Over $509M for LRIP 2 AAC LONG LEAD aircraft engines, awarded to RTX CORPORATION by the Department of Defense

Contract Overview

Contract Amount: $509,140,024 ($509.1M)

Contractor: RTX Corporation

Awarding Agency: Department of Defense

Start Date: 2007-08-24

End Date: 2014-06-16

Contract Duration: 2,488 days

Daily Burn Rate: $204.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: LRIP 2 AAC LONG LEAD

Place of Performance

Location: EAST HARTFORD, HARTFORD County, CONNECTICUT, 06108

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $509.1 million to RTX CORPORATION for work described as: LRIP 2 AAC LONG LEAD Key points: 1. Value for money is difficult to assess due to the cost-plus award fee structure, which incentivizes cost incurrence. 2. The contract was not competed, raising questions about price discovery and potential overpayment. 3. A long contract duration of 2488 days suggests a complex, multi-year program. 4. The award to a single, large incumbent contractor may limit opportunities for new entrants or innovative solutions. 5. Performance context is limited without specific award fee details or objective performance metrics. 6. This contract falls within the Defense sector, specifically for aircraft engine manufacturing.

Value Assessment

Rating: questionable

The contract's cost-plus award fee (CPAF) structure makes direct value-for-money assessment challenging. CPAF contracts can incentivize contractors to incur costs to achieve higher award fees, potentially leading to less cost-consciousness than fixed-price contracts. Benchmarking against similar LRIP (Low Rate Initial Production) contracts for aircraft engines is difficult without more specific technical details and performance data. The total award value of over $509 million over approximately 7 years indicates a significant investment.

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 potential suppliers. This typically occurs when a specific contractor possesses unique capabilities, intellectual property, or is the only source capable of meeting the requirement. The lack of competition means that the government did not benefit from a competitive bidding process, which usually drives down prices and encourages innovation.

Taxpayer Impact: The absence of competition means taxpayers may not have received the lowest possible price for these aircraft engines, as there was no market pressure to reduce costs.

Public Impact

The primary beneficiaries are the Department of Defense and its aviation units, receiving critical components for aircraft. The services delivered include the production of aircraft engines and engine parts under a low rate initial production phase. The geographic impact is primarily within the United States, supporting defense manufacturing and supply chains. Workforce implications include employment for engineers, technicians, and manufacturing personnel at RTX CORPORATION and its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition limits potential cost savings for taxpayers.
Cost-plus award fee structure may not be the most cost-effective pricing model.
Long contract duration could lead to cost overruns if not managed tightly.

Positive Signals

Award to a major defense contractor like RTX CORPORATION suggests access to established expertise and production capabilities.
The contract supports critical defense readiness and modernization efforts.
The definitive contract award provides a framework for a long-term relationship.

Sector Analysis

This contract falls within the Defense Industrial Base, specifically the Aircraft Engine and Engine Parts Manufacturing sector. This sector is characterized by high barriers to entry, significant R&D investment, and long product development cycles. Spending in this area is crucial for maintaining military readiness and technological superiority. Comparable spending benchmarks would involve other LRIP contracts for major weapon systems or their components, often running into hundreds of millions or billions of dollars.

Small Business Impact

The contract data indicates that small business participation was not a stated requirement or set-aside (ss: false, sb: false). This suggests that the primary award was made to a large business (RTX CORPORATION). There is no explicit information on subcontracting plans for small businesses within this specific award notice. Therefore, the direct impact on the small business ecosystem from this particular contract appears limited, though the prime contractor may engage small businesses in its broader supply chain.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy's contracting and program management offices. The cost-plus award fee structure necessitates robust oversight to ensure performance objectives are met and costs are reasonable. Inspector General (IG) jurisdiction would apply for investigations into fraud, waste, or abuse. Transparency is generally limited for specific contract details related to pricing and performance metrics in sole-source defense contracts.

Related Government Programs

Aircraft Engine Manufacturing
Defense Procurement
Low Rate Initial Production
Cost-Plus Contracts
Naval Aviation Programs

Risk Flags

Sole-source award
Cost-plus contract type
Lack of transparency on performance metrics
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $509.1 million to RTX CORPORATION. LRIP 2 AAC LONG LEAD

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 Navy).

