Air Force's $92.6M contract for combat engine components awarded to General Electric, a sole-source procurement
Contract Overview
Contract Amount: $92,574,342 ($92.6M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2021-02-03
End Date: 2026-12-31
Contract Duration: 2,157 days
Daily Burn Rate: $42.9K/day
Competition Type: NOT COMPETED
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: LARGE COMBAT ENGINES COMPONENT IMPROVEMENT PROGRAM CY21-23 TASK ORDER
Place of Performance
Location: CINCINNATI, HAMILTON County, OHIO, 45215
State: Ohio Government Spending
Plain-Language Summary
Department of Defense obligated $92.6 million to GENERAL ELECTRIC COMPANY for work described as: LARGE COMBAT ENGINES COMPONENT IMPROVEMENT PROGRAM CY21-23 TASK ORDER Key points: 1. This contract represents a significant investment in critical defense technology. 2. The sole-source nature raises questions about potential price efficiencies and market alternatives. 3. Performance is tied to a multi-year effort, indicating a long-term need for these components. 4. The R&D classification suggests a focus on innovation and future capabilities. 5. Geographic concentration in Ohio for contract performance.
Value Assessment
Rating: fair
Benchmarking the value of this sole-source contract is challenging without competitive data. The 'cost plus fixed fee' structure means the government pays for allowable costs plus a fixed fee, which can lead to cost overruns if not managed tightly. The awarded amount of $92.6 million over approximately five years suggests a substantial but not exceptionally high annual spend for specialized R&D. Without comparable sole-source contracts or open market pricing, a definitive value-for-money assessment is difficult, but the lack of competition inherently limits upside for price optimization.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning General Electric was the only vendor considered. This typically occurs when a unique capability or proprietary technology is required, or in situations where only one source can fulfill the requirement. The lack of competition means there was no opportunity for other companies to bid, potentially limiting price discovery and innovation that could arise from a competitive bidding process.
Taxpayer Impact: Taxpayers may not be receiving the best possible price due to the absence of competitive pressure. The government's ability to negotiate favorable terms is reduced when only one provider is available.
Public Impact
The U.S. Air Force benefits from improved and sustained combat engine capabilities. This contract supports the development and sustainment of critical military hardware. The primary geographic impact is in Ohio, where General Electric's facilities are located. Workforce implications include skilled engineering and manufacturing jobs at the contractor's site.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price competition and potential taxpayer savings.
- Cost-plus-fixed-fee contracts can incentivize higher costs if not rigorously overseen.
- Long-term nature of the contract requires sustained oversight to ensure continued value.
Positive Signals
- Addresses a critical need for advanced combat engine components.
- Award to a known, established contractor with relevant expertise.
- Clear performance period and defined scope for task orders.
Sector Analysis
This contract falls within the aerospace and defense sector, specifically focusing on advanced manufacturing and research and development for military aircraft engines. The market for such specialized components is highly concentrated, with a few major players dominating. General Electric is a key incumbent in this space. Spending benchmarks for similar R&D efforts on complex defense systems can vary widely, but this contract's value is significant for a specific component improvement program.
Small Business Impact
This contract does not appear to have a small business set-aside component. Given the specialized nature of combat engine components and the sole-source award to a large incumbent like General Electric, subcontracting opportunities for small businesses may be limited or dictated by the prime contractor's existing supply chain. Further analysis would be needed to determine if any small business subcontracting plans are in place.
Oversight & Accountability
Oversight for this contract would primarily reside with the Department of the Air Force contracting and program management offices. The 'cost plus fixed fee' structure necessitates robust financial oversight to ensure costs are allowable and reasonable. Transparency is generally maintained through contract reporting mechanisms, though specific details of cost breakdowns may be proprietary. The Inspector General's office for the Department of Defense would have jurisdiction for audits and investigations if fraud, waste, or abuse were suspected.
