Navy awards $37M to General Electric for T-64 engine cores, a sole-source procurement
Contract Overview
Contract Amount: $36,971,870 ($37.0M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2021-03-31
End Date: 2024-01-31
Contract Duration: 1,036 days
Daily Burn Rate: $35.7K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: INITIAL PRODUCTION - T-64 ENGINE CORES
Place of Performance
Location: LYNN, ESSEX County, MASSACHUSETTS, 01905
Plain-Language Summary
Department of Defense obligated $37.0 million to GENERAL ELECTRIC COMPANY for work described as: INITIAL PRODUCTION - T-64 ENGINE CORES Key points: 1. The contract value of $36.97 million for T-64 engine cores represents a significant investment in maintaining critical aircraft propulsion systems. 2. Sole-source procurement raises questions about potential price inflation and the absence of competitive pressure to drive down costs. 3. The duration of the contract (over 3 years) suggests a long-term need for these specific engine components. 4. The 'Aircraft Engine and Engine Parts Manufacturing' NAICS code indicates a specialized industrial sector. 5. The contract type, Cost Plus Fixed Fee, can lead to cost overruns if not carefully managed. 6. The absence of small business set-aside flags indicates this contract was not specifically targeted for small business participation.
Value Assessment
Rating: questionable
Benchmarking the value of this contract is challenging without comparable sole-source procurements for T-64 engine cores. The Cost Plus Fixed Fee (CPFF) contract type inherently carries a risk of cost escalation, as the contractor is reimbursed for allowable costs plus a fixed fee. This structure, while providing flexibility, can disincentivize cost control compared to fixed-price contracts. Without competitive bids, it's difficult to ascertain if the fixed fee and overall cost represent a fair market price for the engine cores.
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 solicited. This typically occurs when a specific capability or proprietary technology is required, or in situations where competition is deemed impractical or not in the government's best interest. The lack of competition means there were no other bidders to compare against, limiting price discovery and potentially leading to higher costs for the government.
Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding. Without competing offers, the government lacks a benchmark to ensure it is receiving the best possible price for these essential engine components.
Public Impact
The primary beneficiaries are the Department of the Navy, ensuring the operational readiness of aircraft utilizing T-64 engines. The services delivered include the provision of critical engine cores, essential for aircraft maintenance and repair. The geographic impact is primarily within the operational theaters of the Navy, supporting its global mission capabilities. Workforce implications include supporting specialized manufacturing jobs within General Electric's engine division.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source procurement limits competitive pressure, potentially leading to higher costs.
- Cost Plus Fixed Fee contract type carries inherent risks of cost overruns.
- Lack of transparency in pricing due to no competitive bids.
- Limited opportunity for small businesses to participate in this specific contract.
Positive Signals
- Ensures continued availability of critical T-64 engine cores for naval aviation.
- Leverages the specialized expertise of General Electric in engine manufacturing.
- Provides a defined contract period for supply chain stability.
Sector Analysis
The contract falls within the 'Aircraft Engine and Engine Parts Manufacturing' sector, a highly specialized and capital-intensive industry. This sector is dominated by a few large, established players due to the significant R&D, manufacturing expertise, and regulatory hurdles involved. General Electric is a major incumbent in this space. Comparable spending benchmarks are difficult to establish without more specific data on T-64 engine core production volumes and market dynamics, but overall defense aerospace manufacturing represents a substantial portion of federal procurement.
Small Business Impact
This contract was not awarded as a small business set-aside, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The nature of specialized engine component manufacturing often favors large, established prime contractors with the necessary technical capabilities and infrastructure. This limits direct opportunities for small businesses to compete for this specific award, though they may participate indirectly through the supply chain if GE opts to subcontract.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures would be tied to the terms of the Cost Plus Fixed Fee contract, requiring detailed cost reporting and adherence to the fixed fee. Transparency is limited by the sole-source nature of the award, but contract details and performance metrics may be available through federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- Aircraft Engine Manufacturing
- Propulsion Systems Procurement
- Naval Aviation Maintenance
- Defense Industrial Base
Risk Flags
- Sole-source procurement
- Cost-plus contract type
- Lack of competitive bidding
Tags
defense, department-of-the-navy, general-electric-company, aircraft-engine-and-engine-parts-manufacturing, definitive-contract, cost-plus-fixed-fee, sole-source, massachusetts, initial-production, t-64-engine-cores
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $37.0 million to GENERAL ELECTRIC COMPANY. INITIAL PRODUCTION - T-64 ENGINE CORES
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 $37.0 million.
What is the period of performance?
Start: 2021-03-31. End: 2024-01-31.
What is the historical spending pattern for T-64 engine cores with General Electric?
Analyzing historical spending patterns for T-64 engine cores with General Electric requires access to historical contract data beyond the current award. Typically, such analysis would involve reviewing previous contracts for the same or similar components, noting award types (competed vs. sole-source), contract values, durations, and any modifications. A trend of sole-source awards for this specific component might indicate a lack of viable alternatives or a long-standing relationship. Conversely, a history of competitive bidding would make the current sole-source award more notable. Without this historical context, it's difficult to assess if the current $36.97 million award is consistent with past spending or represents a deviation.
How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types for engine parts?
The Cost Plus Fixed Fee (CPFF) contract type, used here, reimburses the contractor for allowable costs plus a predetermined fixed fee. This contrasts with fixed-price contracts, where the price is set regardless of the final cost, incentivizing efficiency. CPFF is often used when the scope of work is not precisely defined or involves significant uncertainty, such as in research and development or complex manufacturing where unforeseen issues may arise. For engine parts, if the design is stable and production is routine, a fixed-price contract might offer better value. However, for unique or developmental engine cores, CPFF can provide necessary flexibility. The risk of cost overruns is borne by the government, making robust oversight crucial.
What are the specific risks associated with sole-source procurement of critical aircraft components?
Sole-source procurement of critical aircraft components like T-64 engine cores carries several risks. Primarily, it eliminates competitive pressure, which is a key driver for cost reduction and innovation. This can lead to higher prices for the government compared to what might be achieved through bidding. It also reduces transparency in pricing, making it harder to ascertain fair market value. Furthermore, reliance on a single supplier can create supply chain vulnerabilities; if the sole source experiences production issues, delays, or goes out of business, the government's ability to acquire these critical parts is severely jeopardized. This dependence can also reduce the government's leverage in negotiations.
What is General Electric's track record with the Department of the Navy for similar engine components?
General Electric Company has a long-standing and extensive track record as a major supplier of aircraft engines and engine parts to the Department of the Navy and other military branches. They are a primary contractor for numerous aircraft propulsion systems. Assessing their specific track record for T-64 engine cores would involve reviewing past contract performance, including on-time delivery, quality metrics, and any past disputes or contract modifications. Given their established position, it's likely they possess the necessary technical expertise and production capacity. However, the sole-source nature of this award means performance history alone doesn't guarantee optimal value compared to potential competitors.
Are there any alternative engine core manufacturers that could have competed for this contract?
Identifying alternative engine core manufacturers for the T-64 engine requires a deep dive into the aerospace manufacturing landscape and specific defense industrial base capabilities. The T-64 engine is an older design, and its components may be manufactured by a limited number of specialized firms, potentially including GE as the original equipment manufacturer (OEM) or licensed producers. Without a thorough market analysis or the solicitation process itself, it's difficult to definitively state if viable competitors exist. Often, for specific legacy engine components, the OEM holds proprietary knowledge or tooling, leading to sole-source situations. A competitive analysis would typically involve market research to identify potential bidders with the required technical qualifications and production capacity.
What is the projected lifespan and maintenance schedule for T-64 engines that necessitate this procurement?
The projected lifespan and maintenance schedule for T-64 engines are critical factors influencing the necessity and scale of this procurement. The T-64 is a turboshaft engine used in various military aircraft, including some variants of the P-3 Orion maritime patrol aircraft and the CH-53 Sea Stallion/Super Stallion helicopters. These platforms often have long service lives, requiring ongoing sustainment and component replacement. The contract's duration (ending January 31, 2024, from an award in March 2021) suggests a need for engine cores over approximately three years, aligning with planned maintenance cycles, depot-level repairs, or the sustainment of the existing fleet. Understanding the specific maintenance intervals and the number of engines requiring these cores would provide context for the $36.97 million value.
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, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $36,971,870
Exercised Options: $36,971,870
Current Obligation: $36,971,870
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2021-03-31
Current End Date: 2024-01-31
Potential End Date: 2024-01-31 00:00:00
Last Modified: 2022-11-10
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