DoD's $104.6M order for GE aircraft engines and parts shows potential value concerns amid limited competition
Contract Overview
Contract Amount: $104,593,830 ($104.6M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2019-12-13
End Date: 2025-04-20
Contract Duration: 1,955 days
Daily Burn Rate: $53.5K/day
Competition Type: NOT AVAILABLE FOR COMPETITION
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: FOR BAHRAIN THERE IS AN ORDER FOR 16 INSTALL ENGINES, 6 SPARE ENGINES, AND 16 EMSCS.
Place of Performance
Location: CINCINNATI, HAMILTON County, OHIO, 45215
State: Ohio Government Spending
Plain-Language Summary
Department of Defense obligated $104.6 million to GENERAL ELECTRIC COMPANY for work described as: FOR BAHRAIN THERE IS AN ORDER FOR 16 INSTALL ENGINES, 6 SPARE ENGINES, AND 16 EMSCS. Key points: 1. The contract's value appears high relative to the quantity of engines and spare parts ordered. 2. Limited competition for specialized aircraft engine components can lead to higher prices. 3. The long duration of the contract (over 5 years) warrants close monitoring for cost escalation. 4. This spending falls within the broader category of aircraft engine and parts manufacturing. 5. The reliance on a single supplier for critical components presents a potential supply chain risk. 6. The absence of a small business set-aside suggests a focus on large, specialized contractors.
Value Assessment
Rating: questionable
The total award of $104.6 million for 16 install engines, 6 spare engines, and 16 EMSCs averages to approximately $2.75 million per installed engine, which seems high. Benchmarking against similar sole-source or limited-competition procurements for advanced military aircraft engines is difficult without more specific component details. However, the unit cost for engines and associated parts warrants scrutiny to ensure fair and reasonable pricing, especially given the lack of competitive pressure.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed and was awarded on a sole-source basis to General Electric Company. This indicates that GE is likely the only approved or capable manufacturer for these specific aircraft engines and associated parts. The lack of competition means the government did not benefit from price discovery through a bidding process, potentially leading to a higher price than if multiple vendors had competed.
Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without alternative suppliers, the government has limited leverage to negotiate lower prices.
Public Impact
The primary beneficiaries are the U.S. Air Force units operating the aircraft requiring these engines. The services delivered include the provision of new aircraft engines, spare engines, and Engine Monitoring and Control Systems (EMCS). The geographic impact is primarily within the Department of Defense's operational theaters globally. This contract supports high-skilled jobs within the aerospace manufacturing sector, specifically at General Electric.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for overpayment due to sole-source award.
- Risk of supply chain disruption if GE faces production issues.
- Lack of transparency in pricing without competitive bids.
- Long contract duration increases exposure to cost overruns.
- Dependence on a single contractor for critical aviation components.
Positive Signals
- Ensures availability of critical components for Air Force operations.
- Leverages specialized expertise of a known, established manufacturer.
- Provides necessary parts to maintain fleet readiness.
- Supports a key defense industrial base supplier.
Sector Analysis
This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft engines and parts. The market for advanced military aircraft engines is highly concentrated, often dominated by a few large, specialized firms like General Electric. Spending in this area is critical for national security and fleet readiness, but the high barriers to entry and specialized nature of the products often lead to limited competition and higher unit costs compared to more commoditized manufacturing sectors.
Small Business Impact
The contract was not set aside for small businesses, nor does it appear to involve significant subcontracting opportunities for small businesses based on the provided data. This is typical for highly specialized, large-scale procurements where the prime contractor possesses unique capabilities and manufacturing infrastructure. The focus is on ensuring the prime contractor's ability to deliver complex, high-value components.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures would include performance monitoring, delivery schedules, and quality control. Transparency is limited due to the sole-source nature, but contract modifications and payment milestones would be tracked. The Inspector General's office could investigate allegations of fraud, waste, or abuse.
Related Government Programs
- Aircraft Engine Maintenance and Repair
- Aerospace Parts Manufacturing
- Defense Logistics and Support
- Military Aircraft Procurement
- Propulsion Systems for Aircraft
Risk Flags
- Sole-source procurement
- High unit cost potential
- Long contract duration
- Critical component dependency
Tags
defense, department-of-defense, air-force, aircraft-engine, general-electric, sole-source, firm-fixed-price, engines-and-engine-parts, delivery-order, large-contract, ohio, 2019-procurement
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $104.6 million to GENERAL ELECTRIC COMPANY. FOR BAHRAIN THERE IS AN ORDER FOR 16 INSTALL ENGINES, 6 SPARE ENGINES, AND 16 EMSCS.
