DoD's $46.7M GE Engine Parts Contract: A Sole-Source Deal with Potential Value Concerns

Contract Overview

Contract Amount: $46,751,814 ($46.8M)

Contractor: General Electric Company

Awarding Agency: Department of Defense

Start Date: 2018-10-02

End Date: 2018-12-31

Contract Duration: 90 days

Daily Burn Rate: $519.5K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: F414 FS PBL DO

Place of Performance

Location: LYNN, ESSEX County, MASSACHUSETTS, 01905

State: Massachusetts Government Spending

Plain-Language Summary

Department of Defense obligated $46.8 million to GENERAL ELECTRIC COMPANY for work described as: F414 FS PBL DO Key points: 1. The contract was awarded on a sole-source basis, limiting competitive pressure on pricing. 2. The fixed-price contract type offers some cost certainty but may not fully capture efficiencies. 3. The short duration of 90 days suggests a specific, immediate need rather than long-term support. 4. The prime contractor, General Electric, is a major player in the aerospace engine market. 5. The contract falls under Aircraft Engine and Engine Parts Manufacturing, a critical defense sector. 6. The absence of small business set-aside indicates a focus on large prime contractors.

Value Assessment

Rating: fair

Benchmarking the value of this specific delivery order is challenging without more detailed cost breakdowns or comparable sole-source awards. The contract's fixed-price nature provides some predictability, but the lack of competition means there's less assurance that the price reflects the best possible value. The reported obligated amount of $46.7 million for a 90-day period warrants scrutiny to ensure it aligns with market rates for similar engine parts and services, especially given the sole-source nature.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a sole-source justification, meaning it was not competed openly. This approach is typically used when only one source can provide the required goods or services, often due to proprietary technology, unique capabilities, or urgent needs. The lack of competition limits the government's ability to solicit multiple bids and negotiate the most favorable terms, potentially leading to higher prices than if the contract had been competed.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive bidding, as the government did not have the opportunity to leverage market forces to drive down prices.

Public Impact

The primary beneficiaries are the Department of the Navy and potentially its operational readiness through the supply of critical aircraft engine parts. The services delivered involve the provision of specific engine parts, essential for maintaining the operational status of naval aircraft. The geographic impact is primarily within the United States, where the parts will be manufactured and delivered. Workforce implications are likely concentrated within General Electric's manufacturing facilities and supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition.
Short contract duration may indicate reactive procurement rather than strategic planning.
Lack of transparency in cost breakdown for a sole-source award.
Potential for price escalation if market conditions change rapidly during the contract period.

Positive Signals

Fixed-price contract provides cost certainty for the government.
Award to a major, established contractor like GE suggests reliability in supply.
Focus on critical engine parts supports essential defense capabilities.

Sector Analysis

This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector, a highly specialized and critical segment of the aerospace industry. The market is dominated by a few large, established players like General Electric, Pratt & Whitney, and Rolls-Royce. Spending in this sector is heavily influenced by defense procurement cycles, technological advancements, and the operational tempo of military fleets. Comparable spending benchmarks would typically involve other sole-source or limited-competition contracts for similar high-value, specialized engine components within the defense sector.

Small Business Impact

The contract data indicates that this was not a small business set-aside, and the prime contractor is General Electric, a large corporation. This suggests that small businesses were likely not directly involved as prime contractors on this specific award. However, General Electric may utilize small business subcontractors as part of its broader supply chain, though this is not explicitly detailed in the provided data. The absence of a set-aside means opportunities for small businesses to compete directly for this particular contract were limited.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management regulations. Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver specified parts at an agreed-upon price. Transparency is limited due to the sole-source nature and the lack of detailed cost breakdowns in the public data. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Engine Procurement
Defense Logistics Agency Contracts
Naval Aviation Support Programs
Propulsion Systems Maintenance Contracts

Risk Flags

Sole-source procurement
Lack of competitive bidding
High dollar value for short duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $46.8 million to GENERAL ELECTRIC COMPANY. F414 FS PBL DO

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 $46.8 million.

What is the period of performance?

Start: 2018-10-02. End: 2018-12-31.

What is the historical spending pattern for this specific contract vehicle or similar engine parts with General Electric by the Department of the Navy?

