General Electric Company awarded $37M for aircraft engine parts, a sole-source contract with a high unit price
Contract Overview
Contract Amount: $37,025,000 ($37.0M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2018-03-27
End Date: 2018-06-30
Contract Duration: 95 days
Daily Burn Rate: $389.7K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: F414 FS PBL
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: F414 FS PBL Key points: 1. The contract value of $37M for aircraft engine parts indicates significant investment in maintaining critical defense assets. 2. The sole-source nature of this award warrants scrutiny regarding potential price inflation and limited market engagement. 3. A high unit price of $389,737 suggests specialized components or a lack of competitive pressure influencing cost. 4. The short duration of 95 days for this delivery order points to an urgent or specific need for these parts. 5. This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector, crucial for naval aviation readiness.
Value Assessment
Rating: questionable
The per-unit cost of $389,737 is notably high, especially when compared to typical commercial engine component prices. Without more specific details on the exact parts and their complexity, it's difficult to definitively benchmark. However, the sole-source nature of the award raises concerns about whether the government received the best possible price. Further analysis would require comparing this to other sole-source procurements for similar specialized military engine components.
Cost Per Unit: $389,737
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 approach bypasses the standard competitive bidding process, which typically leads to better price discovery and potentially lower costs for the government. The lack of competition here suggests either a unique capability held by GE or a potential failure to explore alternative sources or contract types.
Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government may not benefit from the price reductions typically achieved through competitive bidding. This limits the government's ability to leverage market forces to secure the best value.
Public Impact
The primary beneficiaries are the U.S. Navy, ensuring the operational readiness of its aircraft fleet. The services delivered involve the provision of critical engine parts, essential for aircraft maintenance and repair. The geographic impact is primarily within the United States, supporting defense logistics and supply chains. Workforce implications include supporting specialized manufacturing jobs within the aerospace and defense industry, particularly at General Electric.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
- High per-unit cost warrants further investigation into pricing justification and market alternatives.
- Short contract duration may indicate a reactive procurement rather than strategic planning.
Positive Signals
- Ensures availability of critical parts for naval aviation, supporting national security.
- Award to a known entity (General Electric) may imply established quality and reliability.
- Contract supports specialized manufacturing capabilities within the U.S. defense industrial base.
Sector Analysis
This contract falls within the broader aerospace and defense sector, specifically focusing on aircraft engine manufacturing and maintenance. The market for specialized military aircraft engine parts is often dominated by a few key original equipment manufacturers (OEMs) like General Electric. Spending in this area is critical for maintaining fleet readiness and involves high-value, complex components. Benchmarking is challenging due to the proprietary nature of military engine technology and the limited number of qualified suppliers.
Small Business Impact
This contract was not set aside for small businesses, nor does it appear to involve significant subcontracting opportunities for small businesses based on the information provided. The award to a large prime contractor like General Electric typically means that any small business involvement would be further down the supply chain, if at all. This award does not directly contribute to the small business contracting goals.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of Defense's contracting and financial management systems. Given it's a sole-source award, there might be specific justifications and reviews required by DoD regulations. Transparency could be enhanced by making the justification for the sole-source award publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.
Related Government Programs
- Aircraft Engine Maintenance, Repair, and Overhaul
- Naval Aviation Readiness Programs
- Defense Logistics and Supply Chain Management
- Aerospace Component Manufacturing
Risk Flags
- Sole-source award
- High per-unit cost
- Lack of competition
Tags
defense, department-of-defense, department-of-the-navy, aircraft-engine-parts, general-electric-company, sole-source, firm-fixed-price, delivery-order, massachusetts, not-competed, manufacturing
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $37.0 million to GENERAL ELECTRIC COMPANY. F414 FS PBL
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: 2018-03-27. End: 2018-06-30.
What specific aircraft engine components are being procured under this contract, and what is the justification for the high per-unit cost?
The provided data does not specify the exact aircraft engine components. However, the high per-unit cost of $389,737 suggests these are likely complex, specialized, or high-performance parts critical to military aircraft engines, such as turbine blades, advanced combustion systems, or control units. The justification for this cost in a sole-source award would typically stem from the unique design, proprietary manufacturing processes, stringent quality control requirements, and the limited number of entities capable of producing such parts. Without access to the contract's detailed specifications and the justification for other-than-full-and-open competition, a precise cost breakdown is not possible. However, such costs are often driven by the advanced materials, precision engineering, and rigorous testing required for military-grade aerospace components.
How does the $37 million contract value compare to historical spending on similar aircraft engine parts by the Department of the Navy?
Comparing this $37 million contract value to historical spending requires access to a broader dataset of past Department of the Navy (DoN) contracts for aircraft engine parts. The provided data only includes this single award. To assess if $37 million is high or low, one would need to analyze trends in DoN spending on similar parts (e.g., by Product Service Code or specific engine model) over several fiscal years. Factors like inflation, changes in fleet size or operational tempo, and the introduction of new aircraft or engine technologies would influence historical spending patterns. A significant deviation from historical averages, especially for a sole-source award, could indicate potential issues with pricing or urgency.
What are the potential risks associated with awarding a sole-source contract for critical aircraft engine parts?
The primary risk of a sole-source award for critical aircraft engine parts is the potential for inflated pricing due to the lack of competition. Without competing bids, the government may pay more than necessary. Other risks include reduced innovation, as the sole provider may have less incentive to improve products or processes. There's also a risk of vendor lock-in, making it difficult and costly to switch suppliers in the future. Furthermore, sole-source awards can sometimes mask underlying issues with program management or procurement strategy, potentially leading to delays or suboptimal outcomes if the chosen vendor faces production or quality issues.
What is General Electric Company's track record with the Department of Defense, particularly in supplying aircraft engine components?
General Electric (GE) has a long and extensive track record as a major supplier of aircraft engines and components to the Department of Defense (DoD), including the Department of the Navy. GE engines power a significant portion of military aircraft across various branches. Their history with the DoD includes numerous large contracts for engine production, sustainment, and parts. While generally considered a reliable supplier with advanced technological capabilities, like any large contractor, GE has been involved in contracts that have faced scrutiny regarding cost, performance, or delivery schedules. A comprehensive assessment would involve reviewing specific past performance evaluations and contract histories related to similar engine programs.
Given the short duration (95 days), does this indicate an urgent need or a specific maintenance cycle for the aircraft engines?
The short duration of 95 days for this delivery order strongly suggests an urgent need or a specific, time-bound requirement for the aircraft engine parts. This could be related to an immediate operational demand, a critical maintenance, repair, and overhaul (MRO) cycle that must be completed within a specific window, or the need to address an unexpected component failure or shortage. Such short-term contracts are often used to fulfill immediate gaps in the supply chain or to support unscheduled maintenance events. It implies that the parts are needed quickly to maintain aircraft availability and operational readiness, rather than for long-term sustainment planning.
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
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: $37,025,000
Exercised Options: $37,025,000
Current Obligation: $37,025,000
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: N0038318DN901
IDV Type: IDC
Timeline
Start Date: 2018-03-27
Current End Date: 2018-06-30
Potential End Date: 2018-06-30 00:00:00
Last Modified: 2018-09-14
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