DoD awards $673M for T408 Engine parts to GE, raising concerns about sole-source procurement and cost reduction
Contract Overview
Contract Amount: $673,140,164 ($673.1M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2023-04-26
End Date: 2027-06-18
Contract Duration: 1,514 days
Daily Burn Rate: $444.6K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: T408 IAF ENGINES AND COST REDUCTION INITIATIVES
Place of Performance
Location: LYNN, ESSEX County, MASSACHUSETTS, 01905
Plain-Language Summary
Department of Defense obligated $673.1 million to GENERAL ELECTRIC COMPANY for work described as: T408 IAF ENGINES AND COST REDUCTION INITIATIVES Key points: 1. Significant contract value of $673 million for aircraft engines. 2. Sole-source award to General Electric Company limits competition. 3. Potential risk associated with long-term contract duration (1514 days). 4. Spending falls within the Aircraft Engine and Engine Parts Manufacturing sector.
Value Assessment
Rating: questionable
The contract's pricing is difficult to assess without competitive benchmarks. The firm fixed-price structure aims to control costs, but the lack of competition raises questions about whether the government is achieving the best possible price.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to General Electric Company. This approach bypasses competitive bidding, potentially leading to higher prices and reduced innovation compared to an open market scenario.
Taxpayer Impact: The lack of competition in this sole-source award may result in taxpayers paying a premium for these critical aircraft engine components.
Public Impact
Impacts military readiness and operational capabilities reliant on T408 engines. Potential for increased defense spending due to lack of competitive pricing. Highlights reliance on a single supplier for critical aerospace components.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Lack of competition
- Long contract duration
Positive Signals
- Firm fixed-price contract type
- Focus on cost reduction initiatives
Sector Analysis
This contract falls under the Aircraft Engine and Engine Parts Manufacturing sector, a critical component of the aerospace and defense industry. Spending benchmarks for similar sole-source engine contracts are often high due to specialized manufacturing and R&D.
Small Business Impact
The contract data indicates no specific provisions or set-asides for small businesses. The award to a large prime contractor like General Electric Company suggests limited direct opportunities for small businesses in this specific procurement.
Oversight & Accountability
The contract's sole-source nature warrants close oversight to ensure cost-effectiveness and adherence to any stated cost reduction initiatives. Accountability for performance and pricing should be rigorously monitored by the Defense Contract Management Agency.
Related Government Programs
- Aircraft Engine and Engine Parts Manufacturing
- Department of Defense Contracting
- Defense Contract Management Agency Programs
Risk Flags
- Sole-source award limits competition and potentially inflates costs.
- Lack of transparency regarding cost reduction initiatives.
- Long contract duration may not be optimal for evolving technology.
- Potential for vendor lock-in with a single supplier.
Tags
aircraft-engine-and-engine-parts-manufac, department-of-defense, ma, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $673.1 million to GENERAL ELECTRIC COMPANY. T408 IAF ENGINES AND COST REDUCTION INITIATIVES
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 $673.1 million.
What is the period of performance?
Start: 2023-04-26. End: 2027-06-18.
What specific cost reduction initiatives are being implemented under this contract, and what are the projected savings?
The contract mentions 'Cost Reduction Initiatives,' but specific details and projected savings are not publicly available in this data. Further inquiry with the contracting agency would be necessary to understand the scope and expected financial benefits of these initiatives. Without this information, it's difficult to assess the true value proposition beyond the base contract price.
What is the justification for awarding this contract on a sole-source basis, and have alternatives been considered?
The justification for a sole-source award typically stems from unique capabilities, proprietary technology, or urgent needs where only one source can fulfill the requirement. Without further documentation, it's unclear if alternatives were thoroughly explored or if specific technical or logistical factors necessitated this approach. This lack of competition is a primary risk factor.
How will the effectiveness of the T408 engines and the cost reduction initiatives be measured and reported throughout the contract's duration?
Effectiveness measurement would likely involve performance metrics related to engine reliability, maintenance intervals, and fuel efficiency, alongside tracking the financial impact of cost reduction efforts. The Defense Contract Management Agency would be responsible for monitoring these aspects. Clear reporting mechanisms and defined success criteria are crucial for accountability.
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
Solicitation ID: N0001921R0034
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, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $719,964,228
Exercised Options: $719,964,228
Current Obligation: $673,140,164
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2023-04-26
Current End Date: 2027-06-18
Potential End Date: 2027-06-18 00:00:00
Last Modified: 2026-03-04
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