DoD awards $111.8M sole-source contract to RTX Corp for aircraft engine parts, extending through 2025

Contract Overview

Contract Amount: $111,772,989 ($111.8M)

Contractor: RTX Corporation

Awarding Agency: Department of Defense

Start Date: 2019-03-28

End Date: 2025-12-31

Contract Duration: 2,470 days

Daily Burn Rate: $45.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: THE PURPOSE OF THIS IS TO FUND PW SECOND SOURCE INITIATIVE. IGE::OT::IGE

Place of Performance

Location: EAST HARTFORD, HARTFORD County, CONNECTICUT, 06118

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $111.8 million to RTX CORPORATION for work described as: THE PURPOSE OF THIS IS TO FUND PW SECOND SOURCE INITIATIVE. IGE::OT::IGE Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. The contract's duration of over two years suggests a long-term need for these critical aircraft engine parts. 3. RTX Corporation, a major defense contractor, is the sole awardee, indicating a lack of accessible competition. 4. The contract type is Cost Plus Fixed Fee (CPFF), which can incentivize cost overruns if not closely monitored. 5. Performance is managed by the Defense Contract Management Agency, suggesting a focus on execution and delivery. 6. The contract is for aircraft engine and engine parts manufacturing, a vital component of military readiness.

Value Assessment

Rating: questionable

Without competitive bidding, it is difficult to benchmark the value for money. The Cost Plus Fixed Fee (CPFF) contract type, while common for complex procurements, carries inherent risks of cost escalation if not rigorously managed. The absence of competition means taxpayers are reliant on the contractor's good faith in reporting costs and the agency's oversight effectiveness to ensure a fair price. Further analysis would require access to detailed cost breakdowns and historical pricing for similar components.

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. This typically occurs when only one responsible source can provide the required goods or services. The lack of competition limits the government's ability to leverage market forces to achieve the best possible price and terms. It suggests that RTX Corporation is the only entity capable of fulfilling this specific requirement, potentially due to proprietary technology, unique manufacturing capabilities, or existing integration with DoD systems.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the price reductions typically achieved through competitive bidding. This can lead to higher overall costs for the government and, consequently, for taxpayers.

Public Impact

The primary beneficiaries are the Department of Defense, ensuring the continued availability of critical aircraft engine parts for its fleet. This contract supports the maintenance and operational readiness of military aircraft, contributing to national security. The contract's geographic impact is primarily tied to RTX Corporation's facilities, likely within the United States. It sustains jobs within the aerospace manufacturing sector, particularly at RTX Corporation and its supply chain partners.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Cost Plus Fixed Fee (CPFF) contract type can incentivize cost overruns if oversight is insufficient.
Lack of competition may reduce pressure on the contractor to innovate or improve efficiency.
Long contract duration increases exposure to potential cost increases over time.

Positive Signals

Award to a major defense contractor (RTX Corp) suggests a high likelihood of technical capability and experience.
Contract managed by Defense Contract Management Agency indicates established oversight processes are in place.
The contract addresses a critical need for aircraft engine parts, essential for military readiness.
The definitive contract structure provides a clear framework for the agreement.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft engine components. This is a highly specialized and capital-intensive industry dominated by a few large players like RTX Corporation. The market is characterized by long development cycles, stringent quality requirements, and significant government procurement. Comparable spending benchmarks are difficult to establish without more specific part details, but overall defense spending on aircraft sustainment is in the billions annually.

Small Business Impact

This contract does not appear to include a small business set-aside. Given the sole-source nature and the likely specialized requirements for aircraft engine parts, it is improbable that small businesses would be primary awardees. However, RTX Corporation may engage small businesses as subcontractors, though this is not explicitly detailed in the provided data. The impact on the small business ecosystem is likely indirect, depending on RTX's subcontracting practices.

Oversight & Accountability

Oversight for this contract is managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance. The Cost Plus Fixed Fee structure necessitates robust financial oversight to scrutinize costs and ensure the fixed fee remains appropriate. Transparency is generally limited in sole-source defense contracts, but reporting requirements under the contract terms would be subject to DCMA's review. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Engine Maintenance and Repair
Defense Logistics Agency Procurement
Aerospace Manufacturing Contracts
Military Aircraft Parts Procurement

Risk Flags

Sole-source award
Cost Plus Fixed Fee contract type
Lack of explicit small business subcontracting goals

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $111.8 million to RTX CORPORATION. THE PURPOSE OF THIS IS TO FUND PW SECOND SOURCE INITIATIVE. IGE::OT::IGE

Who is the contractor on this award?

