General Electric Company awarded $55.4M for aircraft engine parts, raising value-for-money questions due to sole-source nature
Contract Overview
Contract Amount: $55,448,415 ($55.4M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2019-10-01
End Date: 2019-12-31
Contract Duration: 91 days
Daily Burn Rate: $609.3K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: F414 FS PBL QUARTERLY DO
Place of Performance
Location: LYNN, ESSEX County, MASSACHUSETTS, 01905
Plain-Language Summary
Department of Defense obligated $55.4 million to GENERAL ELECTRIC COMPANY for work described as: F414 FS PBL QUARTERLY DO Key points: 1. The contract was awarded on a sole-source basis, limiting competitive pressure on pricing. 2. Performance is tied to a firm-fixed-price contract, which shifts some risk to the contractor. 3. The contract duration of 91 days suggests a short-term need for engine parts. 4. The award falls within the Aircraft Engine and Engine Parts Manufacturing sector. 5. The value of this single order is substantial, warranting scrutiny of its necessity and pricing. 6. No small business set-aside was indicated for this procurement.
Value Assessment
Rating: questionable
Benchmarking the value of this $55.4 million delivery order is challenging without comparable sole-source awards for the same engine parts. The firm-fixed-price structure is standard, but the lack of competition means the government cannot be assured of obtaining the best possible price. Further analysis would require understanding the specific parts procured and their market availability. The base of the contract is $60,932,300, indicating this is a portion of a larger agreement.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning it was not competed. The Department of the Navy likely cited specific justifications for not pursuing a competitive procurement, such as proprietary technology or the need for a specific manufacturer's parts. The absence of multiple bidders inherently limits price discovery and potentially leads to higher costs for the government.
Taxpayer Impact: Taxpayers may be paying a premium for these aircraft engine parts due to the lack of competitive bidding. Without competition, there is less incentive for the contractor to offer the lowest possible price.
Public Impact
The primary beneficiaries are the Department of the Navy, ensuring operational readiness of aircraft. The services delivered involve the provision of critical engine parts for aircraft maintenance and repair. The geographic impact is primarily within Massachusetts, where General Electric Company is located. Workforce implications include the continued employment of skilled manufacturing personnel at General Electric.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price competition.
- Potential for overpayment without competitive benchmarking.
- Lack of transparency in the justification for sole-source procurement.
Positive Signals
- Firm-fixed-price contract shifts some cost risk to the contractor.
- Ensures availability of critical engine parts for military readiness.
- Award to a known entity (General Electric) may imply established quality and reliability.
Sector Analysis
This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft engine components. The market for specialized engine parts is often dominated by a few key manufacturers due to high barriers to entry, including complex engineering, rigorous testing, and established relationships with defense agencies. Spending in this category is critical for maintaining the operational readiness of military aviation fleets.
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 available data. The award to a large prime contractor like General Electric suggests that the focus was on direct procurement of specialized parts rather than fostering small business participation through this specific award.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. 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 by the sole-source nature of the award, though justifications for such awards are usually documented internally.
Related Government Programs
- Aircraft Engine Maintenance and Repair
- Defense Logistics Agency Procurement
- Naval Aviation Sustainment
Risk Flags
- Sole-source award
- Lack of competition
- Potential for price inflation
Tags
defense, department-of-the-navy, general-electric-company, aircraft-engine-parts, sole-source, firm-fixed-price, delivery-order, massachusetts, 336412, f414-fs-pbl-quarterly-do
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $55.4 million to GENERAL ELECTRIC COMPANY. F414 FS PBL QUARTERLY 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 $55.4 million.
What is the period of performance?
Start: 2019-10-01. End: 2019-12-31.
What specific aircraft engine parts were procured under this delivery order?
The provided data does not specify the exact aircraft engine parts procured under this $55.4 million delivery order (F414 FS PBL QUARTERLY DO). The North American Industry Classification System (NAICS) code 336412, 'Aircraft Engine and Engine Parts Manufacturing,' indicates the general category. To understand the precise nature of the procurement, one would need to consult the detailed contract award documents or the contract line item numbers (CLINs) associated with this order. This information is crucial for assessing the necessity and potential for alternative sourcing or pricing comparisons.
What was the justification for awarding this contract on a sole-source basis?
The justification for awarding this contract on a sole-source basis is not detailed in the provided data. Typically, sole-source procurements are justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source can provide the required supplies or services, or when there is a compelling urgency. For aircraft engine parts, justifications often relate to proprietary technology, unique design specifications, or the need for parts compatible with existing, specific engine models where only the original equipment manufacturer can supply them. A formal Justification and Approval (J&A) document would normally be required and publicly accessible for such awards.
How does the pricing of this contract compare to similar sole-source awards for aircraft engine parts?
Direct comparison of pricing for this $55.4 million delivery order to similar sole-source awards is difficult without specific details on the parts procured and their quantities. Sole-source awards inherently lack the price discovery mechanism of competition. To assess value, one would need to benchmark against historical sole-source awards for the same or highly similar parts, considering factors like inflation, quantity, and any unique specifications. Alternatively, if the parts are available from other sources (even if not competitively bid for this specific contract), market research could provide a benchmark. The base contract value of $60,932,300 suggests this delivery order is part of a larger, potentially multi-year, agreement.
What is the track record of General Electric Company in fulfilling defense contracts for aircraft engine parts?
General Electric Company (GE) has a long and extensive track record of supplying aircraft engines and parts to the U.S. military, including the Department of the Navy. As a major defense contractor and a leading manufacturer of jet engines (such as the F414 engine, likely associated with this contract), GE has consistently been awarded significant contracts for engine production, sustainment, and spare parts. Their performance history is generally characterized by technical expertise and the ability to deliver complex systems. However, like any large contractor, specific contract performance can vary, and scrutiny of individual awards, especially sole-source ones, remains important for ensuring value and accountability.
What are the potential risks associated with sole-source procurements of critical defense components like aircraft engine parts?
Sole-source procurements of critical defense components carry several risks. Primarily, there is a significant risk of paying inflated prices due to the absence of competitive bidding, which can lead to inefficient use of taxpayer funds. Another risk is vendor lock-in, where the government becomes overly reliant on a single supplier, potentially limiting future flexibility and negotiation power. There's also a risk that innovation may be stifled, as the sole provider may face less pressure to improve products or processes. Furthermore, if the sole-source supplier experiences production issues or financial instability, it could severely impact the military's operational readiness due to the lack of alternative sources for critical parts.
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: $55,448,415
Exercised Options: $55,448,415
Current Obligation: $55,448,415
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: N0038318DP601
IDV Type: IDC
Timeline
Start Date: 2019-10-01
Current End Date: 2019-12-31
Potential End Date: 2020-08-30 00:00:00
Last Modified: 2020-08-26
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