DoD's $38.5M engine parts order to GE shows limited competition and raises value questions
Contract Overview
Contract Amount: $38,519,475 ($38.5M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2017-10-01
End Date: 2018-06-30
Contract Duration: 272 days
Daily Burn Rate: $141.6K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: F414 FS PBL ORDER
Place of Performance
Location: LYNN, ESSEX County, MASSACHUSETTS, 01905
Plain-Language Summary
Department of Defense obligated $38.5 million to GENERAL ELECTRIC COMPANY for work described as: F414 FS PBL ORDER Key points: 1. The contract was awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The firm fixed-price contract type offers some cost certainty but doesn't guarantee optimal value without competition. 3. Performance period of 272 days is relatively short, suggesting a focus on immediate supply needs. 4. The specific part number (336412) indicates a specialized component within a larger aircraft engine system. 5. The awarding agency, Department of the Navy, relies on this for critical aviation readiness. 6. The contractor, General Electric Company, is a major player in this specialized manufacturing sector.
Value Assessment
Rating: fair
Benchmarking the value of this specific engine parts order is challenging without detailed cost breakdowns or comparable sole-source awards. The firm fixed-price nature provides some cost control, but the lack of competition means the government cannot be certain it received the best possible price. Without competitive bids, it's difficult to assess if the $38.5 million represents a fair market price or if it includes a premium due to the sole-source award.
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 bypasses the competitive bidding process, which typically drives down prices and encourages innovation. The lack of competition here suggests potential barriers to entry for other manufacturers or a specific need that only GE could fulfill at the time of award.
Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from the cost savings typically achieved through competitive bidding, potentially leading to higher overall spending for the same goods or services.
Public Impact
The primary beneficiaries are the Department of the Navy, ensuring operational readiness of its aircraft fleet. The services delivered include the provision of critical aircraft engine and engine parts. The geographic impact is primarily within the operational theaters where the Navy's aircraft are deployed. Workforce implications are likely concentrated within General Electric's manufacturing and supply chain operations.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to higher prices for taxpayers.
- Sole-source awards can reduce transparency in pricing.
- Dependence on a single supplier can create supply chain risks.
Positive Signals
- Firm fixed-price contract provides cost certainty for this order.
- General Electric is an established and experienced supplier in this domain.
- The order addresses a specific, likely critical, need for aircraft engine parts.
Sector Analysis
The Aircraft Engine and Engine Parts Manufacturing sector is highly specialized, characterized by high barriers to entry due to complex technology, stringent quality requirements, and significant R&D investment. Major players like General Electric dominate this market. Federal spending in this area is crucial for defense readiness and involves substantial, often long-term, investments in complex systems.
Small Business Impact
This contract was awarded directly to General Electric Company and does not appear to have a small business set-aside component. There is no explicit information regarding subcontracting opportunities for small businesses within this specific order. The nature of specialized aerospace manufacturing often involves large prime contractors, and the extent of small business participation would typically depend on GE's internal subcontracting policies.
Oversight & Accountability
Oversight for this contract would fall under the Department of Defense's established procurement regulations and contract management processes. The firm fixed-price nature provides a degree of accountability for the contractor to deliver the specified parts within the agreed price. Transparency is limited due to the sole-source award, but contract modifications and performance would be subject to internal DoD review and potentially audits by the Government Accountability Office (GAO) or the DoD Inspector General if specific concerns arise.
Related Government Programs
- Aircraft Engine Maintenance, Repair, and Overhaul
- Aerospace Parts Manufacturing
- Defense Logistics and Supply Chain Management
- Naval Aviation Readiness Programs
Risk Flags
- Sole-source award limits competition.
- Potential for unbenchmarked pricing.
- Dependence on a single supplier.
Tags
defense, department-of-the-navy, general-electric-company, aircraft-engine-parts, firm-fixed-price, sole-source, delivery-order, performance-based-logistics, specialty-manufacturing, massachusetts
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $38.5 million to GENERAL ELECTRIC COMPANY. F414 FS PBL ORDER
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 $38.5 million.
