DoD's $71.4M contract for aircraft engine parts awarded to RTX Corporation shows limited competition

Contract Overview

Contract Amount: $71,380,179 ($71.4M)

Contractor: RTX Corporation

Awarding Agency: Department of Defense

Start Date: 2018-01-05

End Date: 2021-06-30

Contract Duration: 1,272 days

Daily Burn Rate: $56.1K/day

Competition Type: NOT COMPETED

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: IGF::OT::IGF F119 CIP CY18 TASKS

Place of Performance

Location: EAST HARTFORD, HARTFORD County, CONNECTICUT, 06118

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $71.4 million to RTX CORPORATION for work described as: IGF::OT::IGF F119 CIP CY18 TASKS Key points: 1. The contract value of $71.4 million represents a significant investment in aircraft engine maintenance and parts. 2. Awarded to a single vendor, RTX Corporation, this contract raises questions about potential price inflation due to lack of competition. 3. The 'NOT COMPETED' status indicates a potential risk of reduced value for taxpayer dollars. 4. The contract duration of 1272 days suggests a long-term need for these critical aircraft components. 5. The specific North American Industry Classification System (NAICS) code 336412 points to a specialized manufacturing sector. 6. The contract type 'COST PLUS FIXED FEE' can sometimes lead to higher costs if not closely managed.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without more detailed cost breakdowns and comparisons to similar sole-source awards. The 'COST PLUS FIXED FEE' structure, while common for complex procurements, necessitates rigorous oversight to ensure costs remain reasonable. The absence of competitive bidding means there's no direct market comparison to assess if the price paid represents fair market value. Further analysis of the contractor's historical pricing and profit margins on similar contracts would be beneficial.

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 possesses the necessary capabilities, technology, or proprietary rights to fulfill the requirement. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no competitive pressure to drive down prices. This necessitates strong justification and oversight to ensure the government is not overpaying.

Public Impact

The Department of the Air Force benefits from the continued availability of critical aircraft engine parts, ensuring operational readiness. This contract supports the maintenance and sustainment of the Air Force's aircraft fleet. The primary beneficiaries are the military personnel who rely on well-maintained aircraft for national security missions. The contract likely supports jobs within RTX Corporation and its supply chain, particularly in specialized manufacturing roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing.
Cost-plus contracts require diligent oversight to control expenditures.
Sole-source awards limit opportunities for other capable businesses.

Positive Signals

Ensures continued availability of critical aircraft engine parts.
Supports a specialized manufacturing sector vital for defense.
Awarded to a known entity with existing capabilities.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft engines and parts. This is a highly specialized and capital-intensive industry dominated by a few large players. The market size for such components is substantial, driven by military and commercial aviation needs. This contract represents a portion of the Department of Defense's broader spending on aircraft sustainment and readiness.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it appear to involve significant subcontracting opportunities for small businesses based on the sole-source nature of the award. The primary awardee is a large corporation, suggesting that the focus is on specialized capabilities rather than broad market outreach. This limits the direct impact on the small business ecosystem for this specific procurement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management offices. Given the sole-source nature and cost-plus fee structure, robust oversight is crucial to monitor expenditures, ensure compliance with contract terms, and verify the reasonableness of costs. Inspector General investigations could be initiated if any irregularities or potential fraud are suspected.

Related Government Programs

Aircraft Engine Maintenance Contracts
Defense Logistics Agency Contracts
Air Force Sustainment Programs
Aerospace Manufacturing Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competitive bidding

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $71.4 million to RTX CORPORATION. IGF::OT::IGF F119 CIP CY18 TASKS

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 $71.4 million.

What is the period of performance?

Start: 2018-01-05. End: 2021-06-30.

What is RTX Corporation's track record with the Department of Defense for similar aircraft engine parts contracts?

