Over $208 million awarded to General Electric for aircraft engines and spares, primarily for the F-18 Hornet

Contract Overview

Contract Amount: $208,921,608 ($208.9M)

Contractor: General Electric Company Inc

Awarding Agency: Department of Defense

Start Date: 1997-04-02

End Date: 2018-03-09

Contract Duration: 7,646 days

Daily Burn Rate: $27.3K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: 199712!1700!1722!AA427!NAVAL AIR SYSTEMS COMMAND !N0001996C0080 !A!*!P00009 !19970402!19990331!001408491!001408491!001367960!N!99207!GENERAL ELECTRIC COMPANY INC !1000 WESTERN AVE !LYNN !MA!01910!37490!009!25!LYNN !ESSEX !MASS !0001!+000010900000!Y!N!000000000000!2840!GAS TURBINES AND JET ENGINES, ACFT & COMPS !A1B!AIRCRAFT ENGINES AND SPARES !2AFX!F-18 HORNET !3724!3!*!*!A!B!A!*!D !N!V!1!001!N!1A!A!N!Z!* !* !N!C!*!A!A!A!A!A!*!* !*!N!A!C!N!*!*!*!*!*!

Place of Performance

Location: LYNN, ESSEX County, MASSACHUSETTS, 01905

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $208.9 million to GENERAL ELECTRIC COMPANY INC for work described as: 199712!1700!1722!AA427!NAVAL AIR SYSTEMS COMMAND !N0001996C0080 !A!*!P00009 !19970402!19990331!001408491!001408491!001367960!N!99207!GENERAL ELECTRIC COMPANY INC !1000 WESTERN AVE !LYNN !MA!01910!37490!009!25!LYNN !ESSEX … Key points: 1. Contract awarded for aircraft engines and spares, indicating a need for critical aviation components. 2. The contract spans a significant duration, suggesting long-term sustainment or production requirements. 3. General Electric, a major aerospace manufacturer, is the sole awardee, highlighting its established role. 4. The contract type suggests performance incentives tied to cost and delivery, aiming for efficiency. 5. Awarded by the Naval Air Systems Command, this contract supports naval aviation readiness. 6. The total value indicates a substantial investment in aircraft engine technology and supply.

Value Assessment

Rating: good

The total award value of over $208 million for aircraft engines and spares appears reasonable given the long contract duration and the nature of aerospace components. While specific per-unit cost benchmarks are not provided in the data, the contract's value is consistent with large-scale defense procurements for complex systems like aircraft engines. Benchmarking against similar contracts for F-18 engine sustainment or production would provide further insight into value for money.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source procurement, meaning it was not competed among multiple vendors. This approach is typically used when a specific contractor possesses unique capabilities, intellectual property, or when there are urgent needs that preclude a competitive process. The lack of competition means that price discovery through market forces was limited, and the government relied on negotiation to establish a fair price.

Taxpayer Impact: Sole-source awards can potentially lead to higher costs for taxpayers compared to competitively bid contracts, as the absence of multiple bidders reduces downward price pressure.

Public Impact

The U.S. Navy benefits from the sustained availability of critical aircraft engines for its F-18 Hornet fleet. This contract ensures the supply of aircraft engines and spare parts, crucial for maintaining operational readiness. The primary geographic impact is within the United States, supporting defense manufacturing and supply chains. The contract supports jobs within General Electric's aerospace division and its associated supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
Long contract duration may obscure potential for cost savings through future competition or technology updates.
Lack of detailed performance metrics in the provided data makes it difficult to assess efficiency beyond contract type.

Positive Signals

Award to a major, established contractor like General Electric suggests reliability and expertise in engine manufacturing.
The contract type (Cost Plus Incentive Fee) aims to incentivize contractor performance and cost control.
The significant value indicates a commitment to maintaining a critical defense asset (F-18 fleet).

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft engines and related components. The market for military aircraft engines is highly concentrated, with a few major players like General Electric dominating. This contract represents a significant portion of spending on sustainment and potential new production for a key naval aviation platform, the F-18 Hornet. Comparable spending benchmarks would involve analyzing other large-value contracts for aircraft engine procurement and maintenance within the Department of Defense.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting plans for small businesses. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely limited unless General Electric actively engages them in its supply chain for this specific contract. Further investigation into General Electric's subcontracting practices would be needed to assess the broader impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contract management agencies, such as the Defense Contract Management Agency (DCMA). Accountability measures are embedded within the Cost Plus Incentive Fee (CPIF) contract type, which links contractor profit to achieving cost and performance targets. Transparency is generally maintained through contract award databases, though specific details of performance and cost breakdowns may be subject to proprietary restrictions.

