DoD's $140.9M F135 Initial Spares contract awarded to RTX Corporation shows no competition

Contract Overview

Contract Amount: $140,923,068 ($140.9M)

Contractor: RTX Corporation

Awarding Agency: Department of Defense

Start Date: 2020-09-17

End Date: 2024-07-31

Contract Duration: 1,413 days

Daily Burn Rate: $99.7K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: F135 INITIAL SPARES

Place of Performance

Location: EAST HARTFORD, HARTFORD County, CONNECTICUT, 06118

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $140.9 million to RTX CORPORATION for work described as: F135 INITIAL SPARES Key points: 1. Contract awarded on a sole-source basis, raising concerns about price discovery and potential overpayment. 2. Significant contract value for aircraft engine parts, indicating critical support for military aviation. 3. Long performance period of over three years suggests sustained demand for these specialized spares. 4. The absence of competition limits opportunities for other manufacturers to enter the supply chain. 5. Focus on initial spares suggests a need for robust inventory management and strategic procurement. 6. Contract type is Firm Fixed Price, which shifts cost risk to the contractor but requires careful negotiation.

Value Assessment

Rating: questionable

The contract value of $140.9 million for initial spares is substantial. Without competitive bidding, it is difficult to benchmark the value for money. The firm fixed price structure provides some cost certainty, but the lack of competition means taxpayers may not be receiving the best possible price. Comparisons to similar sole-source awards for specialized aerospace components would be necessary to assess if the pricing is within an acceptable range, though such data is often proprietary.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, RTX Corporation, was solicited. This approach is typically used when a unique capability or proprietary technology is involved, or when urgency precludes a competitive process. The lack of competition means there were no other bidders to compare against, and no mechanism for price negotiation based on multiple offers. This limits the government's ability to ensure it is obtaining the most advantageous terms.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This contract's value suggests a significant potential for increased expenditure compared to a competed scenario.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Navy, ensuring operational readiness of F135 aircraft. Services delivered include the provision of initial spare parts essential for the maintenance and operation of F135 engines. Geographic impact is primarily within the United States, supporting domestic defense manufacturing and supply chains. Workforce implications include continued employment for skilled labor within RTX Corporation's aerospace manufacturing facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated prices and reduced value for taxpayer dollars.
Sole-source awards can create vendor lock-in, limiting future flexibility and potentially increasing long-term costs.
Dependence on a single supplier for critical spares poses a supply chain risk if the supplier faces production issues.

Positive Signals

Firm Fixed Price contract provides cost certainty for the government, assuming the initial price is fair.
Award to a known entity (RTX Corporation) suggests a level of established capability and reliability.
Ensures timely availability of critical spares, supporting the operational readiness of the F135 fleet.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government investment. Contracts for aircraft engine parts, like those for the F135, are crucial for maintaining military readiness. The market is dominated by a few large prime contractors and their specialized suppliers. Spending benchmarks for such specialized components are often difficult to ascertain due to proprietary information and the unique nature of defense systems. This contract fits within the broader category of sustainment and readiness support for major defense platforms.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, RTX Corporation, is a large aerospace company. While large prime contractors are often required to subcontract a portion of their work to small businesses, the specific subcontracting plan for this contract is not detailed here. The absence of a direct set-aside means small businesses are unlikely to be the primary recipients of this award, though they may benefit indirectly through RTX's supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the contract terms, particularly the Firm Fixed Price structure. Transparency is limited due to the sole-source nature of the award and the proprietary aspects of defense contracting. The Inspector General for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

F135 Engine Program
Fighter Aircraft Sustainment
Aerospace Parts Procurement
Department of Defense Logistics
Naval Aviation Readiness

Risk Flags

Sole-source award
Lack of competition
Potential for inflated pricing
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $140.9 million to RTX CORPORATION. F135 INITIAL SPARES

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 $140.9 million.

What is the period of performance?

Start: 2020-09-17. End: 2024-07-31.

What is RTX Corporation's track record with sole-source contracts for F135 components?

RTX Corporation (formerly Raytheon Technologies) and its subsidiaries have a long history of sole-source and limited-competition contracts related to the F135 program, given their role as a primary developer and manufacturer of the engine and its components. Analyzing their past performance on similar sole-source awards would involve reviewing contract histories for on-time delivery, quality compliance, and any cost overruns or disputes. Without specific data on prior sole-source awards for F135 initial spares, it's challenging to provide a precise track record. However, the F135 program itself has faced scrutiny regarding cost and schedule, and sole-source awards are often a contributing factor to these challenges. A deeper dive would require access to detailed contract performance reports and potentially IG investigations related to RTX's F135 contracts.

