DoD's $690M F135 Component Improvement Program contract awarded to RTX Corporation for aircraft engine parts

Contract Overview

Contract Amount: $68,985,890 ($69.0M)

Contractor: RTX Corporation

Awarding Agency: Department of Defense

Start Date: 2022-06-30

End Date: 2025-12-31

Contract Duration: 1,280 days

Daily Burn Rate: $53.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: F135 CY2022 COMPONENT IMPROVEMENT PROGRAM (CIP) REQUIREMENTS

Place of Performance

Location: EAST HARTFORD, HARTFORD County, CONNECTICUT, 06118

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $69.0 million to RTX CORPORATION for work described as: F135 CY2022 COMPONENT IMPROVEMENT PROGRAM (CIP) REQUIREMENTS Key points: 1. Value for money is assessed through benchmarking against similar engine component contracts and market rates. 2. Competition dynamics indicate a sole-source award, potentially limiting price discovery and increasing costs. 3. Risk indicators include the sole-source nature and the cost-plus-fixed-fee pricing structure. 4. Performance context is tied to the critical F135 engine, essential for multiple U.S. military branches. 5. Sector positioning places this contract within the high-value aerospace and defense manufacturing industry.

Value Assessment

Rating: questionable

The contract's value is difficult to benchmark precisely due to its sole-source nature and the specialized components involved. The Cost Plus Fixed Fee (CPFF) structure, while common for complex R&D, can lead to cost overruns if not tightly managed. Without competitive bids, it's challenging to ascertain if the fixed fee adequately compensates the contractor for the effort or if it represents an optimal price for the government. Further analysis of historical CPFF contracts for similar engine components would be necessary for a more robust value assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. This typically occurs when a single contractor possesses unique capabilities, intellectual property, or is the sole provider of a critical component. The lack of competition means the government did not benefit from multiple offers, which could have driven down prices through bidding. The justification for sole-source awards requires rigorous documentation to ensure it is in the government's best interest.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as there is no competitive pressure to reduce prices. This necessitates strong government oversight to ensure fair pricing and prevent potential overspending.

Public Impact

The primary beneficiaries are the U.S. Air Force, Navy, and Marine Corps, who rely on the F135 engine for their fighter jets. The contract delivers essential component improvements and sustainment for the F135 propulsion system. Geographic impact is national, supporting a critical defense capability across multiple military branches. Workforce implications include supporting highly skilled manufacturing and engineering jobs within the aerospace sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Cost-plus-fixed-fee structure may incentivize cost increases.
Dependence on a single contractor for critical components poses supply chain risk.
Long-term sustainment costs for complex defense systems can be substantial.

Positive Signals

Contract supports a critical national defense asset (F135 engine).
RTX Corporation (Pratt & Whitney) is a sole-source provider with extensive experience.
Component Improvement Program aims to enhance engine reliability and performance.
Long-term contract provides stability for sustainment and upgrades.

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 prime contractors. The market for advanced military aircraft engines is characterized by long development cycles, significant R&D investment, and strong government reliance. Comparable spending benchmarks would involve other sustainment and upgrade contracts for major military aircraft propulsion systems.

Small Business Impact

This contract does not appear to involve a small business set-aside. Given the sole-source nature and the specialized requirements for F135 engine components, it is unlikely that small businesses would be the primary awardees. However, the prime contractor, RTX Corporation, may engage small businesses as subcontractors for specific parts or services, though this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense and the Department of the Navy. Given the sole-source award and CPFF structure, rigorous oversight is crucial to monitor costs, performance, and adherence to contract terms. Inspector General investigations could be initiated if any irregularities or potential fraud are suspected. Transparency is enhanced through contract reporting mechanisms, though the sole-source nature limits public visibility into the negotiation process.

Related Government Programs

F135 Propulsion System Sustainment
Fighter Aircraft Engine Maintenance
Aerospace Component Manufacturing
Department of Defense Aircraft Procurement
Military Engine Research and Development

Risk Flags

Sole-source award
Cost-plus-fixed-fee pricing
Critical component dependency
Long-term sustainment costs

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $69.0 million to RTX CORPORATION. F135 CY2022 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 $69.0 million.

