DoD awarded $19.5M for aircraft engines and spares, with limited competition and a fixed-price award fee structure

Contract Overview

Contract Amount: $19,534,210 ($19.5M)

Contractor: RTX Corporation

Awarding Agency: Department of Defense

Start Date: 2005-04-14

End Date: 2010-11-18

Contract Duration: 2,044 days

Daily Burn Rate: $9.6K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE AWARD FEE

Sector: Defense

Official Description: 200507!001049!5700!FA8104!OC-ALC/LPK !SP040001D9405 !A!N! !N!SD68 ! !20050414!20061231!001447952!835551474!001344142!N!UNITED TECHNOLOGIES CORPORATIO!400 MAIN ST !EAST HARTFORD !CT!06108!22700!003!09!EAST HARTFORD !HARTFORD !CONN !+000019537437!N!N!000000000000!2840!GAS TURBINES AND JET ENGINES, ACFT & COMPS !A1B!AIRCRAFT ENGINES AND SPARES !000 !* !336412!E! !5!A!S! ! ! !20200930!B! ! !N!Z!D!U!M!1!001!N!1A!A!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!B!Y! ! ! ! ! ! !0001! !

Place of Performance

Location: EAST HARTFORD, HARTFORD County, CONNECTICUT, 06108

State: Connecticut Government Spending

Plain-Language Summary

Department of Defense obligated $19.5 million to RTX CORPORATION for work described as: 200507!001049!5700!FA8104!OC-ALC/LPK !SP040001D9405 !A!N! !N!SD68 ! !20050414!20061231!001447952!835551474!001344142!N!UNITED TECHNOLOGIES CORPORATIO!400 MAIN ST !EAST HARTFORD !CT!06108!22700!003!09!EAST HARTFORD !HART… Key points: 1. Contract awarded for aircraft engines and spares, indicating a need for specialized aviation components. 2. The contract utilized a fixed-price award fee structure, aiming to balance cost control with performance incentives. 3. Limited competition suggests potential challenges in achieving the best possible pricing and value. 4. The contract duration was substantial, spanning over 2000 days, implying a long-term requirement. 5. The awardee, United Technologies Corporation (now RTX Corporation), is a major aerospace manufacturer. 6. The contract was awarded by the Department of Defense, highlighting its role in national security and defense readiness.

Value Assessment

Rating: fair

The contract value of $19.5 million for aircraft engines and spares appears moderate for a defense procurement of this nature. Without specific benchmarks for comparable engine components or overhaul services, it's difficult to definitively assess value for money. The fixed-price award fee structure suggests an attempt to control costs while incentivizing performance, but the ultimate cost-effectiveness depends heavily on the achieved award fee and the contractor's efficiency. The limited competition may have led to a higher price than could have been achieved in a more robustly competed scenario.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was not fully and openly competed, indicating that the solicitation was likely restricted to a limited number of sources. This could be due to specific technical requirements, existing relationships, or other factors that narrowed the field of potential bidders. With limited competition, the government may not have received the full benefit of a broad market search, potentially impacting price discovery and the range of innovative solutions considered.

Taxpayer Impact: Limited competition can mean taxpayers may have paid a premium compared to what might have been achieved with a wider range of bids. It also suggests fewer opportunities for new or smaller businesses to enter the defense supply chain for these critical components.

Public Impact

The primary beneficiaries are the Department of Defense and its aviation units, ensuring the availability of critical aircraft engine components. Services delivered include the provision of aircraft engines and spare parts, essential for maintaining operational readiness of military aircraft. The geographic impact is primarily within the United States, with the contractor based in Connecticut, but the operational impact extends to wherever DoD aircraft are deployed. Workforce implications include support for skilled manufacturing and maintenance jobs within the aerospace sector, particularly at the prime contractor's facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may restrict price negotiation and potentially lead to higher costs for taxpayers.
The fixed-price award fee structure requires careful monitoring to ensure the 'award' portion is justified by performance.
Reliance on a limited number of suppliers for critical aircraft components can create supply chain vulnerabilities.

Positive Signals

The contract is with a major, established aerospace manufacturer (RTX Corporation), suggesting a high likelihood of technical capability and product reliability.
The fixed-price award fee structure, if managed well, can incentivize contractor performance and efficiency.
The contract addresses a critical need for aircraft engines and spares, directly supporting defense operations.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft engines and related parts. The market for military aircraft engines is dominated by a few large, specialized manufacturers. Spending in this area is driven by defense budgets, aircraft modernization programs, and the operational tempo of military aviation. Comparable spending benchmarks would typically involve analyzing other contracts for similar engine types, overhaul services, or spare parts procurement within the DoD.

Small Business Impact

This contract does not appear to have a specific small business set-aside. Given the nature of aircraft engine manufacturing and supply, it is likely that the prime contractor, RTX Corporation, would subcontract portions of the work. Analysis would be needed to determine if small businesses are included in the subcontracting plan and to what extent they benefit from this large prime contract.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contract management and inspection agencies, such as the Defense Contract Management Agency (DCMA). Accountability measures are embedded in the contract's performance requirements and the award fee structure. Transparency is generally maintained through contract databases, though specific performance details and award fee determinations may be less public.

