General Electric Company awarded $57.2M for aircraft engine parts, with limited competition
Contract Overview
Contract Amount: $57,212,069 ($57.2M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2018-12-19
End Date: 2019-03-31
Contract Duration: 102 days
Daily Burn Rate: $560.9K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: DEPOT COMPONENTS PBL QUARTER 2 POP
Place of Performance
Location: LYNN, ESSEX County, MASSACHUSETTS, 01905
Plain-Language Summary
Department of Defense obligated $57.2 million to GENERAL ELECTRIC COMPANY for work described as: DEPOT COMPONENTS PBL QUARTER 2 POP Key points: 1. Value for money appears fair given the firm fixed-price contract type, but detailed cost breakdowns are not publicly available. 2. Competition dynamics indicate a sole-source award, potentially limiting price discovery and increasing risk. 3. Risk indicators include the sole-source nature and the short performance period, suggesting potential urgency or specific needs. 4. Performance context shows this is a delivery order under a larger contract, with a defined, short duration. 5. Sector positioning places this within the critical Defense industrial base for aircraft engine maintenance and parts. 6. The award represents a significant portion of the total contract value, highlighting the importance of this specific order.
Value Assessment
Rating: fair
The contract value of $57.2 million for aircraft engine parts is substantial. Benchmarking against similar sole-source awards for specialized components is challenging due to proprietary data. The firm fixed-price structure offers some cost certainty, but without competitive bidding, it's difficult to definitively assess if the price represents optimal value for money. The awarded amount is a significant portion of the overall contract, suggesting critical or high-demand components were procured.
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 approach is typically used when only one source is capable of meeting the government's needs, often due to proprietary technology, unique capabilities, or urgent requirements. The lack of competition means that price discovery through market forces was not utilized, which can sometimes lead to higher prices compared to a fully competed contract.
Taxpayer Impact: For taxpayers, a sole-source award means there is a reduced opportunity to benefit from competitive pricing, potentially leading to higher overall expenditure for the government.
Public Impact
The Department of the Navy benefits from the procurement of essential aircraft engine parts, ensuring operational readiness of its fleet. Services delivered include the supply of specific engine components critical for aircraft maintenance and repair. Geographic impact is primarily within the operational theaters of the Navy's aviation units, supporting global missions. Workforce implications are indirect, supporting the manufacturing and supply chain jobs associated with General Electric's production of these parts.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pressure on pricing.
- Lack of transparency in cost breakdown makes value assessment difficult.
- Short performance period could indicate potential supply chain vulnerabilities or urgent needs.
- Reliance on a single contractor for critical components poses a long-term risk.
Positive Signals
- Firm fixed-price contract provides cost certainty for the government.
- Award to a known, established contractor like General Electric suggests reliability.
- Procurement supports critical defense readiness for the Navy's aviation assets.
Sector Analysis
This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector, a critical component of the aerospace and defense industry. This sector is characterized by high barriers to entry, significant R&D investment, and a limited number of major players, including General Electric. The market size for military aircraft engine components is substantial, driven by the ongoing need for maintenance, repair, and overhaul (MRO) services for aging fleets and new platforms. This specific award contributes to the overall defense spending within this specialized manufacturing niche.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, General Electric Company, is a large business. There is no explicit information provided regarding subcontracting plans to small businesses for this specific delivery order. Without this data, the direct impact on the small business ecosystem is unclear, though large prime contractors often have established subcontracting programs.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. As a delivery order under a larger contract, existing oversight mechanisms for the parent contract would apply. Transparency is limited due to the sole-source nature and the lack of detailed public cost breakdowns. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- Aircraft Engine Maintenance, Repair, and Overhaul (MRO)
- Defense Logistics Agency (DLA) Aviation
- Naval Air Systems Command (NAVAIR) Contracts
- Propulsion Systems Procurement
- Aerospace Manufacturing Contracts
Risk Flags
- Sole-source award
- Lack of competition
- Limited cost transparency
- Potential for price inflation
Tags
defense, department-of-defense, department-of-the-navy, aircraft-engine-parts, manufacturing, sole-source, firm-fixed-price, delivery-order, general-electric-company, massachusetts, large-business, non-small-business-set-aside
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $57.2 million to GENERAL ELECTRIC COMPANY. DEPOT COMPONENTS PBL QUARTER 2 POP
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 $57.2 million.