What is the period of performance?

Start: 2022-06-30. End: 2025-12-31.

What is the historical spending trend for the F135 Component Improvement Program (CIP) with RTX Corporation?

Historical spending data for the F135 CIP with RTX Corporation reveals a consistent and significant investment over multiple fiscal years. While the provided data focuses on CY2022 with an award of $68.98 million, broader analysis of past contracts indicates a multi-year commitment to improving and sustaining the F135 engine. For instance, previous years have seen similar or even higher annual obligations for CIP activities, reflecting the ongoing need for engine upgrades, reliability enhancements, and part replacements. The total obligation for the F135 program, encompassing sustainment, upgrades, and new procurement, runs into billions of dollars annually. This specific CIP contract represents a portion of that larger sustainment and modernization effort, underscoring the long-term financial commitment the DoD has to maintaining the operational readiness of the F135 engine fleet.

How does the pricing structure (Cost Plus Fixed Fee) for this contract compare to other engine component contracts?

The Cost Plus Fixed Fee (CPFF) pricing structure is common for complex development, research, and sustainment efforts where the scope of work can be difficult to define precisely upfront, or where innovation is a key objective. For engine component improvement programs like this one, CPFF allows the contractor to incur allowable costs and receive a predetermined fixed fee. Compared to fixed-price contracts, CPFF offers less price certainty for the government but can be more adaptable to evolving technical requirements. Benchmarking CPFF contracts for similar aerospace components is challenging due to proprietary data and varying levels of complexity. However, the 'fixed fee' portion is typically negotiated as a percentage of the estimated cost, and its reasonableness is a key area for government negotiation and oversight to ensure value for money.

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

The primary risks associated with a sole-source award for critical aircraft engine components are significant. Firstly, the lack of competition can lead to inflated prices, as the government does not benefit from the cost-reduction pressures inherent in a competitive bidding process. Secondly, it creates a high degree of dependency on a single supplier. This dependency can lead to supply chain vulnerabilities; any disruption at the sole-source provider, whether due to production issues, financial instability, or geopolitical factors, could severely impact the operational readiness of the aircraft. Furthermore, without competitive alternatives, the government may have limited leverage to negotiate favorable terms or drive innovation, potentially leading to higher long-term sustainment costs.

What is the expected impact of this contract on the operational readiness of the F135 fleet?

This contract is expected to have a positive and crucial impact on the operational readiness of the F135 fleet. The F135 engine is the sole power plant for all variants of the F-35 Lightning II Joint Strike Fighter, a cornerstone of U.S. air superiority and a key asset for allied nations. The Component Improvement Program (CIP) specifically targets enhancements to the engine's reliability, durability, and performance. By addressing potential component failures, improving efficiency, and incorporating design upgrades, this contract directly contributes to reducing unscheduled maintenance, increasing engine availability, and ensuring that F-35 aircraft are mission-capable when needed. Sustained investment in CIP is vital for maintaining the high operational tempo and readiness required for modern air combat operations.

How does the Department of Defense ensure fair pricing and value when awarding sole-source contracts for specialized defense systems?

The Department of Defense employs several mechanisms to ensure fair pricing and value in sole-source contract awards. For critical systems like the F135 engine components, where competition is often not feasible, the DoD relies heavily on robust cost analysis and should-cost modeling. This involves detailed examination of the contractor's proposed costs, including labor, materials, and overhead, benchmarked against historical data, industry standards, and independent government estimates. Price negotiation objectives are established based on this analysis. Furthermore, contract clauses often require the contractor to provide detailed cost breakdowns and justifications. For Cost Plus Fixed Fee contracts, the negotiation of the fixed fee itself is a critical step, aiming to ensure it is reasonable for the effort required and incentivizes efficient performance. Oversight by contracting officers and program managers is continuous throughout the contract lifecycle.

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, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $68,985,890

Exercised Options: $68,985,890

Current Obligation: $68,985,890

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001922G0001

IDV Type: BOA

Timeline