DoD's $104M Improved Turbine Engine contract awarded to GE for aircraft engine development
Contract Overview
Contract Amount: $104,034,766 ($104.0M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2016-08-22
End Date: 2019-03-16
Contract Duration: 936 days
Daily Burn Rate: $111.1K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 2
Pricing Type: FIXED PRICE INCENTIVE
Sector: Defense
Official Description: THIS CONTRACT IS FOR THE PLANNING, DESIGN AND DEVELOPMENT OF THE IMPROVED TURBINE ENGINE (ITE) THROUGH PRELIMINARY DESIGN REVIEW (PDR). IGF::OT::IGF
Place of Performance
Location: LYNN, ESSEX County, MASSACHUSETTS, 01905
Plain-Language Summary
Department of Defense obligated $104.0 million to GENERAL ELECTRIC COMPANY for work described as: THIS CONTRACT IS FOR THE PLANNING, DESIGN AND DEVELOPMENT OF THE IMPROVED TURBINE ENGINE (ITE) THROUGH PRELIMINARY DESIGN REVIEW (PDR). IGF::OT::IGF Key points: 1. Contract awarded for preliminary design review phase of a critical aircraft engine program. 2. Full and open competition suggests a robust market for this technology. 3. Fixed Price Incentive contract type aims to balance cost control with performance incentives. 4. Contract duration of 936 days indicates a significant development effort. 5. The award to General Electric Company, a major aerospace manufacturer, suggests confidence in their capabilities. 6. This contract represents a strategic investment in next-generation aviation technology for the Army.
Value Assessment
Rating: good
The contract value of $104 million for preliminary design and development of an improved turbine engine appears reasonable given the complexity and strategic importance of such a project. Benchmarking against similar advanced engine development programs is challenging due to proprietary information and unique technological goals. However, the fixed-price incentive structure suggests an effort to manage costs while encouraging contractor performance, which is a positive sign for value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, indicating that multiple capable vendors were likely solicited and had the opportunity to bid. The presence of two bidders (no: 2) suggests a competitive environment, though the exact number of proposals received and evaluated is not detailed. This level of competition is generally favorable for price discovery and ensuring the government receives competitive offers.
Taxpayer Impact: Full and open competition typically leads to better pricing for taxpayers by fostering a competitive environment where contractors strive to offer their best value.
Public Impact
The primary beneficiaries are the Department of the Army and potentially other branches of the military requiring advanced aircraft propulsion. The services delivered include the planning, design, and development of a new, improved turbine engine. The geographic impact is primarily within the United States, focusing on defense manufacturing and technological advancement. Workforce implications include highly skilled engineering, design, and manufacturing jobs within the aerospace sector.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for cost overruns if development challenges are greater than anticipated, despite the incentive structure.
- Dependence on a single contractor (GE) for the preliminary design phase could pose risks if issues arise.
- Technological risks inherent in developing a novel engine system.
Positive Signals
- Awarded through full and open competition, indicating market interest and potential for multiple sources.
- Fixed Price Incentive contract type aligns contractor and government interests towards successful completion.
- Experienced contractor (General Electric) with a strong track record in engine manufacturing.
- Strategic investment in advanced technology that could yield long-term operational benefits.
Sector Analysis
This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector (NAICS 336412), a highly specialized and technologically advanced segment of the aerospace industry. The market is characterized by high barriers to entry, significant R&D investment, and a limited number of major global players. Spending in this sector is driven by defense modernization efforts and the need for more efficient, powerful, and reliable aircraft engines. Comparable spending benchmarks would typically involve other advanced engine development programs, which are often classified or highly proprietary.
Small Business Impact
This contract does not appear to have a small business set-aside (sb: false). Given the nature of advanced turbine engine development, it is unlikely that small businesses would be primary contractors for such a complex undertaking. However, General Electric may engage small businesses as subcontractors for specialized components or services, contributing to the broader small business ecosystem within the defense industrial base.
Oversight & Accountability
Oversight for this contract would primarily reside with the Department of the Army contracting and program management offices. The Fixed Price Incentive contract type includes specific milestones and performance metrics that require rigorous monitoring. Transparency is generally limited for defense development contracts due to national security considerations, but reporting requirements would be in place. Inspector General jurisdiction would apply to any allegations of fraud, waste, or abuse.
Related Government Programs
- Advanced Turbine Engine Program
- Future Vertical Lift Program
- Next Generation Air Dominance Program
- Department of Defense Research and Development Contracts
Risk Flags
- Potential for cost overruns due to R&D complexity.
- Schedule delays in advanced technology development.
- Technical feasibility risks of novel engine components.
