Air Force awarded $18.8M contract for aircraft engine spares to General Electric Company

Contract Overview

Contract Amount: $18,871,493 ($18.9M)

Contractor: General Electric Company

Awarding Agency: Department of Defense

Start Date: 2006-09-01

End Date: 2011-02-28

Contract Duration: 1,641 days

Daily Burn Rate: $11.5K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS INCENTIVE

Sector: Defense

Official Description: 200612!001002!5700!FA8528!WR-ALC-LXKB ISR MGNT DIR !FA852806C0003 !A!N! !N! ! !20060901!20110930!137488664!137488664!001367960!N!GENERAL ELECTRIC COMPANY !1 NEUMANN WAY !CINCINNATI !OH!45215!15000!061!39!CINCINNATI !HAMILTON !OHIO !+000003364719!N!N!000000000000!2995!MISCELLANEOUS ENGINE ACCESSORIES, AIRCRAFT !A1B!AIRCRAFT ENGINES AND SPARES !000 !NOT DISCERNABLE !541330!E! !1! ! ! ! ! !99990909!B! ! !N!Z!D!U!V!1!001!N!1A!A!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!A!N! ! ! ! ! ! !0001! !

Place of Performance

Location: CINCINNATI, HAMILTON County, OHIO, 45215

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $18.9 million to GENERAL ELECTRIC COMPANY for work described as: 200612!001002!5700!FA8528!WR-ALC-LXKB ISR MGNT DIR !FA852806C0003 !A!N! !N! ! !20060901!20110930!137488664!137488664!001367960!N!GENERAL ELECTRIC COMPANY !1 NEUMANN WAY !CINCINNATI !OH!45215!15000!061!39!CINCINNATI !HAMI… Key points: 1. Contract awarded for miscellaneous engine accessories, aircraft, indicating a focus on specialized aviation components. 2. The contract was not competed, raising questions about potential price efficiencies and market engagement. 3. A significant duration of over 1600 days suggests a long-term need for these specialized parts. 4. The award to a single, established manufacturer like General Electric may limit broader industry participation. 5. The contract type, Cost Plus Incentive, suggests performance-based incentives were tied to cost targets. 6. The geographic location of the contractor in Ohio points to a concentration of aerospace manufacturing in that region.

Value Assessment

Rating: fair

The contract value of $18.8 million for aircraft engine spares over approximately 4.5 years appears to be within a reasonable range for specialized aerospace components. However, without direct comparable contracts for similar engine accessories or detailed cost breakdowns, a precise value-for-money assessment is challenging. The Cost Plus Incentive fee structure implies that the government aimed to control costs through performance incentives, but the ultimate cost efficiency depends on the contractor's ability to meet targets. Benchmarking against industry standards for similar parts would be necessary for a more definitive evaluation.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when a specific product or service is only available from a single source, or in cases of urgent need where competition is not feasible. The lack of competition means that the government did not benefit from the price discovery mechanisms that typically occur in a competitive bidding process, potentially leading to higher costs than if multiple suppliers had been considered.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without competing offers, there is less assurance that the price reflects the lowest possible cost for the required engine accessories.

Public Impact

The primary beneficiaries are likely the U.S. Air Force units that rely on the specified aircraft engine spares for operational readiness. The services delivered include the provision of miscellaneous engine accessories essential for the maintenance and operation of aircraft. The geographic impact is primarily within the Air Force's operational bases, wherever these aircraft are deployed. Workforce implications include support for manufacturing and logistics jobs at General Electric and its supply chain partners.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may have led to higher prices for taxpayers.
Sole-source awards can reduce opportunities for new or smaller suppliers to enter the market.
Cost Plus Incentive contracts require careful monitoring to ensure cost targets are met effectively.
Reliance on a single supplier for critical components can create supply chain vulnerabilities.

Positive Signals

Award to a reputable manufacturer like General Electric suggests a focus on quality and reliability.
The Cost Plus Incentive structure, if managed well, can align contractor and government interests towards cost efficiency.
Long contract duration indicates a stable, long-term supply of essential parts for the Air Force.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft components and maintenance. The market for aircraft engine accessories is characterized by high technical barriers to entry, significant research and development costs, and a limited number of specialized manufacturers. General Electric is a major player in this industry. Comparable spending benchmarks would involve analyzing other contracts for similar engine parts across different military branches or government agencies, as well as commercial aviation aftermarket sales data.

Small Business Impact

This contract does not appear to have a small business set-aside component, as it was awarded to General Electric Company, a large corporation. There is no explicit information regarding subcontracting plans for small businesses within the provided data. The sole-source nature of the award further limits the potential for small business participation, as opportunities to bid on the prime contract or significant subcontracts are reduced.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of the Department of the Air Force's contracting and program management offices. Accountability measures are embedded within the Cost Plus Incentive fee structure, which links contractor profit to performance and cost targets. Transparency is limited due to the sole-source nature and the lack of readily available public details on performance metrics and cost justifications. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Engine Maintenance and Repair
Aerospace Component Procurement
Defense Logistics Agency Contracts
Air Force Aviation Sustainment Programs

Risk Flags

Sole-source award lacks competitive pricing.
Potential for higher costs due to lack of competition.
Supply chain risk associated with single-source provider.
Cost Plus Incentive requires diligent oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.9 million to GENERAL ELECTRIC COMPANY. 200612!001002!5700!FA8528!WR-ALC-LXKB ISR MGNT DIR !FA852806C0003 !A!N! !N! ! !20060901!20110930!137488664!137488664!001367960!N!GENERAL ELECTRIC COMPANY !1 NEUMANN WAY !CINCINNATI !OH!45215!15000!061!39!CINCINNATI !HAMILTON !OHIO !+000003364719!N!N!000000000000!2995!MISCELLANEOUS ENGINE ACCESSORIES, AIRCRAFT !A1B!AIRCRAFT ENGINES AND SPARES !000 !NOT DISCERNABLE !541330!E! !1! ! ! ! ! !999

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 $18.9 million.

What is the period of performance?

Start: 2006-09-01. End: 2011-02-28.

What is the track record of General Electric Company in fulfilling similar sole-source contracts for the Department of Defense?

General Electric Company (GE) has a long and extensive history of contracting with the Department of Defense (DoD) across various platforms and components, including aircraft engines and related systems. While this specific contract was sole-source, GE frequently engages in competitive bidding for larger engine programs and spare parts. Their track record generally indicates a capacity to deliver complex aerospace components, often involving advanced technology and stringent quality requirements. However, like any large defense contractor, GE's performance on specific contracts can vary. Analyzing past performance evaluations, on-time delivery rates, and cost performance on prior sole-source or competitively awarded contracts for similar items would provide a more granular understanding of their reliability and efficiency in fulfilling DoD requirements.

How does the $18.8 million contract value compare to other Air Force procurements for miscellaneous aircraft engine accessories?

Benchmarking the $18.8 million contract value for miscellaneous aircraft engine accessories requires comparing it against similar procurements by the Air Force or other branches. Without access to a comprehensive database of all such contracts, a direct comparison is difficult. However, considering the duration of the contract (over 4.5 years) and the specialized nature of aircraft engine components, this value appears to be within a plausible range for a significant supply agreement. Contracts for high-value, complex systems or large quantities of parts can easily reach tens or hundreds of millions of dollars. Conversely, smaller, less critical accessories or shorter-term needs would be valued much lower. The sole-source nature of this award also complicates direct value comparisons, as competitive bids often drive prices down.

What are the primary risks associated with a sole-source award for critical aircraft engine spares?

The primary risks associated with a sole-source award for critical aircraft engine spares include potential overpricing due to the lack of competition, reduced incentive for the contractor to innovate or improve efficiency, and a lack of market transparency. Taxpayers may bear a higher cost than necessary. Furthermore, reliance on a single supplier can create supply chain vulnerabilities; if the sole source experiences production issues, quality control problems, or business disruptions, the Air Force's operational readiness could be significantly impacted. There's also a risk that the government might not be aware of or able to leverage alternative, potentially more cost-effective or technologically advanced solutions available from other manufacturers.

What does the Cost Plus Incentive (CPIF) contract type imply about the program's objectives and potential cost overruns?

The Cost Plus Incentive (CPIF) contract type signifies that the contractor is reimbursed for allowable costs incurred, plus a fixed fee that is adjusted based on whether the final costs are below or above a target cost. This structure aims to incentivize the contractor to control costs by sharing in any savings or cost overruns. If the final cost is less than the target cost, the contractor receives a larger fee; if it exceeds the target cost, the fee is reduced. This implies that the program objectives included achieving specific performance standards while managing costs effectively. Potential cost overruns are a risk, but the incentive fee structure is designed to mitigate this by aligning the contractor's profit motive with the government's goal of cost containment. However, the effectiveness depends heavily on the accuracy of the initial target cost and the government's ability to monitor performance and costs.

How has Air Force spending on miscellaneous engine accessories, aircraft, evolved over time, and does this contract represent a significant portion?

Analyzing the historical spending trends for 'Miscellaneous Engine Accessories, Aircraft' by the Air Force requires access to historical contract databases. This specific contract, awarded in 2006 for $18.8 million over approximately 4.5 years, represents a moderate investment for a specialized component category. Annual spending on such items can fluctuate based on fleet readiness requirements, modernization programs, and the lifecycle of specific aircraft. Without broader historical data, it's difficult to definitively state if this contract was a 'significant' portion of overall spending. However, for a sole-source award of this nature, it indicates a sustained need for these particular accessories. Trends might show increased spending during periods of high operational tempo or decreased spending during budget austerity or fleet reductions.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: ENGINE ACCESSORIES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS INCENTIVE (V)

Evaluated Preference: NONE

Contractor Details

Address: 1 NEUMANN WAY, CINCINNATI, OH, 90

Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Contract Characteristics

Cost or Pricing Data: YES

Timeline