What is the period of performance?
Start: 2017-10-01. End: 2018-06-30.
What is the historical spending pattern for this specific part number (336412) or similar engine components from General Electric to the Department of the Navy?
Analyzing historical spending for this specific part number (336412) or similar engine components from General Electric to the Department of the Navy would require access to detailed contract databases beyond this single award. However, given that this is a 'PBL ORDER' (Power By the Hour or Performance-Based Logistics), it suggests a recurring need for engine support. Past spending would likely show a pattern of similar sole-source or limited-competition orders for critical engine parts, reflecting the specialized nature of aerospace manufacturing and the long lifecycle of military aircraft. Without specific historical data, it's difficult to ascertain if the $38.5 million represents an increase or decrease compared to previous periods, but the sole-source nature implies a consistent reliance on GE for these components.
How does the unit cost of these engine parts compare to commercially available equivalents or parts supplied to other government agencies?
Directly comparing the unit cost of these specialized military aircraft engine parts to commercially available equivalents or parts supplied to other government agencies is challenging without detailed cost breakdowns and specific part identification. Military-grade components often incorporate higher specifications, stricter quality control, and longer lifecycles, justifying a higher cost. Furthermore, the sole-source nature of this award means there's no direct competitive benchmark. If comparable commercial parts exist, they likely differ in material, performance, or certification requirements. Benchmarking against other government agencies would require identifying contracts for identical or highly similar parts, which may not be readily available due to the specificity of military engine components.
What are the specific risks associated with relying on General Electric as a sole-source provider for these critical engine parts?
The primary risk associated with relying on General Electric as a sole-source provider for these critical engine parts is the potential for price escalation without competitive pressure. This can lead to increased costs for the Department of the Navy and, consequently, taxpayers. Another significant risk is supply chain vulnerability; any disruption at GE's manufacturing facilities or its own supply chain could directly impact the Navy's aircraft readiness. Furthermore, a sole-source arrangement can reduce leverage for the government in negotiating terms, maintenance schedules, or future upgrades. Dependence on a single supplier also limits the government's ability to foster competition and innovation among potential alternative providers in the long run.
What is the expected performance and reliability of these engine parts, and how is it being measured under this contract?
The expected performance and reliability of these engine parts are critical for the operational readiness of the Department of the Navy's aircraft. While the provided data indicates a 'FIRM FIXED PRICE' contract, the specifics of performance metrics and reliability targets are not detailed. Typically, for aircraft engine components, performance is measured by factors such as thrust output, fuel efficiency, operational lifespan, and resistance to environmental stressors. Reliability is often assessed through Mean Time Between Failures (MTBF) or Mean Time To Repair (MTTR) metrics. Under a 'PBL ORDER' (Performance-Based Logistics), the contractor, GE, would likely be incentivized or contractually obligated to meet certain performance and availability standards for the engines or the parts supplied, with potential penalties for failure to do so. However, the exact measurement criteria would be detailed in the contract's statement of work.
Are there any known issues or past performance concerns with General Electric regarding the supply of similar aircraft engine components to the DoD?
Assessing General Electric's past performance requires a comprehensive review of contract databases and performance reports, which are not fully detailed in the provided data. However, as a major, long-standing supplier of aircraft engines and components to the DoD, GE has a significant track record. While generally considered a reliable supplier, like any large contractor, GE may have faced performance issues, delivery delays, or quality control challenges on specific contracts over its history. These could range from minor discrepancies to more significant issues requiring corrective action plans. Without specific data on this contract or related ones, it's impossible to definitively state if there are known issues. However, the DoD typically maintains contractor performance assessment reporting systems (CPARS) that would document such concerns.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Engine and Engine Parts Manufacturing
Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
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, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $38,519,475
Exercised Options: $38,519,475
Current Obligation: $38,519,475
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: N0038315D001M
IDV Type: IDC
Timeline
Start Date: 2017-10-01
Current End Date: 2018-06-30
Potential End Date: 2018-06-30 00:00:00
Last Modified: 2018-07-02
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