Related Government Programs

Aircraft Engine Maintenance and Repair
Aerospace Component Manufacturing
Defense Logistics and Supply Chain Management
Military Aircraft Procurement
Fixed-Wing Aircraft Operations

Risk Flags

Limited Competition
Potential for Cost Overruns
Supply Chain Risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.5 million to RTX CORPORATION. 200507!001049!5700!FA8104!OC-ALC/LPK !SP040001D9405 !A!N! !N!SD68 ! !20050414!20061231!001447952!835551474!001344142!N!UNITED TECHNOLOGIES CORPORATIO!400 MAIN ST !EAST HARTFORD !CT!06108!22700!003!09!EAST HARTFORD !HARTFORD !CONN !+000019537437!N!N!000000000000!2840!GAS TURBINES AND JET ENGINES, ACFT & COMPS !A1B!AIRCRAFT ENGINES AND SPARES !000 !* !336412!E! !5!A!S! ! ! !202

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 $19.5 million.

What is the period of performance?

Start: 2005-04-14. End: 2010-11-18.

What is the historical spending trend for aircraft engines and spares within the Department of Defense over the last decade?

Historical spending on aircraft engines and spares within the Department of Defense has been substantial and relatively consistent, driven by the need to maintain a large and aging fleet of military aircraft. While specific figures fluctuate year-to-year based on modernization programs, operational tempo, and budget allocations, the overall trend indicates a sustained high level of investment. Major spending categories include new engine procurement for new aircraft platforms, sustainment contracts for existing engines (including overhauls and repairs), and the purchase of spare parts to ensure operational readiness. The market is characterized by a limited number of prime contractors, such as RTX Corporation (formerly United Technologies Corporation) and General Electric, who hold the majority of these high-value contracts. Factors influencing spending include geopolitical events, technological advancements in engine design, and congressional appropriations. Analyzing trends requires looking at specific aircraft platforms and engine types, as well as broader categories like 'aircraft components' and 'propulsion systems'.

How does the pricing of this contract compare to similar fixed-price award fee contracts for aircraft engines?

Comparing the pricing of this specific $19.5 million contract for aircraft engines and spares to similar fixed-price award fee (FPAF) contracts requires access to detailed pricing data for comparable procurements. FPAF contracts aim to provide cost certainty while allowing for performance incentives. The 'fixed-price' component sets a ceiling, while the 'award fee' is earned based on meeting or exceeding specific performance criteria. Without knowing the exact engine type, quantity, specific performance metrics, and the competitive landscape at the time of award, a direct price-per-unit comparison is challenging. However, the limited competition noted for this contract suggests that the pricing might be on the higher end compared to contracts that underwent full and open competition. Benchmarking would involve identifying contracts with similar scope, duration, and complexity awarded to different entities or under different competitive conditions to assess if the pricing is reasonable and reflects fair market value.

What are the key performance indicators (KPIs) typically associated with fixed-price award fee contracts for aerospace components?

Key performance indicators (KPIs) for fixed-price award fee (FPAF) contracts in aerospace components typically revolve around delivery, quality, cost control, and technical performance. For aircraft engines and spares, common KPIs include: On-Time Delivery (OTD) rates for both new components and spare parts; Quality Acceptance Rates (e.g., rejection rates during inspection); Mean Time Between Failures (MTBF) or reliability metrics for engines; Adherence to Technical Specifications and Performance Standards; Responsiveness to Government Requests (e.g., for technical support or urgent spares); and Cost Management (e.g., staying within budget or achieving cost reduction targets). The 'award fee' portion of the contract is directly tied to the contractor's performance against these KPIs, with pre-defined criteria determining the amount of the award fee earned. Effective oversight involves rigorous tracking and evaluation of these metrics.

What is the track record of United Technologies Corporation (RTX Corporation) in fulfilling similar defense contracts?

United Technologies Corporation, now operating as RTX Corporation, has a long and extensive track record of fulfilling complex defense contracts, particularly in the aerospace sector. As a major manufacturer of aircraft engines (through its Pratt & Whitney division), avionics, and other aerospace systems, the company has consistently been a key supplier to the Department of Defense and allied nations. Their history includes delivering engines for major military aircraft platforms such as fighter jets, bombers, and transport aircraft. While specific contract performance details are often proprietary, RTX generally maintains a strong reputation for technical capability and product quality. However, like any large defense contractor, they have likely encountered performance challenges or disputes on specific contracts over their long history. A thorough assessment would involve reviewing past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS) if publicly available, and examining their portfolio of similar large-scale engine and component contracts.

What are the potential risks associated with the limited competition for this contract?

The primary risks associated with limited competition for this defense contract include: 1) Higher Costs: Without robust competition, the government may pay a premium for the goods or services, as the contractor faces less pressure to offer the lowest possible price. 2) Reduced Innovation: A limited field of bidders might stifle innovation, as contractors may be less motivated to invest in developing novel solutions if they perceive a guaranteed award. 3) Supply Chain Vulnerability: Over-reliance on a small number of suppliers can create vulnerabilities. If one supplier faces production issues, financial distress, or geopolitical challenges, it can significantly disrupt the supply chain for critical defense assets. 4) Less Favorable Contract Terms: The government may have less leverage in negotiating favorable contract terms and conditions when competition is scarce. 5) Potential for Complacency: Contractors in non-competitive environments may become complacent regarding performance or customer service, assuming their position is secure.

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: FIXED PRICE AWARD FEE (M)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp (UEI: 001344142)

Address: 400 MAIN ST, EAST HARTFORD, CT, 01

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: SP040001D9405

IDV Type: IDC

Timeline