DoD's $1.39B GE Rolls-Royce Fighter Engine Contract Faces Scrutiny for Lack of Competition

Contract Overview

Contract Amount: $2,260,452,545 ($2.3B)

Contractor: GE Rolls-Royce Fighter Engine Team, LLC

Awarding Agency: Department of Defense

Start Date: 2005-08-19

End Date: 2014-03-31

Contract Duration: 3,146 days

Daily Burn Rate: $718.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200512!456119!1700!N00019!NAVAL AIR SYSTEMS COMMAND !N0001904C0093 !A!N! !N! ! !20050819!20130930!139434034!139434034!139434034!N!GE ROLLS-ROYCE FIGHTER ENGINE !1 NEUMANN WAY MD318A !CINCINNATI !OH!45215!15000!061!39!CINCINNATI !HAMILTON !OHIO !+000041000000!N!N!002466034890!AC14!RDTE/AIRCRAFT-DEMO/VALID !A1B!AIRCRAFT ENGINES AND SPARES !198 !F-35 (JSF) !336412!E! !3! ! ! ! ! !20200930!B! ! !A! !D!N!R!1!001!N!1A!Z!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!Y! ! ! ! !1719!N30763!0001! !

Place of Performance

Location: CINCINNATI, HAMILTON County, OHIO, 45215

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $2.26 billion to GE ROLLS-ROYCE FIGHTER ENGINE TEAM, LLC for work described as: 200512!456119!1700!N00019!NAVAL AIR SYSTEMS COMMAND !N0001904C0093 !A!N! !N! ! !20050819!20130930!139434034!139434034!139434034!N!GE ROLLS-ROYCE FIGHTER ENGINE !1 NEUMANN WAY MD318A !CINCINNATI !OH!45215!15000!061!39!CINCINNATI !HAMI… Key points: 1. The contract awarded to GE Rolls-Royce Fighter Engine Team for aircraft engines and spares is substantial, totaling over $1.39 billion. 2. Competition was explicitly 'NOT COMPETED', raising concerns about potential overpricing and lack of market pressure. 3. The contract's duration of over 8 years (3146 days) and its 'COST PLUS AWARD FEE' structure warrant close examination for cost control. 4. The sector is Defense, specifically R&D/Aircraft-Demo/Valid, with a Product Service Code of A1B for Aircraft Engines and Spares.

Value Assessment

Rating: questionable

The contract value of $1.39 billion for aircraft engines and spares is significant. Without competitive bidding, it's difficult to benchmark pricing against similar contracts, raising questions about whether the government received the best possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

The contract was 'NOT COMPETED' and awarded as a 'DEFINITIVE CONTRACT' under a sole-source basis. This lack of competition limits price discovery and potentially leads to higher costs for the government.

Taxpayer Impact: The absence of competition for a contract of this magnitude raises concerns about taxpayer money being spent efficiently and effectively.

Public Impact

Taxpayers may be overpaying for critical defense components due to the lack of competitive bidding. The long-term nature of the contract and its fee structure could incentivize cost overruns. Lack of transparency in pricing due to sole-source award hinders public trust in defense spending. Potential for reduced innovation if only one supplier is engaged for such a critical component.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of Competition
Cost Plus Award Fee Structure
Long Contract Duration
Sole-Source Award

Positive Signals

Critical Component for F-35 Program
Established Contractor Relationship

Sector Analysis

This contract falls within the Defense sector, specifically for R&D related to aircraft demonstration and validation. Spending on aircraft engines and spares is a significant portion of the defense budget, and benchmarks are often established through competitive processes.

Small Business Impact

There is no indication that small businesses were involved in this contract, as it was awarded to a large, established entity. Further analysis would be needed to determine if subcontracting opportunities were explored.

Oversight & Accountability

The 'NOT COMPETED' status suggests a potential gap in oversight regarding the justification for avoiding a competitive process. Accountability for the pricing and performance under this sole-source contract is crucial.

Related Government Programs

Aircraft Engine and Engine Parts Manufacturing
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Lack of competition raises concerns about fair pricing.
Cost Plus Award Fee structure may not incentivize cost efficiency.
Sole-source award limits market dynamics and potential savings.
Long contract duration increases exposure to potential cost overruns.
Transparency regarding the justification for non-competition is needed.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $2.26 billion to GE ROLLS-ROYCE FIGHTER ENGINE TEAM, LLC. 200512!456119!1700!N00019!NAVAL AIR SYSTEMS COMMAND !N0001904C0093 !A!N! !N! ! !20050819!20130930!139434034!139434034!139434034!N!GE ROLLS-ROYCE FIGHTER ENGINE !1 NEUMANN WAY MD318A !CINCINNATI !OH!45215!15000!061!39!CINCINNATI !HAMILTON !OHIO !+000041000000!N!N!002466034890!AC14!RDTE/AIRCRAFT-DEMO/VALID !A1B!AIRCRAFT ENGINES AND SPARES !198 !F-35 (JSF) !336412!E! !3! ! ! ! ! !202

Who is the contractor on this award?

The obligated recipient is GE ROLLS-ROYCE FIGHTER ENGINE TEAM, LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $2.26 billion.

What is the period of performance?

Start: 2005-08-19. End: 2014-03-31.

What was the specific justification provided for not competing this large contract, and was it adequately documented and reviewed?

The provided data indicates the contract was 'NOT COMPETED' and awarded as a 'DEFINITIVE CONTRACT'. A thorough review would require access to the contract file to ascertain the specific justification (e.g., sole-source necessity, urgent need) and the level of review and approval it received to ensure it was warranted and in the government's best interest.

How does the 'COST PLUS AWARD FEE' structure impact the contractor's incentive to control costs on this $1.39 billion engine contract?

A Cost Plus Award Fee (CPAF) contract reimburses the contractor for allowable costs and provides a fee that can be adjusted based on performance against specific criteria. While the award fee can incentivize meeting targets, it may also reduce the contractor's inherent motivation to minimize costs compared to fixed-price contracts, especially if the performance metrics are not rigorously defined or achievable without cost increases.

What is the potential long-term impact on the F-35 program's sustainment costs given this sole-source engine contract?

A sole-source contract for a critical component like the F-35 engine could lead to higher sustainment costs over the program's lifecycle. Without competition, there's less pressure on the contractor to innovate for cost efficiency or offer competitive pricing for spare parts and maintenance, potentially increasing the overall burden on the defense budget.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Engine and Engine Parts Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: General Electric Company (UEI: 001367960)

Address: 1 NEUMANN WAY MD318A, CINCINNATI, OH, 45215

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $2,203,446,355

Exercised Options: $2,208,596,008

Current Obligation: $2,260,452,545

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline