DoD awards $10.3M letter contract to General Electric for navigation systems, with no competition
Contract Overview
Contract Amount: $10,380,292 ($10.4M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2007-05-07
End Date: 2009-09-30
Contract Duration: 877 days
Daily Burn Rate: $11.8K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: LETTER CONTRACT FOR NON-RECURRING
Place of Performance
Location: CINCINNATI, HAMILTON County, OHIO, 45206
State: Ohio Government Spending
Plain-Language Summary
Department of Defense obligated $10.4 million to GENERAL ELECTRIC COMPANY for work described as: LETTER CONTRACT FOR NON-RECURRING Key points: 1. The contract's value of $10.3 million is moderate for a definitive contract in the defense sector. 2. The lack of competition raises concerns about potential overpricing and limited innovation. 3. The contract duration of 877 days suggests a significant project requiring substantial development or production. 4. The firm-fixed-price structure aims to control costs, but without competition, its effectiveness is diminished. 5. The award to a large, established contractor like General Electric is typical for complex defense systems. 6. The absence of small business set-asides indicates this contract was not specifically targeted for smaller enterprises.
Value Assessment
Rating: questionable
Benchmarking the value of this $10.3 million letter contract is challenging without more specific details on the navigation system components. However, the lack of competition is a significant red flag. Typically, competitive bidding drives down prices and ensures fair market value. Without this process, it's difficult to ascertain if the government received the best possible price for the goods and services. The firm-fixed-price type offers some cost control, but the initial negotiation without competitive pressure is a concern.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only one vendor, General Electric Company, was considered. The documentation indicates it was 'NOT COMPETED.' This approach bypasses the standard competitive bidding process, which typically involves soliciting offers from multiple interested parties. The lack of competition means there was no opportunity to compare proposals or leverage multiple bids to achieve a lower price or better terms.
Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without competing offers, the government cannot be certain it secured the most cost-effective solution available in the market.
Public Impact
The primary beneficiaries are the Department of Defense, which will receive critical navigation systems for its aircraft or vessels. The contract supports the manufacturing and integration of Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing. The geographic impact is likely concentrated around General Electric's facilities in Ohio, where the contract is managed. This contract supports skilled jobs in the aerospace and defense manufacturing sector, particularly within General Electric's workforce.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to inflated costs for taxpayers.
- Sole-source awards can limit innovation by not exploring alternative solutions from other vendors.
- The 'letter contract' nature suggests an initial agreement, potentially with less defined scope, increasing risk.
- Absence of small business participation could mean missed opportunities for economic diversification.
Positive Signals
- Award to a reputable contractor like General Electric suggests a level of trust in their capability.
- Firm-fixed-price contract type aims to provide cost certainty once the final terms are established.
- The contract is for a specific, essential defense system, indicating a clear need.
- The Defense Contract Management Agency's oversight suggests a structured management process.
Sector Analysis
This contract falls within the 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' sector, a critical component of the aerospace and defense industry. This market is characterized by high barriers to entry, significant R&D investment, and long product development cycles. Major players like General Electric dominate, often securing large, long-term contracts for specialized systems. Spending in this niche is driven by defense modernization efforts and the need for advanced technological capabilities.
Small Business Impact
This contract does not appear to have a small business set-aside (ss=false, sb=false). The award to a large prime contractor like General Electric suggests that subcontracting opportunities might exist for small businesses. However, the extent of these opportunities is not detailed in the provided data. Without specific subcontracting plans or goals mandated, the direct impact on the small business ecosystem is uncertain, though large defense contracts often flow down to smaller suppliers.
Oversight & Accountability
The contract is managed by the Defense Contract Management Agency (DCMA), indicating a level of oversight. As a definitive contract, it implies a more structured agreement than a basic ordering agreement. However, the specific oversight mechanisms, accountability measures, and transparency related to this sole-source award are not detailed. Inspector General jurisdiction would typically apply to investigations of fraud, waste, or abuse within DoD contracts.
