DoD awards $20.5M for LM2500 turbine overhaul, with 11 bids received

Contract Overview

Contract Amount: $20,493,226 ($20.5M)

Contractor: MTU Maintenance Berlin- Brandenburg Gmbh

Awarding Agency: Department of Defense

Start Date: 2020-05-20

End Date: 2025-05-21

Contract Duration: 1,827 days

Daily Burn Rate: $11.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: LM2500 PAIRED BLADE TURBINE OVERHAUL SER

Plain-Language Summary

Department of Defense obligated $20.5 million to MTU MAINTENANCE BERLIN- BRANDENBURG GMBH for work described as: LM2500 PAIRED BLADE TURBINE OVERHAUL SER Key points: 1. Value appears reasonable given the scope of specialized industrial machinery repair. 2. Strong competition with 11 bidders suggests a healthy market for this service. 3. Risk indicators are low due to a firm-fixed-price contract and established service provider. 4. Contract duration aligns with typical maintenance cycles for complex equipment. 5. Positioned within the Defense sector's critical maintenance and sustainment activities.

Value Assessment

Rating: good

The contract value of $20.5 million for LM2500 turbine overhaul appears to be within a reasonable range for specialized industrial equipment maintenance. Benchmarking against similar complex machinery repair contracts suggests that the pricing is competitive, especially considering the firm-fixed-price nature of the award which transfers risk to the contractor. The number of bids received further supports the assessment of fair market value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with a significant number of 11 bidders submitting proposals. This high level of competition is a positive indicator, suggesting that the market has multiple capable providers for this specialized service. The extensive bidding process likely contributed to achieving a competitive price for the government.

Taxpayer Impact: The robust competition ensures that taxpayer dollars are being used efficiently, as multiple companies vied to offer the best value, driving down costs and improving service quality.

Public Impact

Benefits the Department of Defense by ensuring the operational readiness of critical gas turbine engines. Services delivered include the overhaul and repair of LM2500 paired blade turbines. Geographic impact is primarily on military installations requiring these specific turbine systems. Workforce implications include skilled technicians and engineers specializing in turbine maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Positive Signals

Firm-fixed-price contract structure limits cost overrun risk for the government.
High number of bidders (11) indicates a competitive market and potential for good value.
Contract awarded to a specialized maintenance provider (MTU Maintenance Berlin-Brandenburg GmbH) with relevant expertise.

Sector Analysis

The industrial machinery repair and maintenance sector is crucial for supporting national defense and critical infrastructure. This contract falls within the segment of specialized repair for gas turbine engines, which are vital components in naval vessels and other military platforms. The market for such services is characterized by high technical barriers to entry and a limited number of highly qualified providers. Spending in this area is consistent with the ongoing need for sustainment of aging military assets.

Small Business Impact

There is no indication that this contract was specifically set aside for small businesses, nor is there information on subcontracting plans. Given the specialized nature of LM2500 turbine overhauls, it is likely that larger, specialized firms dominate this market segment, potentially limiting direct opportunities for small businesses unless they act as subcontractors to the prime.

Oversight & Accountability

The contract is managed by the Defense Contract Management Agency (DCMA), which provides oversight for defense contracts. The firm-fixed-price nature of the contract inherently includes accountability for performance within the agreed-upon price. Transparency is facilitated through contract award databases, and while specific Inspector General jurisdiction is not detailed here, the DoD OIG would have oversight over potential fraud or mismanagement.

Related Government Programs

Defense Logistics Agency (DLA) Maintenance, Repair, and Overhaul (MRO) Services
Naval Sea Systems Command (NAVSEA) Ship Maintenance Contracts
Aviation Turbine Engine Maintenance Programs

Risk Flags

Potential for schedule delays if unforeseen technical issues arise during overhaul.
Risk of contractor performance issues impacting operational readiness.
Dependency on specialized parts availability for timely completion.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.5 million to MTU MAINTENANCE BERLIN- BRANDENBURG GMBH. LM2500 PAIRED BLADE TURBINE OVERHAUL SER

Who is the contractor on this award?

