Navy Aviation contract for aircraft engine parts awarded to General Electric Company for over $33.2 million
Contract Overview
Contract Amount: $33,201,584 ($33.2M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2008-10-03
End Date: 2009-09-30
Contract Duration: 362 days
Daily Burn Rate: $91.7K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: NAVY AVIATION
Place of Performance
Location: CINCINNATI, HAMILTON County, OHIO, 45215
State: Ohio Government Spending
Plain-Language Summary
Department of Defense obligated $33.2 million to GENERAL ELECTRIC COMPANY for work described as: NAVY AVIATION Key points: 1. The contract was awarded on a sole-source basis, raising questions about potential price overruns and lack of competitive pressure. 2. With a duration of 362 days, the contract represents a significant but short-term investment in critical aviation components. 3. The awarded amount of over $33.2 million indicates a substantial need for specialized engine parts within the Navy's aviation fleet. 4. The absence of competition suggests a potential reliance on a single supplier, which could impact future pricing and innovation. 5. The contract's fixed-price nature provides some cost certainty, but the lack of competition limits benchmarking opportunities. 6. The specific part number '336412' points to a highly specialized component, likely essential for specific aircraft models.
Value Assessment
Rating: questionable
Benchmarking the value of this contract is challenging due to its sole-source nature and the lack of publicly available comparable contract data for this specific part. The awarded amount of $33.2 million for a 362-day duration suggests a high per-unit cost, especially if the quantity is low. Without competitive bids, it's difficult to ascertain if the price reflects fair market value or if taxpayers are potentially overpaying for these critical engine parts. The 'OH' (Ohio) location for the contractor might offer some regional economic context, but doesn't directly inform price competitiveness.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when only one vendor can provide the required goods or services, often due to proprietary technology, unique capabilities, or urgent needs where competition is impractical. The lack of bidders means there was no opportunity for price discovery through a competitive bidding process, potentially leading to higher costs for the government.
Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings typically achieved through competitive bidding. This can result in higher overall spending for essential defense procurements.
Public Impact
The primary beneficiaries are the U.S. Navy's aviation units, ensuring the operational readiness of aircraft requiring these specific engine parts. The contract delivers essential aircraft engine and engine parts, crucial for maintaining the functionality and safety of naval aircraft. The geographic impact is primarily within the United States, supporting the defense industrial base and potentially jobs in Ohio where the contractor is located. Workforce implications include the employment of skilled labor in manufacturing, engineering, and quality control at General Electric Company.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pressure, potentially leading to higher costs.
- Lack of transparency in the procurement process due to non-competition.
- Potential for vendor lock-in if this part is unique and critical.
- Limited data available to assess the true value for money.
- Short contract duration might indicate a stop-gap measure or a specific, limited need.
Positive Signals
- Award to a known entity (General Electric Company) suggests a degree of reliability.
- Fixed-price contract offers some cost predictability.
- Ensures availability of critical engine parts for Navy aviation readiness.
- Contract supports a key defense contractor, contributing to the defense industrial base.
Sector Analysis
The Aircraft Engine and Engine Parts Manufacturing sector is a critical component of the aerospace and defense industry. This sector is characterized by high barriers to entry, significant R&D investment, and stringent quality control requirements. Contracts like this, even if sole-source, are vital for maintaining the operational capabilities of military fleets. The total market for aerospace and defense manufacturing is substantial, with engine components representing a high-value niche. Benchmarking against other sole-source awards for similar specialized parts would be necessary for a comprehensive value assessment.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'aw': 'DO' (Department of Defense) designation and the sole-source nature suggest that subcontracting opportunities for small businesses may be limited and dependent on General Electric's internal policies or specific needs for this procurement. Without a competitive bidding process, there's less inherent pressure to include small business participation targets.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Navy and the Department of Defense. As a sole-source award, the justification for non-competition would be subject to review. Accountability measures would involve performance monitoring against the contract's terms and delivery schedules. Transparency is limited due to the lack of a competitive process, making public scrutiny of the pricing and selection rationale more difficult. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.