How does the $140.9 million value compare to similar initial spare parts procurements for major defense aircraft?

Benchmarking the $140.9 million value for F135 initial spares against similar procurements is complex due to the unique nature of advanced military aircraft and their components. The F135 engine is one of the most sophisticated and expensive fighter jet engines in the world, powering the F-35 Lightning II. Initial spares procurements are critical for establishing operational capability and typically involve a wide array of components, from complex sub-assemblies to individual parts. Given the F135's advanced technology and the program's scale, a value in the hundreds of millions for initial spares is not necessarily out of line with other major defense platforms. However, the lack of competition for this specific award makes a direct value-for-money comparison difficult. Competed contracts for similar high-value, specialized aerospace components might yield lower prices due to market forces.

What are the primary risks associated with a sole-source award of this magnitude for critical aircraft components?

The primary risks associated with a sole-source award of $140.9 million for critical F135 spares are financial and operational. Financially, the government lacks the leverage of competition, which can lead to inflated pricing and reduced value for taxpayer money. Without competing bids, there's less incentive for the contractor to offer the lowest possible price. Operationally, reliance on a single supplier for critical components creates a significant supply chain vulnerability. Any disruption in RTX Corporation's production, quality control issues, or unforeseen events affecting their operations could directly impact the availability of essential spares, potentially grounding aircraft and jeopardizing mission readiness. This vendor lock-in also limits the government's flexibility in sourcing or negotiating future requirements.

What does the 'Aircraft Engine and Engine Parts Manufacturing' (NAICS 336412) sector context imply for this contract?

The NAICS code 336412, 'Aircraft Engine and Engine Parts Manufacturing,' signifies that this contract falls within a highly specialized and technologically advanced segment of the aerospace industry. This sector is characterized by stringent quality requirements, long product development cycles, and significant capital investment. Companies operating in this space, like RTX Corporation, often possess unique intellectual property and manufacturing capabilities. The high barriers to entry mean that the market for specific, advanced engine parts is often limited to a few qualified suppliers, making sole-source or limited-competition awards more common, though not necessarily ideal from a cost-efficiency perspective. This context underscores the critical nature of the F135 engine and the specialized expertise required for its maintenance and sustainment.

How does the Firm Fixed Price (FFP) contract type influence risk and cost for this sole-source award?

The Firm Fixed Price (FFP) contract type shifts the majority of cost risk to the contractor, RTX Corporation. This means that RTX is obligated to complete the work for the agreed-upon price, regardless of their actual costs. For the government, this provides cost certainty, as the total expenditure is known upfront, assuming no contract modifications. However, in a sole-source scenario, the 'firm' price might be negotiated without the benefit of competitive benchmarking, potentially leading to a higher initial price than might be achieved in a competed environment. While FFP protects the government from cost overruns, it does not guarantee the 'best value' if the initial price is not rigorously negotiated or benchmarked against fair market rates. The contractor bears the risk of cost overruns, but also stands to gain higher profit margins if they can deliver the spares at a cost significantly below the fixed price.

What are the historical spending patterns for F135 initial spares, and how does this $140.9M award fit?

Historical spending patterns for F135 initial spares are intrinsically linked to the F-35 program's multi-year production and sustainment phases. The F135 engine program is one of the largest defense contracts globally, with cumulative spending reaching billions of dollars over its lifecycle. Initial spares procurements are typically concentrated during the early stages of fleet deployment and ramp-up, as well as during major upgrades or modifications. A $140.9 million award for initial spares suggests a significant procurement event, likely supporting the fielding of a new batch of aircraft or addressing a critical need for foundational spare parts inventory. Without access to specific historical data on prior initial spares awards for the F135, it's difficult to place this contract precisely within a trend. However, it represents a substantial investment consistent with the high cost and strategic importance of the F-35 program and its sustainment.

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

Pricing Type: FIRM FIXED PRICE (J)

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: $140,923,068

Exercised Options: $140,923,068

Current Obligation: $140,923,068

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001920D0013

IDV Type: IDC

Timeline