DoD's $822M F135 Engine Parts Contract with RTX Corporation Lacks Competition, Raising Cost Concerns
Contract Overview
Contract Amount: $82,221,103 ($82.2M)
Contractor: RTX Corporation
Awarding Agency: Department of Defense
Start Date: 2021-01-01
End Date: 2027-09-30
Contract Duration: 2,463 days
Daily Burn Rate: $33.4K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: F135 CY2021 COMPONENT IMPROVEMENT PROGRAM (CIP) REQUIREMENTS
Place of Performance
Location: EAST HARTFORD, HARTFORD County, CONNECTICUT, 06118
Plain-Language Summary
Department of Defense obligated $82.2 million to RTX CORPORATION for work described as: F135 CY2021 COMPONENT IMPROVEMENT PROGRAM (CIP) REQUIREMENTS Key points: 1. Significant spending on critical aircraft engine components. 2. Sole-source award to RTX Corporation, the incumbent. 3. Potential for inflated costs due to lack of competition. 4. Long-term contract duration raises oversight questions.
Value Assessment
Rating: questionable
The contract's cost-plus-fixed-fee structure, combined with a sole-source award, makes it difficult to benchmark pricing effectively against potential alternatives. The lack of competition suggests pricing may not be optimized.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, awarded directly to RTX Corporation. This limits price discovery and potentially leads to higher costs for taxpayers as there is no market pressure to reduce prices.
Taxpayer Impact: The lack of competition on such a large contract likely results in higher taxpayer costs than if it were competitively bid.
Public Impact
Impacts readiness of the F135 fighter jet fleet. Affects the defense industrial base's reliance on a single supplier. Potential for long-term cost increases for a key military asset.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Cost-plus contract type
- Long contract duration
- Lack of small business participation
Positive Signals
- Supports critical defense capability
- Ensures supply chain for essential components
Sector Analysis
This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector. Spending benchmarks for sole-source, cost-plus contracts in this specialized defense area are difficult to establish due to unique technical requirements and limited suppliers.
Small Business Impact
The data indicates no specific set-aside for small businesses in this contract. Given the specialized nature of F135 components and the sole-source award to a large corporation, small business participation is likely minimal.
Oversight & Accountability
The sole-source nature of this contract warrants close oversight from the Department of the Navy to ensure costs are reasonable and performance meets requirements. Transparency in pricing and justification for the lack of competition is crucial.
Related Government Programs
- Aircraft Engine and Engine Parts Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Lack of competition
- Potential for cost overruns
- Limited visibility into pricing justification
- Long-term dependency on a single supplier
- No small business participation noted
Tags
aircraft-engine-and-engine-parts-manufac, department-of-defense, ct, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $82.2 million to RTX CORPORATION. F135 CY2021 COMPONENT IMPROVEMENT PROGRAM (CIP) REQUIREMENTS
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 $82.2 million.
What is the period of performance?
Start: 2021-01-01. End: 2027-09-30.
What is the justification for awarding this contract sole-source, and what steps are being taken to ensure fair and reasonable pricing?
The justification for a sole-source award typically relates to unique capabilities or the lack of viable alternatives. However, for critical defense systems like the F135, agencies should actively explore competition where feasible. Robust cost analysis, including should-cost reviews and benchmarking against similar sole-source contracts, is essential to ensure fair pricing. Regular audits and performance monitoring are also key oversight mechanisms.
What are the long-term risks associated with relying on a single supplier for F135 engine components, particularly regarding innovation and supply chain resilience?
Reliance on a single supplier like RTX Corporation for F135 engine components poses significant risks. It can stifle innovation as there's less incentive for the supplier to invest in new technologies or process improvements. Supply chain resilience is also compromised; any disruption at RTX could severely impact the F135 fleet's operational readiness. This dependency can also lead to price escalation over time without competitive pressure.
How does the cost-plus-fixed-fee structure impact the government's ability to control costs on this contract, especially given the sole-source nature?
The Cost-Plus-Fixed-Fee (CPFF) structure means the government reimburses the contractor for allowable costs plus a fixed fee representing profit. While the fee is fixed, the total cost is variable and depends on actual costs incurred. In a sole-source scenario, this structure offers less cost control than fixed-price contracts because the government bears the risk of cost overruns. The fixed fee provides some incentive for efficiency, but the primary cost control relies on robust government oversight of allowable costs.
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 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, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $82,221,103
Exercised Options: $82,221,103
Current Obligation: $82,221,103
Subaward Activity
Number of Subawards: 2
Total Subaward Amount: $100,371
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: N0001917G0005
IDV Type: BOA
Timeline
Start Date: 2021-01-01
Current End Date: 2027-09-30
Potential End Date: 2027-09-30 00:00:00
Last Modified: 2024-07-31
More Contracts from RTX Corporation
- LOT 12 AAC Long Lead for Propulsion Systems — $8.7B (Department of Defense)
- 200204!008533!1700!AF600 !naval AIR Systems Command !N0001902C3003 !A!N! !N! !20011026!20120430!001447952!001447952!001344142!n!united Technologies Corp !400 Main Street !east Hartford !ct!06108!22700!003!09!east Hartford !hartford !conn !+000014000000!n!n!004803460088!ac15!rdte/Aircraft-Eng/Manuf Develop !a1b!aircraft Engines and Spares !2ama!jast/Jsf !541710!E! !3! ! ! ! ! !99990909!B! ! !A! !d!n!r!1!001!n!1a!a!y!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $7.9B (Department of Defense)
- LOT 15 FMS-1 F135 Ctol Prop System — $7.5B (Department of Defense)
- FY21 PBL2 — $4.9B (Department of Defense)
- F119 Engine Long Term Sustainment Program for the Raptor Engine (spare) — $3.6B (Department of Defense)
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)