Related Government Programs
- DoD Navigation Systems Procurement
- Aerospace and Defense Manufacturing Contracts
- General Electric Defense Contracts
- Sole-Source Defense Awards
- Letter Contracts
Risk Flags
- Sole-source award
- Lack of competition
- Letter contract (potential for undefined scope/cost)
Tags
defense, department-of-defense, general-electric-company, letter-contract, definitive-contract, not-competed, sole-source, firm-fixed-price, navigation-systems, aerospace, ohio, 334511
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $10.4 million to GENERAL ELECTRIC COMPANY. LETTER CONTRACT FOR NON-RECURRING
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 $10.4 million.
What is the period of performance?
Start: 2007-05-07. End: 2009-09-30.
What is the specific type of navigation system being procured, and what are its intended applications within the Department of Defense?
The provided data indicates the contract is for 'Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing' (NAICS code 334511). While the specific system isn't detailed, this broad category suggests components or complete systems crucial for aircraft, ships, or ground vehicles. These could range from GPS receivers and inertial navigation units to radar systems or electronic warfare components. The intended applications are likely to enhance situational awareness, targeting, and operational effectiveness for various DoD platforms, ensuring mission success in complex environments.
Why was this contract awarded on a sole-source basis instead of through full and open competition?
The data explicitly states the contract was 'NOT COMPETED' (ct='NOT COMPETED'), indicating a sole-source award. Common justifications for sole-sourcing include unique capabilities possessed by only one contractor, urgent and compelling needs where competition is impractical, or when a previous contract requires follow-on work that can only be efficiently performed by the original contractor. Without further documentation, the specific rationale for General Electric being the sole provider for this navigation system remains unclear, but it implies a belief by the DoD that only GE could meet the requirement at that time.
What is the historical spending pattern for similar navigation systems by the Department of Defense?
Historical spending on navigation systems within the DoD is substantial and varies significantly based on platform modernization cycles and technological advancements. The DoD regularly procures a wide array of navigation equipment, from basic GPS receivers to highly sophisticated integrated systems for aircraft, ships, and ground vehicles. Major defense contractors like Honeywell, Rockwell Collins (now part of RTX), and General Electric are frequent recipients of such contracts. Annual spending can range from hundreds of millions to billions of dollars across all branches, depending on specific program needs and budget allocations. This $10.3 million contract represents a small fraction of the overall DoD investment in this category.
What are the potential risks associated with a sole-source letter contract for advanced defense systems?
Sole-source letter contracts carry several risks. Firstly, the lack of competition can lead to higher prices than might be achieved through a competitive process, as the government lacks leverage from multiple bids. Secondly, a letter contract is an initial agreement, often used when the full scope or cost isn't precisely defined, which can introduce cost and schedule uncertainty. Thirdly, relying on a single source can create vendor lock-in and limit future flexibility or innovation. For advanced defense systems, these risks are amplified due to the complexity and critical nature of the technology, potentially impacting operational readiness and taxpayer value if not managed meticulously.
How does the firm-fixed-price (FFP) contract type mitigate risks in this sole-source scenario?
The Firm-Fixed-Price (FFP) contract type aims to mitigate cost risks for the government. Under an FFP agreement, the contractor agrees to a total price, and is responsible for all costs incurred to complete the work. This shifts the risk of cost overruns from the government to the contractor. However, in a sole-source context, the initial FFP is negotiated without competitive pressure. While it caps the government's maximum liability, the negotiated price itself might be higher than in a competitive scenario. Therefore, while FFP provides cost certainty, its effectiveness in ensuring value-for-money is diminished when competition is absent.
What is General Electric's track record in supplying navigation systems to the U.S. military?
General Electric (GE) has a long and significant history of supplying complex systems and components to the U.S. military, including those related to navigation, guidance, and control. GE Aviation, a division of the company, is a major player in aerospace, producing engines, avionics, and integrated systems for a wide range of military aircraft. Their involvement in navigation systems is well-established, often involving sophisticated technologies that integrate with other aircraft systems. While specific contract details vary, GE's consistent presence as a prime contractor for DoD programs suggests a strong track record and established capabilities in this domain.
Industry Classification
NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing
Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES
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: 1000 WESTERN AVE, LYNN, MA, 01905
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $10,380,292
Exercised Options: $10,380,292
Current Obligation: $10,380,292
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2007-05-07
Current End Date: 2009-09-30
Potential End Date: 2009-09-30 00:00:00
Last Modified: 2019-11-07
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