DoD's $633M F-15 Engine Contract with GE Raises Questions on Value and Competition
Contract Overview
Contract Amount: $633,073,464 ($633.1M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2007-09-26
End Date: 2013-12-31
Contract Duration: 2,288 days
Daily Burn Rate: $276.7K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: CY08 ROYAL SAUDI AIR FORCE (RSAF) F110-GE-129C(F-15)
Place of Performance
Location: CINCINNATI, HAMILTON County, OHIO, 45215
State: Ohio Government Spending
Plain-Language Summary
Department of Defense obligated $633.1 million to GENERAL ELECTRIC COMPANY for work described as: CY08 ROYAL SAUDI AIR FORCE (RSAF) F110-GE-129C(F-15) Key points: 1. Significant spending on aircraft engine parts for the Royal Saudi Air Force. 2. Solely awarded to General Electric, raising questions about competitive pricing. 3. Long contract duration (2007-2013) may have missed opportunities for better deals. 4. Focus on a specific aircraft engine model (F110-GE-129C) indicates specialized needs.
Value Assessment
Rating: questionable
The contract value of $633 million for F-15 engine parts is substantial. Without competitive bids, it's difficult to assess if this price reflects fair market value compared to similar engine procurements.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
Despite being listed as 'full and open competition,' the award went to a single entity, General Electric. This suggests potential issues in the bidding process or a lack of viable alternatives, impacting price discovery.
Taxpayer Impact: The substantial expenditure on foreign military sales raises concerns about maximizing taxpayer value and ensuring competitive pricing.
Public Impact
Impacts foreign military sales capabilities for a key ally. Funds advanced aerospace technology and manufacturing. Potential for cost overruns if competition was not fully realized.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of clear competitive pricing evidence.
- Long-term contract may not reflect current market rates.
- Sole awardee despite 'full and open' designation.
Positive Signals
- Supports critical defense capabilities for an allied nation.
- Ensures availability of essential aircraft components.
Sector Analysis
This contract falls within the Defense sector, specifically focusing on aircraft engine and engine parts manufacturing. Spending benchmarks for such specialized components are highly variable, but large sole-source awards warrant scrutiny.
Small Business Impact
The data does not indicate any specific involvement or benefit to small businesses in this large, specialized defense contract.
Oversight & Accountability
The contract's long duration and the nature of the award warrant oversight to ensure continued value and adherence to competitive principles, even in specialized procurements.
Related Government Programs
- Aircraft Engine and Engine Parts Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Potential lack of true competition despite 'full and open' designation.
- Significant contract value without clear cost-effectiveness benchmarks.
- Long contract duration may not reflect current market pricing.
- Foreign military sale context requires careful value assessment.
Tags
aircraft-engine-and-engine-parts-manufac, department-of-defense, oh, do, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $633.1 million to GENERAL ELECTRIC COMPANY. CY08 ROYAL SAUDI AIR FORCE (RSAF) F110-GE-129C(F-15)
Who is the contractor on this award?
The obligated recipient is GENERAL ELECTRIC COMPANY.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Air Force).
What is the total obligated amount?
The obligated amount is $633.1 million.
What is the period of performance?
Start: 2007-09-26. End: 2013-12-31.
Was the 'full and open competition' process effectively managed to ensure the best possible price for these critical aircraft engine parts?
The data indicates the contract was awarded under 'full and open competition' but to a single entity, General Electric. This raises questions about the effectiveness of the competition. Further investigation into the bidding process, including the number of bids received and the justification for selecting a single awardee, is needed to determine if competitive pressures truly influenced the final price and terms.
What is the risk associated with a long-term contract for specialized aircraft engine parts, particularly if market conditions or technology evolve?
Long-term contracts for specialized parts carry the risk of price escalation if market conditions change or if newer, more cost-effective technologies emerge. Without periodic re-evaluation or price adjustment clauses, the government might overpay. For F110-GE-129C engines, the risk lies in potentially paying above-market rates over the contract's lifespan and missing opportunities to leverage competitive sourcing if alternatives become available.
How effectively does this contract contribute to the long-term operational readiness and cost-efficiency of the Royal Saudi Air Force's F-15 fleet?
The contract's effectiveness hinges on providing reliable access to critical engine components, thereby supporting the RSAF's operational readiness. However, the lack of clear competitive pricing data makes it difficult to assess cost-efficiency. If the price paid was inflated due to limited competition, it detracts from the overall value and could strain the RSAF's budget, impacting long-term sustainment planning.
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: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Offers Received: 2
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 1 NEUMANN WAY, CINCINNATI, OH, 90
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $633,073,464
Exercised Options: $633,073,464
Current Obligation: $633,073,464
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: F3365798D0019
IDV Type: IDC
Timeline
Start Date: 2007-09-26
Current End Date: 2013-12-31
Potential End Date: 2013-12-31 00:00:00
Last Modified: 2011-01-31
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