Related Government Programs
- Air Force Engine Component Improvement Programs
- Defense Research and Development Contracts
- Sole-Source Defense Procurements
- Aerospace Manufacturing Contracts
Risk Flags
- Sole-source award
- Cost-plus-fixed-fee contract type
- Long contract duration
Tags
defense, air-force, general-electric, sole-source, r&d, component-improvement, combat-engines, cost-plus-fixed-fee, ohio, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $92.6 million to GENERAL ELECTRIC COMPANY. LARGE COMBAT ENGINES COMPONENT IMPROVEMENT PROGRAM CY21-23 TASK ORDER
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 $92.6 million.
What is the period of performance?
Start: 2021-02-03. End: 2026-12-31.
What is General Electric's track record with similar sole-source defense contracts, particularly for engine components?
General Electric has a long and extensive history of contracting with the Department of Defense, including numerous sole-source awards for aircraft engine components and related services. Their established position as a primary supplier for many military aircraft platforms means they often hold unique technical data, intellectual property, and manufacturing capabilities. While sole-source awards are necessary in certain situations, a review of past performance on similar contracts would focus on cost control, delivery timeliness, and quality adherence to assess their reliability and efficiency even without direct competition. Data on past performance metrics, such as on-time delivery rates and defect rates, would be crucial for a comprehensive assessment.
How does the 'cost plus fixed fee' pricing structure compare to other contract types for R&D in this sector?
The 'cost plus fixed fee' (CPFF) contract type is common for research and development efforts where the scope of work can be uncertain or evolve. It allows the contractor to recover allowable costs incurred plus a predetermined fixed fee, which represents their profit. Compared to fixed-price contracts, CPFF offers more flexibility for the government if requirements change but can expose taxpayers to higher costs if the contractor's spending is not well-managed. Other R&D contract types include 'cost plus incentive fee' (CPIF), which adds performance incentives, or 'cost reimbursement' (CR) with no fee, used for basic research. CPFF balances risk between the government and contractor, but requires diligent oversight to prevent cost escalation.
What are the primary risks associated with a sole-source award for critical defense components?
The primary risks associated with a sole-source award for critical defense components include a lack of price competition, potentially leading to higher costs for taxpayers. Without competing bids, there is less incentive for the contractor to optimize efficiency or offer the lowest possible price. Another risk is vendor lock-in, where the government becomes dependent on a single supplier, making it difficult and costly to switch providers in the future. Furthermore, the absence of competitive pressure might reduce the urgency for innovation or prompt delivery compared to a competitive environment. Ensuring robust contract management and oversight becomes paramount to mitigate these risks.
What is the historical spending pattern for this specific 'LARGE COMBAT ENGINES COMPONENT IMPROVEMENT PROGRAM' or similar initiatives?
Analyzing historical spending for the 'LARGE COMBAT ENGINES COMPONENT IMPROVEMENT PROGRAM' or analogous initiatives is crucial for context. While the provided data focuses on a single task order valued at $92.6 million from CY21-23, understanding the program's total lifecycle cost, previous funding levels, and spending trends over multiple years would offer a clearer picture. For instance, if this $92.6M represents a significant increase or decrease compared to prior years, it warrants investigation. Examining the historical spending on component improvement programs for similar engine classes or across the Air Force's fleet can reveal patterns of investment, identify potential cost efficiencies or inefficiencies over time, and help benchmark current spending against past performance.
What are the implications of the 'Research and Development in the Physical, Engineering, and Life Sciences' NAICS code for this contract?
The NAICS code 541715, 'Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology),' indicates that this contract is primarily for scientific research and experimental development. This means the work likely involves systematic study to gain new knowledge and understanding, leading to the development of new or improved products, processes, or services. For this combat engines component improvement program, it suggests the focus is on innovation, testing new materials, design modifications, or advanced manufacturing techniques rather than routine production or maintenance. This classification often involves higher risk and uncertainty, justifying contract types like CPFF and necessitating close technical oversight.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Nanotechnology and Biotechnology)
Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 1 NEUMANN WAY, CINCINNATI, OH, 45215
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $95,554,811
Exercised Options: $94,550,284
Current Obligation: $92,574,342
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: FA862620D0002
IDV Type: IDC
Timeline
Start Date: 2021-02-03
Current End Date: 2026-12-31
Potential End Date: 2026-12-31 00:00:00
Last Modified: 2025-12-22
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