight.
Single-year duration may not reflect long-term sustainment needs efficiently.
High dollar value requires robust performance monitoring to ensure value.
Dependence on a single contractor for critical engine sustainment poses a risk.

Positive Signals

RTX Corporation (Pratt & Whitney) is the original equipment manufacturer, possessing unique technical knowledge.
Sustainment ensures the continued operational readiness of a vital national defense asset.
The contract addresses critical maintenance needs for advanced aerospace technology.
The Air Force is likely receiving specialized expertise essential for the F-22's complex systems.

Sector Analysis

The aerospace and defense sector is characterized by high technological complexity, significant R&D investment, and long product lifecycles. Sustainment contracts for advanced platforms like the F-22 are a substantial part of this market. Spending benchmarks for similar platform sustainment can vary widely, but contracts in the hundreds of millions to billions of dollars annually are not uncommon for major fighter jet programs. This contract fits within the broader category of aerospace MRO (Maintenance, Repair, and Overhaul) services.

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 for F-22 engine sustainment, it is unlikely that small businesses would be primary awardees. However, the prime contractor, RTX Corporation, may engage small businesses as subcontractors for specific components or services, though this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and program management offices, specifically within the Department of the Air Force. Accountability measures would include performance metrics, milestone tracking, and financial audits. Transparency is often limited for sole-source defense contracts, but reporting requirements on cost and performance are usually mandated. Inspector General jurisdiction would apply to investigations of fraud, waste, or abuse.

Related Government Programs

F-22 Raptor Program
Aerospace Engine Maintenance
Defense Logistics Support
Air Force Aircraft Sustainment
Pratt & Whitney Engine Services

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
High annual contract value
Critical defense asset sustainment

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.35 billion to RTX CORPORATION. SCAT 1, F-22, SUSTAINMENT PROGRAM FOR THE RAPTOR ENGINE (SPARE 2)

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 $1.35 billion.

What is the period of performance?

Start: 2018-01-01. End: 2018-12-31.

What is RTX Corporation's track record with F-22 sustainment and other complex defense contracts?

RTX Corporation, through its subsidiary Pratt & Whitney, has a long-standing relationship with the F-22 program as the original engine manufacturer. Their track record includes developing and supporting the F119 engine, which powers the F-22. They also hold numerous other large sustainment and production contracts for various military aircraft engines across different branches of the U.S. military and international partners. While generally considered a capable provider of complex aerospace services, like any large defense contractor, they have faced scrutiny over pricing and performance on specific contracts. Their extensive experience with the F-22 engine specifically positions them as a unique provider, which often underpins sole-source justifications.

How does the $1.35 billion annual cost compare to similar aircraft sustainment programs?

The $1.35 billion annual cost for F-22 engine sustainment is substantial, reflecting the complexity and advanced nature of the F119 engines. Comparing it directly to other programs is challenging without knowing the specific scope of services included (e.g., depot-level maintenance, component repair, spare parts provisioning, engineering support). However, major fighter aircraft sustainment programs, especially for legacy platforms requiring extensive upkeep, often run into hundreds of millions or even billions of dollars annually. For instance, sustainment for aircraft like the F-35, F-15, or B-2 can also represent significant annual expenditures. The key differentiator here is the sole-source award, which makes direct value-for-money comparisons difficult without internal cost data.

What are the primary risks associated with a sole-source, Cost Plus Fixed Fee (CPFF) contract for critical defense systems?

The primary risks associated with a sole-source, CPFF contract for critical defense systems like the F-22 engine sustainment are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated pricing as the contractor faces no market-based incentive to reduce costs. The government relies heavily on the contractor's proposed pricing and internal cost controls. Secondly, the CPFF structure, while providing flexibility, can incentivize the contractor to incur higher costs to achieve a higher fixed fee (if the fee is a percentage of costs). This necessitates robust government oversight, detailed cost accounting, and stringent performance monitoring to mitigate the risk of cost overruns and ensure the government receives good value for its investment.

How effective is the F-22 sustainment program in ensuring the operational readiness of the fleet?

The effectiveness of the F-22 sustainment program is critical to maintaining the operational readiness of the U.S. Air Force's premier air superiority fighter. While the provided data focuses on the contract award, the underlying program's success is measured by metrics such as aircraft availability rates, sortie generation capability, and mission-capable percentages. Given the F-22's advanced and complex systems, consistent and high-quality sustainment is paramount. The substantial annual investment suggests a commitment to keeping the fleet ready, but the true measure of effectiveness lies in the Air Force's ability to deploy and employ the F-22 as intended. Without specific performance data tied to this contract, assessing effectiveness remains qualitative.

What are the historical spending patterns for F-22 sustainment, and how does this contract compare?

Historical spending on F-22 sustainment has been significant over the life of the program, reflecting the high cost of maintaining a fleet of advanced stealth fighters. While the specific data for this $1.35 billion contract covers a single year (2018), annual sustainment costs for the F-22 program have historically fluctuated but generally remained in the high hundreds of millions to over a billion dollars. Factors influencing these costs include the number of aircraft in the fleet, their operational tempo, the age of the airframes and engines, and the availability of spare parts. This $1.35 billion award appears consistent with, or slightly higher than, previous annual expenditures for comprehensive sustainment, particularly given its sole-source nature.

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

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, 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: $1,476,313,618

Exercised Options: $1,387,973,228

Current Obligation: $1,353,542,573

Actual Outlays: $84,841,994

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $173,802

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA861118D2850

IDV Type: IDC

Timeline