The obligated recipient is RTX CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $111.8 million.

What is the period of performance?

Start: 2019-03-28. End: 2025-12-31.

What is the historical spending pattern for this specific contract or similar sole-source awards to RTX Corporation for aircraft engine parts?

Without specific historical data for this contract number or a more granular description of the parts, it's challenging to provide a precise historical spending pattern. However, RTX Corporation (formerly Raytheon Technologies) is a major defense contractor with a long history of supplying aircraft engines and components to the DoD. Their spending in this category typically runs into billions of dollars annually across various contracts. Sole-source awards for specialized components are not uncommon in the defense sector due to the complexity and limited number of qualified suppliers. Analyzing past sole-source awards to RTX for similar items, if available, would be crucial to identify any trends in pricing, duration, or cost escalation. The current award of $111.8 million over approximately 2.5 years suggests a significant but not unprecedented level of investment for critical sustainment parts.

How does the pricing structure (Cost Plus Fixed Fee) compare to other contract types for similar aircraft engine parts, and what are the associated risks?

Cost Plus Fixed Fee (CPFF) contracts are often used when the exact costs are uncertain but a reasonable estimate can be made, and the contractor is incentivized by a fixed fee. Compared to Firm-Fixed-Price (FFP) contracts, CPFF offers more flexibility for the government if unforeseen costs arise, but it shifts more cost risk to the government. The primary risk with CPFF is the potential for cost overruns, as the contractor is reimbursed for actual costs incurred plus a predetermined fee. This can incentivize less cost-consciousness unless robust oversight and auditing mechanisms are in place. For aircraft engine parts, where design, materials, and manufacturing processes can be complex and subject to change, CPFF might be deemed necessary. However, it requires diligent monitoring of expenditures and justification of costs by the contractor to ensure value for money.

What specific aircraft platforms or engine types are these parts intended for, and what is the criticality of these parts to operational readiness?

The provided data does not specify the exact aircraft platforms or engine types for which these parts are intended. However, RTX Corporation is a major supplier for numerous military aircraft engines, including those used in fighter jets (e.g., F-15, F-16, F-22, F-35), bombers, transport aircraft, and helicopters. The criticality of these parts to operational readiness is likely high, given that they are being procured under a sole-source definitive contract by the Department of Defense. Aircraft engine components are essential for maintaining flight safety and mission capability. A shortage or failure of critical parts can ground aircraft, impacting training, deployment, and overall military effectiveness. The long-term nature of the contract (ending in 2025) suggests these are not for immediate, short-term needs but rather for ongoing sustainment and operational support.

What is RTX Corporation's track record with the Defense Contract Management Agency (DCMA) on similar contracts?

RTX Corporation, as a major defense contractor, has extensive experience working with the Defense Contract Management Agency (DCMA) across a wide array of contracts. DCMA's role is to provide contract administration services, ensuring that contractors meet their obligations regarding cost, schedule, and performance. While specific performance metrics for RTX on this particular contract are not available in the provided data, the agency's continued awarding of contracts to RTX suggests a generally satisfactory working relationship and performance history. DCMA's oversight typically involves monitoring financial reporting, production progress, quality assurance, and compliance with contract terms. Any significant performance issues or compliance problems would likely be reflected in DCMA's contract administration activities and potentially influence future contracting decisions.

Are there any alternative suppliers or potential future competition for these or similar aircraft engine parts?

The sole-source nature of this award implies that, at the time of procurement, no other responsible sources were identified or available to meet the requirement. This could be due to proprietary technology held by RTX Corporation, specialized manufacturing processes, unique tooling, or existing integration with DoD systems that makes switching suppliers prohibitively expensive or technically infeasible. However, the government often seeks to introduce competition over time where possible. It is plausible that the DoD may conduct market research to identify potential alternative suppliers for future procurements or for different components within the same engine system. The long-term nature of the contract (through 2025) might provide an opportunity for such research and development to foster future competition.

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

Solicitation ID: N0001919R0054

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, 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: $111,772,989

Exercised Options: $111,772,989

Current Obligation: $111,772,989

Actual Outlays: $3,810,691

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $4,063,232

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline