DoD awards $647M for aircraft engine logistics support to General Electric, a sole-source contract
Contract Overview
Contract Amount: $646,710,611 ($646.7M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2017-11-16
End Date: 2021-07-31
Contract Duration: 1,353 days
Daily Burn Rate: $478.0K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: LRIP LOT 1&2 INTEGRATED LOGISTICS SUPPORT
Place of Performance
Location: LYNN, ESSEX County, MASSACHUSETTS, 01905
Plain-Language Summary
Department of Defense obligated $646.7 million to GENERAL ELECTRIC COMPANY for work described as: LRIP LOT 1&2 INTEGRATED LOGISTICS SUPPORT Key points: 1. Contract awarded for integrated logistics support for aircraft engines. 2. Sole-source award raises questions about price competition and value. 3. Contract duration of over three years suggests long-term support needs. 4. Cost-plus-fixed-fee structure may incentivize cost overruns. 5. No small business set-aside indicates potential missed opportunities for smaller firms. 6. Awarded by the Defense Contract Management Agency, indicating a focus on defense procurement.
Value Assessment
Rating: questionable
Benchmarking the value of this contract is challenging due to its sole-source nature and the specific nature of integrated logistics support for aircraft engines. Without competitive bids, it's difficult to assess if the fixed fee and estimated costs represent a fair market price. The cost-plus-fixed-fee (CPFF) contract type, while common for complex services where costs are uncertain, can lead to higher overall spending compared to fixed-price contracts if not managed rigorously. The total award amount of $647 million over approximately three years suggests a significant investment in maintaining critical defense assets.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only one bidder, General Electric Company, was solicited. This approach is typically used when a specific contractor possesses unique capabilities, proprietary technology, or is the sole provider of essential goods or services. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices through market forces. This raises concerns about whether the government secured the best possible value.
Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without competing offers, there is less pressure on the contractor to offer the most cost-effective solution, potentially leading to higher overall expenditure for the government.
Public Impact
The primary beneficiaries are the Department of Defense units relying on the supported aircraft engines for operational readiness. Services delivered include integrated logistics support, crucial for maintaining the functionality and longevity of complex aircraft propulsion systems. The geographic impact is likely widespread, supporting military operations across various bases and deployment locations. Workforce implications include the potential for continued employment for engineers, technicians, and support staff at General Electric and its subcontractors.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price competition, potentially increasing costs for taxpayers.
- Cost-plus-fixed-fee contract type can incentivize higher spending if not closely monitored.
- Lack of transparency in the sole-source justification process.
- Potential for contractor lock-in due to specialized nature of logistics support.
- No indication of small business participation or subcontracting goals.
Positive Signals
- General Electric is a known entity with established expertise in aircraft engine manufacturing and support.
- Integrated logistics support is critical for maintaining the operational readiness of vital military aircraft.
- The contract duration suggests a stable, long-term commitment to supporting essential defense capabilities.
- The award is managed by the Defense Contract Management Agency, implying established oversight processes.
Sector Analysis
This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft engine parts and related support services. The market for such specialized logistics is often dominated by original equipment manufacturers due to proprietary knowledge and technical requirements. General Electric is a major player in this industry. Comparable spending benchmarks are difficult to establish without more detailed cost breakdowns and market analysis, but large-scale logistics support contracts for major defense platforms often run into hundreds of millions of dollars.
Small Business Impact
This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements mentioned in the provided data. Given the specialized nature of integrated logistics support for advanced aircraft engines, it's possible that opportunities for small businesses are limited to specific component manufacturing or niche support services. The absence of a set-aside suggests that the primary contractor, General Electric, is expected to fulfill the majority of the requirements directly, potentially limiting the direct economic benefit to the broader small business ecosystem in this specific award.
Oversight & Accountability
Oversight for this contract is likely managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractors meet performance and cost requirements. Accountability measures would be embedded within the contract's terms and conditions, including reporting requirements and performance metrics. Transparency regarding the sole-source justification and detailed cost breakdowns may be limited due to the nature of the award and defense procurement regulations. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.
Related Government Programs
- Aircraft Engine Manufacturing
- Defense Logistics Support Services
- Military Aircraft Maintenance
- Propulsion Systems Support
- Aerospace Parts Manufacturing
Risk Flags
- Sole-source award
- Cost-plus contract type
- Lack of competition
Tags
defense, department-of-defense, general-electric-company, aircraft-engine-parts-manufacturing, integrated-logistics-support, sole-source, cost-plus-fixed-fee, definitive-contract, defense-contract-management-agency, massachusetts, long-term-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $646.7 million to GENERAL ELECTRIC COMPANY. LRIP LOT 1&2 INTEGRATED LOGISTICS SUPPORT
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 $646.7 million.
What is the period of performance?
Start: 2017-11-16. End: 2021-07-31.
What is the specific justification for awarding this contract on a sole-source basis to General Electric?
The provided data indicates the contract was 'NOT COMPETED,' signifying a sole-source award. While the specific justification is not detailed in the abbreviated data, common reasons for sole-source awards in defense contracting include the unique capabilities of the contractor, proprietary technology, essential nature of the product or service where only one source exists, or urgent and compelling circumstances. For integrated logistics support of complex aircraft engines, General Electric, as the likely original equipment manufacturer, often possesses the exclusive technical data, specialized tooling, and trained personnel required for maintenance and support, making competition impractical or impossible without significant government investment in developing alternative capabilities.
How does the Cost Plus Fixed Fee (CPFF) contract type compare to other contract types in terms of cost efficiency for this type of service?
Cost Plus Fixed Fee (CPFF) contracts are often used when the scope of work is well-defined but the costs are uncertain, such as in complex service or R&D efforts. The government pays the contractor's actual costs plus a predetermined fixed fee, which represents the contractor's profit. While this structure allows for flexibility and ensures the contractor is compensated for unforeseen costs, it carries a higher risk of cost overruns compared to fixed-price contracts. In a competitive environment, fixed-price contracts generally offer better value for taxpayers as they place the cost risk on the contractor. However, for specialized, long-term logistics support where technical expertise is concentrated, CPFF might be deemed necessary to ensure adequate support is provided, though it necessitates robust government oversight to manage costs effectively.
What are the potential risks associated with a sole-source contract for integrated logistics support?
The primary risk of a sole-source contract is the lack of price competition, which can lead to the government paying a higher price than if multiple bidders had competed. This can result in reduced value for taxpayer money. Another risk is contractor lock-in, where the government becomes dependent on a single provider, making it difficult and costly to switch suppliers in the future, even if performance or pricing becomes unsatisfactory. Furthermore, without the pressure of competition, there might be less incentive for the contractor to innovate or improve efficiency. Robust contract management and oversight are crucial to mitigate these risks.
What is the historical spending pattern for integrated logistics support for these specific aircraft engines, if available?
The provided data only includes details for a single contract award from 2017 to 2021 totaling $646,710,610.75. It does not offer historical spending data for this specific type of integrated logistics support or for the aircraft engines it serves. To assess historical spending patterns, one would need to access contract databases for previous awards to General Electric or other potential providers for similar services, analyze spending trends over multiple fiscal years, and compare the cost per engine hour or per unit of support over time. Without this broader context, it's impossible to determine if current spending represents an increase, decrease, or stable trend.
What performance metrics or key performance indicators (KPIs) are likely being used to evaluate General Electric's performance under this contract?
While specific KPIs are not detailed in the provided data, typical performance metrics for integrated logistics support contracts in the defense sector often include: aircraft availability rates, engine mission capable rates, turnaround time for repairs and overhauls, spare parts availability, response time for technical support, and adherence to maintenance schedules. The contract likely specifies required levels for these metrics, with potential penalties for non-performance and possibly incentives for exceeding targets. The Defense Contract Management Agency (DCMA) would be responsible for monitoring these KPIs and ensuring the contractor meets contractual obligations.
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: COST PLUS FIXED FEE (U)
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: $646,710,611
Exercised Options: $646,710,611
Current Obligation: $646,710,611
Actual Outlays: $453,920,478
Subaward Activity
Number of Subawards: 49
Total Subaward Amount: $15,625,621
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2017-11-16
Current End Date: 2021-07-31
Potential End Date: 2021-07-31 00:00:00
Last Modified: 2026-01-13
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