RTX Corporation, through its various subsidiaries like Pratt & Whitney, has a long-standing and extensive history of contracting with the Department of Defense for aircraft engines, components, and related services. They are a primary original equipment manufacturer (OEM) for many critical military aircraft platforms. Historical data would likely show numerous awards, including sole-source and competed contracts, for engine sustainment, spare parts, and upgrades. Analyzing past performance, including any documented issues with delivery, quality, or cost overruns on previous contracts, would provide valuable context for assessing the current award's risk and value. Without specific historical data on this exact contract vehicle or component type, it's presumed RTX has the established capability and historical relationship that often underpins sole-source awards in this specialized sector.

How does the pricing of this contract compare to other sole-source awards for similar aircraft engine parts?

Directly comparing the pricing of this $71.4 million sole-source contract to other similar awards is difficult without access to detailed pricing structures, specific part numbers, quantities, and the exact nature of the 'COST PLUS FIXED FEE' arrangement. Sole-source awards inherently lack the price discovery mechanism of competition. However, regulatory bodies and the DoD's contracting officers are expected to perform price analyses based on historical pricing, commercial price lists (if applicable), and comparisons to other government contracts. If RTX is the sole manufacturer or authorized distributor, their pricing might be based on established rates. A significant deviation from historical pricing for similar components or services, or from prices paid by other government agencies for comparable items, could indicate a potential value concern that warrants deeper investigation.

What are the primary risks associated with a sole-source, cost-plus contract for aircraft engine parts?

The primary risks associated with a sole-source, cost-plus contract for aircraft engine parts are twofold. Firstly, the lack of competition means the government may not achieve the lowest possible price, as there is no market pressure to drive down costs. The contractor has less incentive to be highly efficient if costs are simply passed through, plus a fee. Secondly, the 'cost-plus' nature of the contract, particularly 'cost-plus-fixed-fee' (CPFF), requires robust government oversight to ensure that all costs incurred are reasonable, allocable, and allowable. Without stringent monitoring, there is a risk of cost escalation, scope creep, and potential for the contractor to incur unnecessary expenses, which are then reimbursed. This structure necessitates a strong partnership and vigilant oversight to ensure value for taxpayer money.

How effective is the Department of Defense in managing sole-source, cost-plus contracts to ensure program effectiveness and value?

The Department of Defense employs various mechanisms to manage sole-source, cost-plus contracts and ensure program effectiveness and value, though effectiveness can vary. These mechanisms include detailed contract clauses, performance metrics, milestone tracking, and regular audits. Contracting officers are trained to conduct thorough price and cost analyses, negotiate fair fees, and monitor contractor performance closely. However, the inherent nature of sole-source, cost-plus contracts presents ongoing challenges. Success often hinges on the expertise and diligence of the contracting team, the transparency of the contractor, and the availability of independent cost data. While the DoD has established procedures, the sheer volume and complexity of its contracting activities mean that oversight can be resource-intensive and may not always prevent cost overruns or suboptimal value realization.

What are the historical spending patterns for aircraft engine parts and maintenance within the Department of Defense?

Historical spending patterns for aircraft engine parts and maintenance within the Department of Defense are substantial and represent a significant portion of the overall defense budget allocated to aviation sustainment. These expenditures are driven by the large and aging fleets of military aircraft, the complexity of modern jet engines, and the need for continuous readiness. Spending typically includes procurement of new engines, spare parts, depot-level maintenance, field support, and upgrades. Contracts for these items often involve long-term sustainment strategies, sometimes awarded on a sole-source basis to original equipment manufacturers (OEMs) due to proprietary technology and specialized expertise. Fluctuations in spending can be influenced by modernization programs, operational tempo, and budget allocations. Analyzing historical data reveals a consistent and considerable investment in ensuring the airworthiness and operational capability of the Air Force's aircraft.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Engine and Engine Parts Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

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: RTX Corp

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

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

Financial Breakdown

Contract Ceiling: $81,691,979

Exercised Options: $81,691,979

Current Obligation: $71,380,179

Actual Outlays: $7,716,842

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA862615D0015

IDV Type: IDC

Timeline