Related Government Programs
- Navy Aircraft Procurement
- Aviation Maintenance and Repair
- Defense Logistics Agency
- Aerospace Component Manufacturing
- Military Engine Support Contracts
Risk Flags
- Sole-source award
- Lack of competition
- Limited transparency
- Potential for price escalation
Tags
defense, department-of-the-navy, general-electric-company, sole-source, aircraft-engine-parts, aviation, fixed-price, ohio, large-contract, non-competed
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $33.2 million to GENERAL ELECTRIC COMPANY. NAVY AVIATION
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 Navy).
What is the total obligated amount?
The obligated amount is $33.2 million.
What is the period of performance?
Start: 2008-10-03. End: 2009-09-30.
What is the specific justification for awarding this contract on a sole-source basis to General Electric Company?
The provided data indicates the contract was 'NOT COMPETED' and awarded on a 'sole-source' basis. Typically, sole-source justifications are based on factors such as the uniqueness of the item, the proprietary nature of the technology, the existence of only one responsible source, or urgent and compelling circumstances where competition is not feasible. For this specific contract, the justification would likely stem from General Electric Company being the sole manufacturer or authorized provider of the specific aircraft engine part (identified by part number '336412') required by the Navy's aviation fleet. Without further documentation from the contracting agency (Department of the Navy), the precise rationale remains unconfirmed, but it is standard practice for highly specialized or proprietary components.
How does the awarded amount of over $33.2 million compare to typical spending for similar aircraft engine parts?
Comparing the $33.2 million award for this contract to typical spending on similar aircraft engine parts is difficult without more specific data. The value is heavily influenced by the criticality, complexity, and volume of the specific part (part number '336412'). If this part is a major component for a widely used aircraft, the cost might be within a reasonable range, albeit high due to specialized manufacturing. However, if it's a niche part for a limited fleet or a component with a high failure rate, the cost per unit could be exceptionally high. The sole-source nature further complicates benchmarking, as competitive bids often drive down prices. A thorough comparison would require access to databases of similar sole-source awards for comparable engine components or detailed cost breakdowns from the contractor.
What are the potential risks associated with a sole-source contract for critical aviation components?
Sole-source contracts for critical aviation components carry several risks. Firstly, the lack of competition can lead to inflated prices, as the government does not benefit from the cost-saving pressures inherent in a bidding process. Secondly, there's a risk of vendor lock-in, where the government becomes overly reliant on a single supplier, potentially limiting future negotiation leverage and flexibility. Thirdly, without competitive pressure, the incentive for the sole-source provider to innovate or improve efficiency might be reduced. Lastly, the absence of multiple bids can obscure potential quality issues or inefficiencies that might be revealed during a competitive evaluation. For critical aviation parts, these risks are amplified due to safety and operational readiness implications.
What is the significance of the contract duration (362 days) in relation to the total contract value?
The contract duration of 362 days, nearly a full year, coupled with a value exceeding $33.2 million, suggests a sustained need for these specific aircraft engine parts. This duration implies that the Navy requires a consistent supply of these components over an extended period, rather than a one-time purchase. The implied annual spending rate is substantial, underscoring the importance of these parts to fleet readiness. A short duration might indicate a temporary surge in demand or a pilot program, whereas this length suggests integration into routine maintenance or operational schedules. The fixed-price nature over this duration provides cost certainty for the Navy, assuming the quantity and delivery schedules are met.
How does the 'Aircraft Engine and Engine Parts Manufacturing' sector typically operate within the defense procurement landscape?
The 'Aircraft Engine and Engine Parts Manufacturing' sector is a highly specialized and technologically advanced segment of the defense industrial base. Companies operating in this space, like General Electric, invest heavily in research and development, possess unique manufacturing capabilities, and adhere to extremely rigorous quality and safety standards. Defense procurement within this sector often involves long-term relationships, given the complexity and lifecycle of aircraft. Contracts can range from initial engine development and production to sustainment, repair, and overhaul services. Due to the critical nature of engines and the proprietary technologies involved, sole-source or limited-competition awards are not uncommon, particularly for specific parts or upgrades. This sector is vital for national security, ensuring the operational readiness and technological superiority of military aviation assets.
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 COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: ONE NEUMANN WAY, CINCINNATI, OH, 90
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $33,201,584
Exercised Options: $33,201,584
Current Obligation: $33,201,584
Contract Characteristics
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: FA810405G0003
IDV Type: IDC
Timeline
Start Date: 2008-10-03
Current End Date: 2009-09-30
Potential End Date: 2009-09-30 00:00:00
Last Modified: 2010-05-12
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