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 $104.6 million.
What is the period of performance?
Start: 2019-12-13. End: 2025-04-20.
What is the historical spending pattern for similar aircraft engines and parts procured by the Department of Defense from General Electric?
Analyzing historical spending for comparable General Electric aircraft engines and parts requires access to detailed contract databases. However, large sole-source awards for military jet engines and components are not uncommon, reflecting the specialized nature of the industry. Past procurements often involve multi-year contracts with significant dollar values, driven by fleet modernization, sustainment, and upgrade programs. Without specific engine model data, direct comparisons are challenging, but trends generally show sustained, high-value investment in propulsion systems due to their critical role and complex manufacturing requirements. Fluctuations in spending can be linked to new aircraft programs, service life extensions, or depot-level maintenance requirements.
How does the unit cost of these engines compare to commercial aircraft engines of similar size and capability?
Direct comparison between military and commercial aircraft engine unit costs is complex due to differing performance requirements, materials, testing protocols, and production volumes. Military engines often incorporate advanced technologies for higher thrust-to-weight ratios, enhanced durability in harsh environments, and specific stealth or survivability features, which can significantly increase costs. Furthermore, military procurements are often sole-source or limited-competition, lacking the price pressures found in the high-volume commercial market. While commercial engines might be cheaper on a per-unit basis due to economies of scale, the specialized nature and unique demands of military applications justify a higher cost for defense-specific propulsion systems.
What are the specific risks associated with relying on a sole-source supplier for critical aircraft engine components?
Relying on a sole-source supplier like General Electric for critical aircraft engine components presents several risks. Firstly, there's a significant price risk, as the government lacks competitive leverage to negotiate lower prices, potentially leading to overpayment. Secondly, supply chain risk is elevated; any production delays, quality issues, or disruptions at the supplier's facility can directly impact fleet readiness and operational capability. Thirdly, there's a technological risk, as the government may become locked into a specific manufacturer's technology, making future upgrades or transitions to alternative systems more difficult and costly. Finally, long-term dependence can reduce the government's bargaining power and flexibility in future contract negotiations.
What performance metrics or key performance indicators (KPIs) are likely being used to evaluate General Electric's performance under this contract?
Under this contract, General Electric's performance is likely evaluated against several Key Performance Indicators (KPIs). These would typically include on-time delivery of engines and spare parts, adherence to quality standards (e.g., defect rates, compliance with specifications), and potentially engine reliability and performance metrics once installed and operational. For Engine Monitoring and Control Systems (EMCS), KPIs might focus on data accuracy, system uptime, and responsiveness. Contractual terms often specify acceptable performance thresholds, with penalties for non-compliance and potential incentives for exceeding expectations. Regular technical reviews and progress reports would be used to track adherence to these KPIs.
What is the anticipated impact of these new engines and spare parts on the operational readiness and capabilities of the Air Force fleet?
The acquisition of 16 new install engines, 6 spare engines, and 16 EMCS is intended to directly enhance the operational readiness and capabilities of the specific Air Force fleet utilizing these engines. New engines typically offer improved performance, fuel efficiency, and reliability compared to older units, reducing unscheduled maintenance and increasing aircraft availability. Spare engines ensure that aircraft can be quickly returned to service following component failures or during scheduled maintenance, minimizing downtime. The EMCS likely provides enhanced diagnostics and predictive maintenance capabilities, allowing for proactive issue resolution and potentially extending engine life, thereby bolstering overall fleet readiness and mission capability.
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: NOT AVAILABLE FOR COMPETITION
Solicitation Procedures: ONLY ONE SOURCE
Pricing Type: FIRM FIXED PRICE (J)
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: $104,593,830
Exercised Options: $104,593,830
Current Obligation: $104,593,830
Subaward Activity
Number of Subawards: 37
Total Subaward Amount: $6,391,374
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: FA862618D0029
IDV Type: IDC
Timeline
Start Date: 2019-12-13
Current End Date: 2025-04-20
Potential End Date: 2025-04-20 00:00:00
Last Modified: 2025-05-07
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