DoD's $330M Initial Spares Contract with RTX Corporation Raises Concerns Over Competition and Value
Contract Overview
Contract Amount: $330,007,223 ($330.0M)
Contractor: RTX Corporation
Awarding Agency: Department of Defense
Start Date: 2021-09-03
End Date: 2025-12-31
Contract Duration: 1,580 days
Daily Burn Rate: $208.9K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: INITIAL SPARES FY22
Place of Performance
Location: EAST HARTFORD, HARTFORD County, CONNECTICUT, 06118
Plain-Language Summary
Department of Defense obligated $330.0 million to RTX CORPORATION for work described as: INITIAL SPARES FY22 Key points: 1. Significant contract value of over $330 million for aircraft engine parts. 2. Sole-source award to RTX Corporation limits competitive pricing and innovation. 3. Long contract duration (2021-2025) may not reflect current market conditions. 4. Lack of small business participation noted.
Value Assessment
Rating: questionable
The contract value of $330M for initial spares is substantial. Without competitive bidding, it's difficult to assess if this price is optimal compared to market rates for similar aircraft engine parts. The benchmark of $208,865 for a related contract suggests potential for significant price variation.
Cost Per Unit: $208,865
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only one vendor, RTX Corporation, was considered. This significantly limits price discovery and potentially leads to higher costs for taxpayers as competition is absent.
Taxpayer Impact: The absence of competition in this large sole-source contract likely results in higher costs for the Department of Defense, ultimately impacting taxpayer funds.
Public Impact
Taxpayers may be overpaying for critical aircraft engine spares due to the lack of competition. The long-term nature of the contract could lock the DoD into potentially suboptimal pricing. Limited opportunities for smaller, innovative businesses to enter the supply chain for these parts.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Lack of small business participation
- Long contract duration
- High contract value
Positive Signals
- Firm Fixed Price contract type
- Essential for aircraft maintenance
Sector Analysis
This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector, a critical component of the defense industrial base. Spending in this sector is often characterized by high barriers to entry and significant R&D costs, but also by potential for consolidation and limited competition.
Small Business Impact
The data indicates that small businesses were not involved in this contract (ss: false, sb: false). This suggests a missed opportunity to foster small business growth within the defense supply chain for critical aircraft components.
Oversight & Accountability
The sole-source nature of this award warrants scrutiny from oversight bodies to ensure fair pricing and prevent potential waste, fraud, and abuse. A review of the justification for the sole-source award is recommended.
Related Government Programs
- Aircraft Engine and Engine Parts Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Sole-source award limits competition and price discovery.
- Potential for inflated pricing due to lack of competitive pressure.
- No small business participation noted.
- Long contract duration may not reflect current market conditions.
- High contract value requires strong oversight.
Tags
aircraft-engine-and-engine-parts-manufac, department-of-defense, ct, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $330.0 million to RTX CORPORATION. INITIAL SPARES FY22
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 $330.0 million.
What is the period of performance?
Start: 2021-09-03. End: 2025-12-31.
What was the justification for awarding this substantial contract on a sole-source basis, and has the DoD explored alternative competitive strategies?
The justification for a sole-source award typically involves unique capabilities, proprietary technology, or urgent needs where competition is not feasible. However, for initial spares, especially over a multi-year period, the Department of Defense should rigorously assess if competitive strategies, such as phased procurements or seeking alternative sources for non-proprietary components, could have been employed to achieve better value and foster a more robust supply chain.
How does the unit cost of these initial spares compare to industry benchmarks or previous contracts for similar components, considering the $208,865 benchmark provided?
Without detailed breakdowns of the specific parts and quantities within this $330 million contract, a direct comparison to the $208,865 benchmark is challenging. However, the benchmark itself, if representative of similar components, suggests that the overall contract value could be significantly impacted by unit pricing. A thorough cost analysis comparing the average unit price across this contract against the benchmark and other available market data is crucial to identify potential overpricing.
What measures are in place to ensure accountability and performance from RTX Corporation throughout the 1580-day contract duration, especially given the lack of competitive pressure?
Accountability is typically managed through contract clauses, performance metrics, and delivery schedules outlined in the contract. For a sole-source award, robust government oversight, including regular performance reviews, quality assurance checks, and adherence to delivery timelines, becomes even more critical. The Department of Defense should actively monitor RTX's performance against contract requirements to mitigate risks associated with the absence of competitive market forces.
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: $330,007,223
Exercised Options: $330,007,223
Current Obligation: $330,007,223
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
Start Date: 2021-09-03
Current End Date: 2025-12-31
Potential End Date: 2025-12-31 00:00:00
Last Modified: 2025-05-06
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