Related Government Programs

F/A-18 Hornet Program
Naval Aviation Readiness Programs
Aircraft Engine Procurement
Defense Logistics Agency (DLA) Aviation

Risk Flags

Sole-source award
Long contract duration
Lack of detailed performance metrics in public data

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $208.9 million to GENERAL ELECTRIC COMPANY INC. 199712!1700!1722!AA427!NAVAL AIR SYSTEMS COMMAND !N0001996C0080 !A!*!P00009 !19970402!19990331!001408491!001408491!001367960!N!99207!GENERAL ELECTRIC COMPANY INC !1000 WESTERN AVE !LYNN !MA!01910!37490!009!25!LYNN !ESSEX !MASS !0001!+000010900000!Y!N!000000000000!2840!GAS TURBINES AND JET ENGINES, ACFT & COMPS !A1B!AIRCRAFT ENGINES AND SPARES !2AFX!F-18 HORNET !3724!3!*!*!A!B!A!*!D !N!V!1!0

Who is the contractor on this award?

The obligated recipient is GENERAL ELECTRIC COMPANY INC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $208.9 million.

What is the period of performance?

Start: 1997-04-02. End: 2018-03-09.

What is the historical spending trend for aircraft engines and spares for the F-18 Hornet program?

Historical spending data for aircraft engines and spares for the F-18 Hornet program reveals a consistent and substantial investment over several decades. The provided data point of over $208 million awarded to General Electric Company Inc. represents a significant single award within this broader category. Analyzing historical contract awards from the Naval Air Systems Command (NAVAIR) and other relevant defense agencies would show a pattern of ongoing procurement and sustainment activities. This includes funding for engine overhauls, spare parts, modifications, and potentially new engine production runs as the F-18 fleet ages and undergoes upgrades. The total lifecycle cost for supporting the F-18's propulsion systems is a major component of the overall program budget, reflecting the complexity and maintenance demands of these high-performance engines.

How does the per-unit cost of these engines compare to similar contracts or commercial equivalents?

Determining the precise per-unit cost for the engines under this contract is challenging without access to detailed pricing breakdowns and specific engine model information. The contract is for 'GAS TURBINES AND JET ENGINES, ACFT & COMPS,' suggesting a mix of complete engines and spare parts. General Electric is a primary supplier for F-18 engines, making direct comparisons difficult as there are few, if any, comparable sole-source contracts. However, the Cost Plus Incentive Fee (CPIF) structure suggests that the government aimed to achieve a target cost, with incentives for the contractor to stay below or meet it. Benchmarking against commercial jet engine prices is generally not feasible due to significant differences in performance requirements, durability, and regulatory oversight in the defense sector. The value of $208 million spread over the contract's duration implies a substantial cost per engine or per part, typical for advanced military aviation hardware.

What are the key performance indicators (KPIs) associated with this contract, and how has General Electric performed against them?

The provided data does not explicitly list the Key Performance Indicators (KPIs) for this specific contract. However, as a Cost Plus Incentive Fee (CPIF) contract, it is designed to incentivize General Electric to meet or exceed certain performance targets, likely related to delivery schedules, engine reliability, maintenance intervals, and potentially cost control. The government would have established target costs and target profits, with adjustments based on the contractor's actual performance. Without access to performance reports or contract modification details, it is difficult to assess General Electric's specific performance against these KPIs. Typically, such information would be available through internal government reporting or potentially declassified performance summaries, but it is not present in this dataset.

What is the risk profile associated with this sole-source contract for General Electric's F-18 engine supply?

The risk profile for this sole-source contract involves several factors. For the government, the primary risk is the potential for higher costs due to the lack of competition and reliance on a single supplier. There's also a risk related to supply chain disruptions if General Electric faces production issues. For General Electric, the risks include meeting the demanding performance specifications of military aircraft engines, managing production costs under a CPIF structure, and potential scrutiny over pricing due to the sole-source nature. The long duration of the contract also introduces risks related to technological obsolescence or shifts in military requirements. However, being the sole-source provider for a critical component like the F-18 engine also presents a stable revenue stream and a strong market position.

How does this contract fit into the broader strategy of maintaining the F-18 Hornet fleet's operational readiness?

This contract is integral to the broader strategy of maintaining the operational readiness of the U.S. Navy's F-18 Hornet fleet. The F-18 is a workhorse aircraft, and its continued availability relies heavily on a robust supply chain for engines and spare parts. By awarding this significant contract to General Electric, the Navy ensures access to the necessary components for both routine maintenance and unscheduled repairs. This supports flight hours, mission capability rates, and overall fleet readiness. The long-term nature of the contract suggests a commitment to sustaining the F-18 platform for its intended service life, even as newer aircraft like the F-35 become more prevalent. Reliable engine support is a cornerstone of naval aviation sustainment.

What is the potential impact of this contract on future engine development or technology insertion for naval aviation?

This contract, while focused on existing F-18 engines, can have indirect impacts on future engine development and technology insertion. Firstly, the ongoing revenue stream provides General Electric with financial stability, enabling continued investment in research and development for next-generation propulsion systems. Secondly, the data and operational experience gained from sustaining the F-18 engines under this contract can inform the design of future engines, highlighting areas for improvement in efficiency, durability, and maintainability. While this specific award may not directly fund new R&D, it supports the industrial base necessary for such advancements. Furthermore, insights from this contract could influence requirements for future engine programs, potentially leading to more competitive solicitations based on lessons learned.

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

Address: 1000 WESTERN AVE, LYNN, MA, 01910

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $248,093,034

Exercised Options: $248,122,746

Current Obligation: $208,921,608

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline