Air Force awards $137.8M for engine kits, raising questions about competition and value
Contract Overview
Contract Amount: $137,863,032 ($137.9M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2015-09-28
End Date: 2017-08-31
Contract Duration: 703 days
Daily Burn Rate: $196.1K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: PROCURE F101 SLEP KITS FOR 294 ENGINES
Place of Performance
Location: CINCINNATI, HAMILTON County, OHIO, 45215
State: Ohio Government Spending
Plain-Language Summary
Department of Defense obligated $137.9 million to GENERAL ELECTRIC COMPANY for work described as: PROCURE F101 SLEP KITS FOR 294 ENGINES Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant investment in sustainment for a critical defense asset. 3. Lack of competition raises concerns about achieving best value for taxpayer dollars. 4. Performance period spans over two years, indicating a substantial operational requirement. 5. The contract is for specialized kits, suggesting a niche market with limited suppliers. 6. Oversight is crucial given the sole-source nature and significant dollar value.
Value Assessment
Rating: questionable
Benchmarking the value of this sole-source contract is challenging due to the absence of competitive bids. The $137.8 million award for 294 engine kits suggests a per-kit cost of approximately $469,000. Without comparable contract data or market analysis, it's difficult to definitively assess if this represents a fair and reasonable price. The lack of competition inherently limits the government's ability to negotiate the best possible terms.
Cost Per Unit: Approximately $469,000 per kit (based on 294 kits for $137.8M)
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only one vendor, General Electric Company, was solicited. This approach is typically used when only one responsible source is available or when a compelling justification exists. The absence of a competitive bidding process means that the government did not benefit from the price reductions and innovations that typically arise from multiple bidders vying for the contract.
Taxpayer Impact: Sole-source awards can lead to higher prices for taxpayers as there is no competitive pressure to drive down costs. This limits the government's leverage in price negotiations.
Public Impact
The primary beneficiaries are the U.S. Air Force and its operational readiness, ensuring its aircraft engines are maintained and functional. The contract delivers essential sustainment kits for 294 engines, directly supporting flight operations. Geographic impact is national, supporting Air Force bases and operations across the country. Workforce implications include potential support roles for General Electric's manufacturing and logistics operations.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price competition and potential cost savings.
- High per-unit cost requires careful justification and oversight.
- Long performance period could mask inefficiencies if not actively managed.
Positive Signals
- Addresses a critical sustainment need for Air Force aircraft engines.
- Awarded to a known incumbent contractor with existing expertise.
- Firm Fixed Price contract provides cost certainty for the government.
Sector Analysis
This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft engine components and sustainment. The market for specialized engine kits is often dominated by original equipment manufacturers (OEMs) like General Electric due to proprietary technology and design. Comparable spending benchmarks are difficult to establish without access to proprietary pricing data or other sole-source awards for similar engine types.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. There is no explicit mention of subcontracting goals for small businesses. This suggests that the primary contractor, General Electric, will likely perform the majority of the work, with limited direct benefit or opportunity for small businesses within this specific award.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Given the sole-source nature and significant value, robust oversight is essential to ensure performance, manage risks, and verify the reasonableness of costs. Inspector General (IG) investigations could be initiated if performance issues or allegations of impropriety arise.
Related Government Programs
- Aircraft Engine Maintenance and Repair
- Defense Logistics and Sustainment
- Aerospace Component Manufacturing
- Air Force Readiness Programs
Risk Flags
- Sole-source award
- Lack of competitive bidding
- High per-unit cost
- Potential for cost overruns
- Limited transparency
Tags
defense, department-of-defense, air-force, sole-source, firm-fixed-price, engine-kits, aircraft-parts, sustainment, general-electric, ohio, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $137.9 million to GENERAL ELECTRIC COMPANY. PROCURE F101 SLEP KITS FOR 294 ENGINES
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 $137.9 million.
What is the period of performance?
Start: 2015-09-28. End: 2017-08-31.
What is the track record of General Electric Company in delivering similar engine kits to the Department of Defense?
General Electric Company (GE) is a major defense contractor with a long history of supplying engines and related components to the U.S. military, including the Air Force. They are the original equipment manufacturer (OEM) for many aircraft engines. Their track record in delivering engine kits is generally strong, characterized by extensive experience and established manufacturing capabilities. However, specific performance metrics for this particular type of kit and contract are not publicly detailed. Past performance reviews and contract histories within government databases would provide a more granular assessment, but such data is often proprietary or requires specific access.
How does the per-unit cost of these engine kits compare to industry benchmarks or previous contracts for similar items?
The per-unit cost of approximately $469,000 for these SLEP kits is substantial. Benchmarking this figure is challenging without access to specific market data for comparable engine sustainment kits or previous sole-source awards for similar components. Typically, sole-source contracts are more expensive than competitively awarded ones. If this contract were competed, it is plausible that a lower per-unit price could have been achieved. A detailed cost analysis by the Air Force, including review of GE's cost proposals and profit margins, would be necessary to determine if this price is reasonable in the absence of competition.
What are the primary risks associated with a sole-source award of this magnitude?
The primary risks associated with a sole-source award of this magnitude include: 1) Inflated pricing due to the lack of competitive pressure, leading to potential overspending of taxpayer funds. 2) Reduced incentive for the contractor to innovate or improve efficiency, as there is no immediate threat of losing future business to competitors. 3) Potential for vendor lock-in, making it difficult and costly to switch suppliers in the future. 4) Limited transparency into the cost structure and profit margins. 5) Risk of inadequate performance if the contractor faces internal issues, as there are no alternative suppliers readily available.
How effective is the sustainment of aircraft engines through these kits in maintaining Air Force readiness?
The effectiveness of these sustainment kits in maintaining Air Force readiness is directly tied to the SLEP (Service Life Extension Program) objectives for the specific engines. These kits are designed to overhaul, repair, and upgrade critical engine components, thereby extending the operational life and reliability of the engines. Successful delivery and implementation of these kits should theoretically enhance engine performance, reduce unscheduled maintenance, and ensure that a larger proportion of the Air Force's fleet remains mission-capable. The actual effectiveness would be measured by metrics such as engine Mean Time Between Failures (MTBF), operational availability rates, and reduction in maintenance-related flight delays.
What has been the historical spending trend for similar aircraft engine sustainment contracts by the Department of Defense?
Historical spending on aircraft engine sustainment contracts by the Department of Defense is substantial and represents a significant portion of the defense budget. The DoD frequently awards large, long-term contracts for engine maintenance, repair, and overhaul (MRO), as well as for spare parts and upgrade kits. Spending trends are influenced by fleet size, aircraft utilization rates, engine technology lifecycles, and strategic decisions regarding fleet modernization versus sustainment. Contracts for OEMs like General Electric and Pratt & Whitney often run into billions of dollars over several years, reflecting the high cost and critical nature of maintaining advanced military aircraft engines.
Are there any alternative solutions or technologies that could provide similar engine sustainment benefits at a lower cost?
Exploring alternative solutions or technologies for engine sustainment is a continuous effort within the aerospace industry and the military. This could include investigating third-party MRO providers (though often limited by OEM restrictions), exploring advanced diagnostics and prognostics to predict failures before they occur, or developing modular component designs that allow for easier and cheaper replacement. However, for specific engine models, especially those with proprietary designs, the OEM often remains the sole or most viable provider of critical sustainment kits. The feasibility and cost-effectiveness of alternatives depend heavily on the specific engine type, its technological maturity, and the existing contractual and intellectual property landscape.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing
Product/Service Code: ENGINES AND TURBINES AND COMPONENT
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: FA812215R0006
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 1 NEUMANN WAY, CINCINNATI, OH, 45215
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $137,863,032
Exercised Options: $137,863,032
Current Obligation: $137,863,032
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: SPE4AX15D9412
IDV Type: IDC
Timeline
Start Date: 2015-09-28
Current End Date: 2017-08-31
Potential End Date: 2017-08-31 00:00:00
Last Modified: 2025-04-23
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