Tags
defense, department-of-the-army, aircraft-engine-manufacturing, definitive-contract, fixed-price-incentive, full-and-open-competition, research-and-development, advanced-technology, general-electric, massachusetts
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $104.0 million to GENERAL ELECTRIC COMPANY. THIS CONTRACT IS FOR THE PLANNING, DESIGN AND DEVELOPMENT OF THE IMPROVED TURBINE ENGINE (ITE) THROUGH PRELIMINARY DESIGN REVIEW (PDR). IGF::OT::IGF
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 Army).
What is the total obligated amount?
The obligated amount is $104.0 million.
What is the period of performance?
Start: 2016-08-22. End: 2019-03-16.
What is General Electric's track record with similar advanced engine development contracts for the DoD?
General Electric Company (GE) has a long and extensive history of developing and producing advanced turbine engines for military and commercial aviation. They are a primary contractor for numerous engine programs across various U.S. military branches, including engines for fighter jets, bombers, helicopters, and transport aircraft. GE has consistently been at the forefront of engine technology, investing heavily in research and development. Their track record includes successful delivery of complex engine systems, often under challenging performance and cost constraints. While specific details of past advanced development contracts are often sensitive, GE's sustained position as a leading engine supplier indicates a strong capability to manage the technical and programmatic risks associated with projects like the Improved Turbine Engine (ITE).
How does the $104 million contract value compare to similar advanced engine development efforts?
Direct comparisons of contract values for advanced engine development are difficult due to the proprietary nature of the technology and the specific scope of work. However, $104 million for the preliminary design and development phase (through Preliminary Design Review - PDR) of a next-generation turbine engine is within the expected range for such complex R&D efforts. Major engine programs often involve multi-billion dollar life-cycle costs, with initial design and development phases representing a significant, but not the entirety, of the total investment. Factors influencing this value include the novelty of the technology, the required performance improvements over existing engines, and the rigorous testing and validation processes mandated by the Department of Defense. The fixed-price incentive structure also implies that the final cost could vary based on performance outcomes.
What are the primary risks associated with this Improved Turbine Engine (ITE) development contract?
The primary risks associated with this contract are technical and programmatic. Technologically, developing a novel turbine engine involves significant challenges in achieving desired performance metrics (e.g., power, efficiency, durability) while meeting stringent weight and thermal management requirements. Unforeseen engineering hurdles could lead to delays or necessitate design changes. Programmatically, the Fixed Price Incentive (FPI) contract type, while designed to share risk, still carries potential for cost growth if development targets are missed or require more effort than initially estimated. Contractor performance and adherence to schedule are also key risk areas. Furthermore, the integration of the new engine into existing or future airframes presents system-level risks that must be managed throughout the development lifecycle.
How effective is the Fixed Price Incentive (FPI) contract type for managing costs in advanced R&D?
The Fixed Price Incentive (FPI) contract type is generally considered effective for managing costs in advanced R&D projects where the scope is well-defined but technical uncertainties exist. It establishes a target cost, target profit, and a price ceiling. The government and contractor share in any cost savings or overruns between the target cost and the ceiling, based on a pre-negotiated sharing ratio. This incentivizes the contractor to control costs while ensuring the government is protected from unlimited cost growth by the price ceiling. For R&D, the 'incentive' aspect can be tied to performance metrics, technical milestones, or delivery schedules, aligning the contractor's profit motive with the government's objectives. While it requires careful negotiation of the sharing ratio and ceiling, FPI offers a balance between cost certainty and flexibility for innovation.
What is the historical spending pattern for advanced aircraft engine development by the Department of the Army?
Historical spending by the Department of the Army on advanced aircraft engine development reflects a consistent commitment to maintaining technological superiority in aviation. Major programs like the T700 engine family for helicopters, and more recently, investments in technologies for the Future Vertical Lift (FVL) initiative, demonstrate this. Spending often occurs in phases, starting with foundational research, moving through component development, preliminary design, detailed design, prototyping, testing, and finally, low-rate initial production and full-rate production. Contract values for these phases can range from tens of millions for early R&D to billions over the program's lifecycle. The Army's spending patterns are driven by evolving threat assessments, the need for enhanced operational capabilities (e.g., speed, range, payload, survivability), and the desire for more fuel-efficient and maintainable platforms.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Engine and Engine Parts Manufacturing
Product/Service Code: ENGINES AND TURBINES AND COMPONENT
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: W58RGZ15R0070
Offers Received: 2
Pricing Type: FIXED PRICE INCENTIVE (L)
Evaluated Preference: NONE
Contractor Details
Address: 1000 WESTERN AVE, LYNN, MA, 01905
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $104,034,766
Exercised Options: $104,034,766
Current Obligation: $104,034,766
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2016-08-22
Current End Date: 2019-03-16
Potential End Date: 2019-03-16 12:03:00
Last Modified: 2018-10-23
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