What is the period of performance?
Start: 2018-12-19. End: 2019-03-31.
What is General Electric Company's track record with the Department of Defense for similar aircraft engine parts?
General Electric Company (GE) has a long-standing and extensive track record as a primary supplier of aircraft engines and engine parts 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-scale contracts for engine production, sustainment, and component supply, often through sole-source or limited competition arrangements due to the specialized nature of their technology and established support infrastructure. While specific data on past performance for identical parts is not detailed here, GE's overall relationship with the DoD is characterized by substantial contract values and critical support roles for aviation readiness.
How does the awarded price of $57.2 million compare to market rates for similar aircraft engine components?
Directly comparing the $57.2 million award to 'market rates' for specific, high-specification aircraft engine components is challenging without access to detailed cost breakdowns and competitive benchmarking data. As this was a sole-source award, there was no direct market price discovery through competitive bidding for this specific order. General Electric is a major original equipment manufacturer (OEM) with proprietary technology and significant R&D investments, which typically positions their pricing at a premium compared to generic parts. The firm fixed-price nature provides some cost control, but the absence of competition means the government relies heavily on GE's internal pricing structures and negotiation leverage. Without comparable sole-source awards or detailed cost analyses, a definitive value-for-money assessment against external market rates is difficult.
What are the primary risks associated with this sole-source contract for aircraft engine parts?
The primary risks associated with this sole-source contract stem from the lack of competition. This can lead to inflated pricing as there is no market pressure to offer the lowest possible cost. It also creates a dependency on General Electric Company as the sole provider, potentially limiting the government's flexibility in sourcing and increasing vulnerability if GE faces production issues, supply chain disruptions, or significant price increases in the future. Furthermore, the absence of competitive proposals means less transparency into the cost structure, making it harder to verify the reasonableness of the price. The short performance period (102 days) might also indicate urgency, which can sometimes be exploited by contractors to justify higher prices or less favorable terms.
How effective is the firm fixed-price contract type in managing costs for specialized defense components?
The firm fixed-price (FFP) contract type is generally considered effective in managing costs for specialized defense components when the scope of work and specifications are well-defined and stable. It shifts the cost risk to the contractor, General Electric Company, who is obligated to complete the work for the agreed-upon price, regardless of their actual costs. This provides the government with cost certainty and incentivizes the contractor to control their expenses efficiently. However, for highly specialized or novel components where cost estimation is inherently difficult, an FFP contract can lead to the contractor building in significant contingency, potentially resulting in a higher initial price compared to cost-reimbursement contracts. In this specific case, given the sole-source nature, the effectiveness of FFP in achieving the best possible price is somewhat diminished without competitive pressure.
What are the historical spending patterns for aircraft engine parts by the Department of the Navy?
Historical spending patterns for aircraft engine parts by the Department of the Navy (DoN) are substantial and consistent, reflecting the continuous need to maintain and operate its large aviation fleet. The DoN procures a wide array of engine components, from routine spares to specialized parts for various aircraft platforms, including fighters, helicopters, and maritime patrol aircraft. Spending is often concentrated with major engine manufacturers like General Electric and Pratt & Whitney, frequently through long-term sustainment contracts, sole-source awards for proprietary parts, and competitive solicitations for more commoditized items. Annual spending can fluctuate based on fleet readiness requirements, new aircraft introductions, and depot maintenance schedules. The total value of such procurements runs into billions of dollars annually across the DoD, with the DoN being a significant contributor.
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: $57,212,069
Exercised Options: $57,212,069
Current Obligation: $57,212,069
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: N0038317DBG01
IDV Type: IDC
Timeline
Start Date: 2018-12-19
Current End Date: 2019-03-31
Potential End Date: 2019-03-31 00:00:00
Last Modified: 2019-07-10
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