DoD awards $1.16B advance acquisition contract for aircraft engines to RTX Corporation, facing no competition
Contract Overview
Contract Amount: $1,158,185,692 ($1.2B)
Contractor: RTX Corporation
Awarding Agency: Department of Defense
Start Date: 2009-05-11
End Date: 2016-03-03
Contract Duration: 2,488 days
Daily Burn Rate: $465.5K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS INCENTIVE FEE
Sector: Defense
Official Description: ADVANCE ACQUISITION CONTRACT
Place of Performance
Location: EAST HARTFORD, HARTFORD County, CONNECTICUT, 06118
Plain-Language Summary
Department of Defense obligated $1.16 billion to RTX CORPORATION for work described as: ADVANCE ACQUISITION CONTRACT Key points: 1. Significant contract value of over $1.1 billion awarded to a single large corporation. 2. Lack of competition raises concerns about potential overpricing and limited innovation. 3. Contract duration of over 6 years suggests a long-term commitment with potential for cost overruns. 4. The sector is critical for defense readiness, but the procurement method warrants scrutiny.
Value Assessment
Rating: questionable
The contract's cost-plus-incentive-fee structure, combined with a lack of competition, makes a definitive pricing assessment difficult. Without benchmarks from competing bids, it's hard to determine if the awarded price represents fair market value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was sole-sourced, meaning no other vendors were considered. This significantly limits price discovery and potentially allows the contractor to set higher prices than might be achieved in a competitive environment.
Taxpayer Impact: The absence of competition for a contract of this magnitude could lead to taxpayers paying a premium for aircraft engines and parts, diverting funds from other critical government needs.
Public Impact
Taxpayers may be overpaying for essential defense components due to the lack of competitive bidding. The long-term nature of the contract could lock the government into a potentially suboptimal pricing arrangement. Reliance on a single supplier for critical defense equipment poses a strategic risk. Limited transparency in the sole-source award process hinders public understanding of defense spending.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source procurement
- High contract value
- Long contract duration
- Cost-plus contract type
Positive Signals
- Advance acquisition can ensure timely delivery of critical components
- Incentive fee structure aims to control costs
Sector Analysis
This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft engines and parts. Spending in this area is crucial for national security, but often involves complex, high-value procurements where competition can be challenging.
Small Business Impact
The contract was awarded to RTX Corporation, a large prime contractor. There is no indication of small business participation in this specific award, suggesting that opportunities for small businesses may have been missed.
Oversight & Accountability
The sole-source nature of this award warrants close oversight to ensure the government is receiving fair value. Robust auditing and performance monitoring will be essential to manage costs and risks effectively throughout the contract's life.
Related Government Programs
- Aircraft Engine and Engine Parts Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Lack of competition may lead to inflated prices.
- Sole-source award limits market research and potential cost savings.
- Long contract duration increases risk of cost overruns and scope creep.
- Cost-plus contract type can incentivize spending rather than cost efficiency.
- Potential for contractor lock-in with limited alternative suppliers.
- Limited transparency in the procurement process.
Tags
aircraft-engine-and-engine-parts-manufac, department-of-defense, ct, definitive-contract, billion-dollar
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $1.16 billion to RTX CORPORATION. ADVANCE ACQUISITION CONTRACT
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 $1.16 billion.
What is the period of performance?
Start: 2009-05-11. End: 2016-03-03.
What specific justification was provided for the sole-source award, and how does it align with federal acquisition regulations for non-competitive procurements?
The justification for a sole-source award typically centers on factors like unique capabilities, urgent need, or lack of viable alternatives. Federal Acquisition Regulation (FAR) Part 6 outlines the requirements for competitive procedures and the exceptions. A thorough review would examine the specific documentation and rationale provided by the Department of Defense to ensure compliance and determine if a competitive process was genuinely infeasible.
How will the cost-plus-incentive-fee structure be monitored to ensure cost control and prevent contractor inefficiencies, especially given the absence of competitive pressure?
Monitoring a cost-plus-incentive-fee contract without competition requires rigorous oversight. The Defense Contract Management Agency (DCMA) would likely employ detailed cost analysis, performance metrics tracking, and regular audits. Incentive targets must be clearly defined and achievable, with penalties for cost overruns and rewards for efficiency. Transparency in reporting and regular reviews are crucial to hold the contractor accountable.
What is the projected long-term cost impact of this sole-source contract on the DoD's overall aircraft engine procurement budget, and are there plans for future competition?
The long-term cost impact is difficult to quantify precisely without competitive benchmarks. However, sole-source contracts often carry a premium. The DoD should have a strategy for future procurements, potentially including market research to foster competition or exploring alternative engine technologies. Continuous evaluation of the contract's value and performance is necessary to mitigate potential budget overruns and ensure strategic sourcing.
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 INCENTIVE FEE (V)
Evaluated Preference: NONE
Contractor Details
Parent Company: RTX Corp (UEI: 001344142)
Address: 400 MAIN ST, EAST HARTFORD, CT, 06108
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $1,175,317,244
Exercised Options: $1,175,317,244
Current Obligation: $1,158,185,692
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2009-05-11
Current End Date: 2016-03-03
Potential End Date: 2016-03-03 00:00:00
Last Modified: 2019-08-21
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