DoD's $681M LRIP 7 AAC contract with RTX Corporation raises concerns over competition and value
Contract Overview
Contract Amount: $681,361,890 ($681.4M)
Contractor: RTX Corporation
Awarding Agency: Department of Defense
Start Date: 2012-09-28
End Date: 2017-10-15
Contract Duration: 1,843 days
Daily Burn Rate: $369.7K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: LRIP 7 AAC
Place of Performance
Location: EAST HARTFORD, HARTFORD County, CONNECTICUT, 06118
Plain-Language Summary
Department of Defense obligated $681.4 million to RTX CORPORATION for work described as: LRIP 7 AAC Key points: 1. Significant spending on aircraft engines and parts, with limited transparency. 2. RTX Corporation is the sole provider, raising competition concerns. 3. Fixed Price Incentive contract type may not fully mitigate cost risks. 4. Long contract duration (1843 days) impacts adaptability and potential savings.
Value Assessment
Rating: questionable
The contract's value of $681M for LRIP 7 AAC is substantial. Without competitive benchmarking or detailed cost breakdowns, assessing its fairness against similar contracts is difficult. The lack of competition inherently limits the government's ability to secure the best possible price.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This significantly limits price discovery and negotiation leverage for the Department of Defense, potentially leading to higher costs than if multiple vendors had vied for the contract.
Taxpayer Impact: The absence of competition likely results in taxpayers paying a premium for these aircraft engines and parts, as market forces are not being utilized to drive down costs.
Public Impact
Taxpayers may be overpaying due to the lack of competitive bidding. Dependence on a single supplier (RTX) creates supply chain vulnerability. Limited public data hinders independent assessment of contract fairness and efficiency. Long-term commitment to a sole-source provider could stifle innovation in the sector.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Lack of competition
- Long contract duration
- Limited transparency on pricing
Positive Signals
- Definitive contract award
- Fixed Price Incentive structure
Sector Analysis
This contract falls under Aircraft Engine and Engine Parts Manufacturing. Spending in this sector is critical for defense readiness but often involves complex, high-value procurements. Benchmarks are difficult without competitive data, but large sole-source awards warrant scrutiny.
Small Business Impact
The data provided does not indicate any specific involvement or benefit for small businesses in this contract. Sole-source awards often bypass opportunities for small business participation.
Oversight & Accountability
The lack of competition suggests potential weaknesses in oversight regarding price reasonableness. Further review is needed to ensure the Department of Defense received fair value and that procurement processes were appropriately justified for a sole-source award.
Related Government Programs
- Aircraft Engine and Engine Parts Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Sole-source award limits price competition.
- Potential for inflated costs due to lack of bidding.
- Long contract duration may not reflect current market conditions.
- Limited transparency on cost justification.
- Supply chain risk associated with single supplier.
Tags
aircraft-engine-and-engine-parts-manufac, department-of-defense, ct, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $681.4 million to RTX CORPORATION. LRIP 7 AAC
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 $681.4 million.
What is the period of performance?
Start: 2012-09-28. End: 2017-10-15.
What was the justification for awarding this contract on a sole-source basis, and were alternative competitive strategies considered?
The justification for a sole-source award typically involves factors like unique capabilities, urgent needs, or lack of viable alternatives. Without specific documentation, it's impossible to confirm the exact reasoning. However, the absence of competition inherently limits the government's ability to explore alternative strategies that could foster price reduction and innovation through market engagement.
How does the unit cost of these aircraft engines and parts compare to industry benchmarks or previous competitive procurements?
Direct comparison is challenging without access to specific cost data and industry benchmarks for this particular LRIP 7 AAC. However, the sole-source nature of the award raises a red flag, suggesting that the government may not have achieved the most cost-effective pricing achievable through a competitive process. A detailed cost analysis would be required for a definitive assessment.
What mechanisms are in place to ensure cost control and value for money throughout the 1843-day contract duration, given the fixed-price incentive structure?
Fixed Price Incentive contracts aim to share cost risks and rewards between the government and contractor. However, the effectiveness relies heavily on robust baseline cost estimates and clear incentive targets. Continuous oversight and performance monitoring are crucial to ensure RTX Corporation meets performance requirements while managing costs effectively within the agreed-upon incentive framework.
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: FIXED PRICE INCENTIVE (L)
Evaluated Preference: NONE
Contractor Details
Parent Company: RTX Corp (UEI: 001344142)
Address: 400 MAIN ST, EAST HARTFORD, CT, 06108
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $681,361,890
Exercised Options: $681,361,890
Current Obligation: $681,361,890
Subaward Activity
Number of Subawards: 1
Total Subaward Amount: $95,076
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2012-09-28
Current End Date: 2017-10-15
Potential End Date: 2017-10-15 00:00:00
Last Modified: 2021-02-25
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