DoD spent $14.2M on engineering services for aircraft engines, with limited competition
Contract Overview
Contract Amount: $14,183,074 ($14.2M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2008-01-01
End Date: 2010-12-31
Contract Duration: 1,095 days
Daily Burn Rate: $13.0K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: ENGINEERING SERVICES
Place of Performance
Location: CINCINNATI, HAMILTON County, OHIO, 45215, UNITED STATES OF AMERICA
State: Ohio Government Spending
Plain-Language Summary
Department of Defense obligated $14.2 million to GENERAL ELECTRIC COMPANY for work described as: ENGINEERING SERVICES Key points: 1. Value for money is difficult to assess due to the cost-plus fixed fee structure and lack of competitive bidding. 2. Competition dynamics indicate a sole-source or limited competition award, potentially leading to higher costs. 3. Risk indicators include the cost-plus contract type, which can incentivize higher spending. 4. Performance context is tied to aircraft engine and parts manufacturing, a critical defense sector. 5. Sector positioning is within the defense industrial base, specifically supporting aircraft engine maintenance and development.
Value Assessment
Rating: questionable
The contract's cost-plus fixed fee structure makes it challenging to benchmark value against market rates or similar contracts. Without competitive bidding, it's difficult to determine if the $14.2 million spent represents a fair price. The lack of transparency in pricing and performance metrics further complicates a value-for-money assessment. Future contracts should explore fixed-price options or require more detailed cost breakdowns to ensure better value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only one vendor was solicited. This significantly limits price discovery and negotiation leverage for the government. The absence of competition suggests potential reliance on a specific capability or a lack of market research to identify alternative providers. Such awards can lead to inflated costs and reduced innovation.
Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the best possible price, as competition is a key driver of cost savings.
Public Impact
The Department of Defense benefits from specialized engineering services for critical aircraft engine components. Services delivered likely include design, analysis, testing, and technical support for aircraft engines. The geographic impact is concentrated in Ohio, where General Electric Company's operations are based. Workforce implications include the employment of skilled engineers and technical staff at the contractor's facility.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Cost-plus contract type can lead to cost overruns and reduced incentive for efficiency.
- Sole-source award limits competitive pressure, potentially increasing costs for taxpayers.
- Lack of detailed performance metrics makes it difficult to assess contractor efficiency and effectiveness.
- Long contract duration (3 years) without clear performance checkpoints could mask inefficiencies.
Positive Signals
- Awarded to a major defense contractor with established expertise in aircraft engines.
- Contract supports critical defense capabilities, ensuring readiness of aircraft fleets.
- Engineering services are essential for maintaining and improving complex defense systems.
Sector Analysis
This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft engine components. The market for specialized engineering services in this area is often concentrated among a few large, established firms due to high barriers to entry, including intellectual property, specialized facilities, and security clearances. Comparable spending benchmarks are difficult to establish without more detailed service descriptions and competitive data.
Small Business Impact
The contract data indicates that this was not a small business set-aside, and there is no explicit mention of subcontracting plans for small businesses. This suggests that the primary award went to a large corporation, potentially limiting opportunities for small businesses to participate in this specific contract's value chain. Further investigation into subcontracting reports would be needed to assess the actual impact on the small business ecosystem.
Oversight & Accountability
Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), responsible for ensuring contractor performance and compliance. Accountability measures are inherent in the contract terms, particularly the fixed fee component, although the cost-plus nature requires careful monitoring of expenditures. Transparency is limited due to the sole-source nature and the cost-plus structure, making public scrutiny of specific costs challenging.
Related Government Programs
- Aircraft Engine Maintenance and Repair
- Defense Industrial Base Support
- Aerospace Engineering Services
- Cost-Plus Contracting
Risk Flags
- Sole-source award
- Cost-plus contract type
- Lack of competitive bidding
Tags
defense, department-of-defense, engineering-services, aircraft-engines, cost-plus-fixed-fee, sole-source, general-electric-company, ohio, defense-contract-management-agency, naics-336412
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $14.2 million to GENERAL ELECTRIC COMPANY. ENGINEERING SERVICES
Who is the contractor on this award?