Analyzing historical spending for this specific contract vehicle (F414 FS PBL DO) and similar engine parts with General Electric by the Department of the Navy is crucial for understanding long-term cost trends and value. Without access to a comprehensive contract database that tracks all delivery orders under this parent contract or similar PBL (Performance-Based Logistics) arrangements, a precise historical analysis is difficult. However, general trends in defense aerospace suggest that engine maintenance and parts can represent significant, recurring expenditures. The F414 engine is used on the F/A-18E/F Super Hornet and EA-18G Growler, both critical naval assets. Sustaining these platforms involves substantial investment in parts and support over their operational lifecycles. If this $46.7 million represents a typical annual or semi-annual spend for this particular engine type's parts, it indicates a substantial ongoing commitment. A deeper dive would require examining prior delivery orders under this contract, other related contracts for F414 components, and the overall sustainment costs for the Super Hornet and Growler fleets to identify any escalation or efficiency gains over time.

How does the pricing of this sole-source contract compare to competitively awarded contracts for similar aircraft engine parts?

Directly comparing the pricing of this sole-source contract to competitively awarded contracts for similar aircraft engine parts is challenging without specific, granular data on the parts themselves and their market prices. Sole-source awards inherently lack the price discovery mechanism of open competition, which typically drives down costs. General Electric, as a major Original Equipment Manufacturer (OEM), often holds proprietary rights to its engine components, which can necessitate sole-source procurement. However, the government often negotiates pricing for sole-source awards based on historical data, cost analyses, and established rates. If this contract's pricing is significantly higher than what might be expected from a competitive bid, it could indicate a potential loss of value for the taxpayer. Benchmarking would ideally involve comparing the unit price of specific parts (if identifiable) against prices paid under other competitively sourced contracts for identical or functionally equivalent components, or against independent cost estimates.

What are the specific risks associated with procuring critical engine parts on a sole-source basis, particularly concerning long-term availability and obsolescence?

Procuring critical engine parts on a sole-source basis carries several risks. Firstly, the lack of competition can lead to inflated prices and reduced incentives for the contractor to innovate or improve efficiency. Secondly, reliance on a single supplier can create vulnerabilities in the supply chain; any disruption at the sole source (e.g., production issues, financial instability, geopolitical factors) directly impacts the government's ability to acquire necessary parts. Thirdly, for long-term availability, a sole-source supplier might deprioritize older parts or engines if newer, more profitable product lines emerge, potentially leading to obsolescence issues for the government's fleet. The government may have less leverage to ensure continued production or to secure long-term support agreements, increasing the risk of costly sustainment challenges or the need for expensive redesigns or replacements down the line.

What is the track record of General Electric Company in delivering aircraft engine parts under similar defense contracts, specifically regarding performance and reliability?

General Electric Company (GE) has a long and extensive track record in supplying aircraft engines and parts to the U.S. military, including the Department of the Navy. As a primary OEM for many critical platforms, GE's performance is generally considered robust, given its deep technical expertise and established manufacturing capabilities. Contracts for engine parts, especially under Performance-Based Logistics (PBL) arrangements, are designed to ensure reliability and availability. However, like any large contractor, GE's performance can vary across specific contracts and programs. Historical data from contract performance reports (e.g., CPARS - Contractor Performance Assessment Reporting System), if publicly accessible, would provide detailed insights into GE's on-time delivery, quality adherence, and overall responsiveness for similar contracts. Generally, GE is viewed as a reliable, albeit expensive, supplier for high-performance military jet engines and components.

Does the short duration (90 days) of this delivery order suggest a specific, immediate need, or is it indicative of a larger, ongoing sustainment program with fragmented funding?

The short duration of 90 days for this $46.7 million delivery order strongly suggests a specific, immediate need for these aircraft engine parts, rather than representing the entirety of a larger, ongoing sustainment program. Defense contracts, especially for high-value components like jet engine parts, are often structured with multiple delivery orders issued against a base contract or indefinite-delivery/indefinite-quantity (IDIQ) vehicle. This approach allows for flexibility in procurement, enabling the government to acquire parts as needed based on operational demands, maintenance schedules, and inventory levels. Funding for sustainment programs is frequently allocated and obligated in increments, which can manifest as shorter-duration delivery orders. While this specific order covers a 90-day period, it is likely part of a broader, multi-year effort to maintain the readiness of the naval aviation fleet equipped with F414 engines.

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, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $46,751,814

Exercised Options: $46,751,814

Current Obligation: $46,751,814

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0038318DP601

IDV Type: IDC

Timeline