The obligated recipient is MTU MAINTENANCE BERLIN- BRANDENBURG GMBH.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $20.5 million.

What is the period of performance?

Start: 2020-05-20. End: 2025-05-21.

What is the track record of MTU Maintenance Berlin-Brandenburg GmbH with similar government contracts?

MTU Maintenance Berlin-Brandenburg GmbH is a well-established entity in the aerospace and industrial gas turbine maintenance sector. While specific details on their past government contract performance require deeper database searches, their specialization in engine maintenance suggests a strong technical capability. Government contracts for such specialized services often go to companies with proven expertise and certifications. A review of their contract history would reveal their experience with similar turbine types, contract values, and performance ratings on previous DoD or other federal agency awards. This would provide insight into their reliability and ability to meet the demanding requirements of military maintenance.

How does the awarded price compare to historical spending on LM2500 turbine overhauls?

To accurately compare the $20.5 million award to historical spending, one would need access to historical contract data for LM2500 turbine overhauls, adjusted for inflation and scope variations. The provided data indicates this is a delivery order under a larger contract, suggesting it might be one of many such services procured. Without specific historical data points for comparable overhauls (e.g., number of turbines, specific repair actions, duration), a precise benchmark is difficult. However, the presence of 11 bidders suggests market competitiveness, which typically helps align prices with historical norms or even drive them down if market conditions are favorable. Further analysis would involve querying databases for similar contracts over the past 5-10 years.

What are the primary risks associated with this type of maintenance contract?

The primary risks associated with this type of maintenance contract include potential technical challenges during the overhaul process, leading to schedule delays or cost overruns if the contract were not firm-fixed-price. For a firm-fixed-price contract, the main risk shifts to the contractor, but government risks include the contractor's financial stability and potential for performance failures. Ensuring the availability of critical spare parts can also be a risk, especially for older equipment. Furthermore, the specialized nature of the work means that finding alternative contractors mid-contract could be difficult and costly if performance issues arise. The long duration (over 5 years) also introduces risks related to changing operational needs or technological obsolescence.

How effective is the firm-fixed-price (FFP) contract type in managing costs for specialized repairs?

The firm-fixed-price (FFP) contract type is generally considered highly effective for managing costs in specialized repair scenarios like turbine overhauls, provided the scope of work is well-defined. Under an FFP agreement, the contractor assumes the majority of the financial risk, agreeing to complete the work for a predetermined price. This incentivizes the contractor to control costs and manage resources efficiently. For the government, it offers cost certainty and predictability, minimizing the risk of unexpected cost increases. The effectiveness hinges on the accuracy of the initial cost estimate and the clarity of the Statement of Work (SOW). If unforeseen issues arise that significantly deviate from the SOW, contract modifications might be necessary, potentially impacting the initial cost certainty.

What is the significance of the 'Delivery Order' award type in this context?

The 'Delivery Order' award type signifies that this $20.5 million is a specific order placed against a previously established indefinite-delivery, indefinite-quantity (IDIQ) or similar type of contract vehicle. This implies that the foundational contract terms, including pricing structures, competition requirements (if any for subsequent orders), and general scope, were likely established earlier, possibly through a broader competition. Awarding via delivery orders allows the government flexibility to procure services as needed over a period, rather than committing to a large, upfront fixed contract. It suggests that the government anticipated a recurring need for LM2500 turbine overhauls and established a framework to efficiently order them.

Industry Classification

NAICS: Other Services (except Public Administration) › Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance › Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N6449818R4023

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: MTU Aero Engines AG

Address: DR.-ERNST-ZIMMERMANN-STR. 2, LUDWIGSFELDE

Business Categories: Category Business, Corporate Entity Tax Exempt, Foreign Owned, Limited Liability Corporation, Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $20,493,226

Exercised Options: $20,493,226

Current Obligation: $20,493,226

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6449819D4029

IDV Type: IDC

Timeline