The obligated recipient is GENERAL ELECTRIC COMPANY.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $14.2 million.
What is the period of performance?
Start: 2008-01-01. End: 2010-12-31.
What is the track record of General Electric Company in delivering similar engineering services for defense contracts?
General Electric Company (GE) has a long and extensive track record in providing engineering services and manufacturing critical components for defense applications, particularly in the realm of aircraft engines. They are a primary contractor for numerous military aircraft platforms, supplying engines and related support. Their experience spans decades, encompassing design, development, testing, and sustainment of complex propulsion systems. While specific performance data for individual contracts is often proprietary, GE's sustained role as a key defense supplier indicates a generally accepted capability and reliability in delivering these specialized services. However, the cost-plus nature of some contracts, including potentially this one, necessitates rigorous oversight to ensure value and prevent cost overruns, regardless of the contractor's historical performance.
How does the $14.2 million cost compare to similar engineering service contracts for aircraft engines?
Directly comparing the $14.2 million cost is challenging without detailed service scope, duration, and competitive landscape information for similar contracts. This contract, awarded on a sole-source basis with a Cost Plus Fixed Fee (CPFF) structure, inherently limits direct cost-to-cost comparisons. CPFF contracts aim to cover allowable costs plus a fixed fee, which can vary significantly based on the complexity and risk involved. Generally, sole-source awards tend to be higher than competitively bid contracts. To provide a meaningful comparison, one would need to identify other DoD contracts for comparable aircraft engine engineering services, ideally those awarded competitively and with similar contract types and durations, to establish a benchmark for pricing and value.
What are the primary risks associated with a Cost Plus Fixed Fee contract for engineering services?
The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for engineering services revolve around cost control and contractor efficiency. For the government, the main risk is that the contractor may have less incentive to control costs rigorously, as all allowable expenses are covered, and the profit (fixed fee) is predetermined. This can lead to potential cost overruns if not managed diligently. Contractors might also prioritize scope expansion or less efficient methods if they believe it won't significantly impact their fixed fee. For the contractor, risks include underestimating the costs required to complete the work, which could lead to the fixed fee being insufficient compensation, or facing disputes over allowable costs. Effective oversight, detailed cost tracking, and clear performance metrics are crucial to mitigate these risks.
What is the historical spending pattern for engineering services related to aircraft engines by the Department of Defense?
The Department of Defense historically spends billions of dollars annually on aircraft engine-related services, encompassing research and development, manufacturing, maintenance, repair, and overhaul. This spending is driven by the continuous need to maintain and modernize a vast fleet of military aircraft, which are equipped with complex and high-performance engines. Spending patterns are influenced by factors such as the introduction of new aircraft platforms, upgrades to existing engines, geopolitical demands, and sustainment requirements for aging fleets. Contracts for engineering services, like the one analyzed, represent a portion of this overall expenditure, focusing on specialized technical support, design modifications, and performance analysis. Detailed historical spending data can be found in public databases like USAspending.gov, broken down by agency, contractor, and service category.
How does the 'Aircraft Engine and Engine Parts Manufacturing' NAICS code relate to the services provided under this contract?
The North American Industry Classification System (NAICS) code 336412, 'Aircraft Engine and Engine Parts Manufacturing,' broadly categorizes businesses involved in the production of aircraft engines, engine parts, and related components. While this contract is for 'ENGINEERING SERVICES,' it is highly probable that these services are directly in support of the manufacturing or sustainment activities within this NAICS code. Engineering services in this context could include design, prototyping, testing, performance analysis, materials science research, and technical support necessary for the development, production, or maintenance of aircraft engines and their parts. Therefore, the NAICS code provides the industrial context for the goods and services this contract facilitates, linking engineering expertise to the physical production and upkeep of critical defense hardware.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Engine and Engine Parts Manufacturing
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
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, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $14,183,132
Exercised Options: $14,183,132
Current Obligation: $14,183,074
Contract Characteristics
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: F3365799D2050
IDV Type: IDC
Timeline
Start Date: 2008-01-01
Current End Date: 2010-12-31
Potential End Date: 2010-12-31 00:00:00
Last Modified: 2015-04-24
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