What is the total obligated amount?

The obligated amount is $509.1 million.

What is the period of performance?

Start: 2007-08-24. End: 2014-06-16.

What specific aircraft platform is this LRIP 2 AAC LONG LEAD contract for, and what are the key performance parameters?

The provided data does not specify the exact aircraft platform for which the LRIP 2 AAC LONG LEAD contract is intended. 'AAC' could potentially refer to 'Advanced Aerial Combat' or a specific engine program designation. 'LONG LEAD' typically refers to components or materials with extended procurement lead times. Without further details, identifying the specific platform and its key performance parameters (e.g., thrust, fuel efficiency, lifespan, reliability metrics) is not possible from this data alone. This information is usually found in detailed program documentation and technical specifications not present in the award notice.

How does the cost-plus award fee (CPAF) structure compare to other contract types for engine manufacturing, and what are its implications for cost control?

Cost-Plus Award Fee (CPAF) contracts are often used when the scope of work is not precisely defined, or when performance incentives are critical. Unlike fixed-price contracts, CPAF reimburses the contractor for allowable costs plus a fee that is based on achieving specific performance targets. This structure can be beneficial for complex, R&D-intensive programs like advanced engine development, as it allows flexibility and encourages innovation. However, it also shifts cost risk to the government and requires rigorous oversight to ensure costs are reasonable and performance targets are met. Compared to fixed-price incentive (FPI) or firm-fixed-price (FFP) contracts, CPAF offers less certainty on final cost but can yield better performance outcomes if managed effectively. The implication for cost control is that the government must actively monitor contractor spending and performance to ensure the award fee is justified and that costs remain within acceptable bounds.

What is the historical spending trend for aircraft engine manufacturing contracts awarded by the Department of the Navy?

Analyzing the historical spending trend for aircraft engine manufacturing contracts by the Department of the Navy requires access to comprehensive contract databases beyond this single award. However, it is generally understood that the Navy, as a major branch of the DoD, invests significantly in advanced aviation capabilities. Spending in this sector is often characterized by large, multi-year procurements for new platforms and upgrades to existing fleets. Factors influencing spending include geopolitical threats, technological advancements, fleet modernization plans, and budget allocations. Contracts for major engine programs can span decades and involve billions of dollars in cumulative spending, often through multiple production phases (e.g., LRIP, full-rate production) and sustainment contracts. The trend is typically towards higher costs for more advanced, capable engines, driven by increased performance requirements and complex manufacturing processes.

What are the potential risks associated with a sole-source award for critical defense components like aircraft engines?

Sole-source awards for critical defense components like aircraft engines carry several potential risks. Firstly, the lack of competition can lead to higher prices than might be achieved in a competitive bidding process, as the contractor faces less pressure to minimize costs. Secondly, it can foster complacency in the contractor, potentially reducing incentives for innovation or efficiency improvements. Thirdly, it creates a dependency on a single supplier, making the supply chain vulnerable to disruptions if that supplier experiences financial difficulties, production issues, or geopolitical challenges. Lastly, it can limit the government's ability to leverage new technologies or alternative solutions that might be offered by other potential suppliers.

What is RTX CORPORATION's track record with the Department of Defense, particularly in aircraft engine contracts?

RTX CORPORATION (formerly Raytheon Technologies, and prior to that, Pratt & Whitney, a key component) has a long and extensive track record as a major supplier of aircraft engines and related systems to the Department of Defense, including the Department of the Navy. They are a primary provider for numerous military aircraft platforms, including fighter jets, bombers, and transport aircraft. Their history includes delivering engines for programs like the F-35, F-15, F-16, B-52, and various naval aviation platforms. While generally recognized for technological capability, like any large defense contractor, they have been involved in contracts that have faced scrutiny regarding cost, schedule, and performance. Their extensive experience suggests a deep understanding of military requirements and production capabilities, but also highlights the importance of robust contract management and oversight by the DoD.

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: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp (UEI: 001344142)

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

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

Financial Breakdown

Contract Ceiling: $509,140,024

Exercised Options: $509,140,024

Current Obligation: $509,140,024

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline