DoD's $79M engine parts delivery order to General Electric lacked competition, raising value concerns
Contract Overview
Contract Amount: $79,240,111 ($79.2M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2020-12-17
End Date: 2021-04-30
Contract Duration: 134 days
Daily Burn Rate: $591.3K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: DELIVERY ORDER FOR POP 01 JAN 2021 THROUGH 30 APR 2021
Place of Performance
Location: LYNN, ESSEX County, MASSACHUSETTS, 01905
Plain-Language Summary
Department of Defense obligated $79.2 million to GENERAL ELECTRIC COMPANY for work described as: DELIVERY ORDER FOR POP 01 JAN 2021 THROUGH 30 APR 2021 Key points: 1. The contract was awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The short 4-month duration suggests a need for immediate parts, but the lack of competition is notable. 3. Benchmarking against similar contracts for aircraft engine parts is crucial to assess value for money. 4. The absence of small business participation is a missed opportunity for economic inclusion. 5. Performance context is limited due to the short delivery period and lack of competitive data. 6. The contract falls within the Aircraft Engine and Engine Parts Manufacturing sector, a critical defense industry.
Value Assessment
Rating: questionable
The contract's value is difficult to assess without competitive bidding. The $79.2 million for a 4-month delivery period for aircraft engine parts suggests a high per-unit cost, but without comparable contract data or market benchmarks, it's hard to definitively state if this represents good value. The firm-fixed-price structure offers some cost certainty, but the lack of competition prevents a robust value-for-money analysis. Further investigation into historical pricing for similar parts from General Electric and other manufacturers would be necessary.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded as a sole-source delivery order, meaning it was not competed. This approach is typically used when only one source can provide the required goods or services, or in urgent situations. The lack of competition means there was no opportunity for other manufacturers to bid, which can limit price discovery and potentially lead to higher costs for the government. The specific justification for the sole-source award was not detailed in the provided data.
Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the best possible price, as competition is a key driver for cost savings in government procurement.
Public Impact
The primary beneficiary is the Department of Defense, specifically the Department of the Navy, ensuring operational readiness of aircraft. The services delivered involve the provision of aircraft engine and engine parts, critical for maintaining military aviation capabilities. The geographic impact is primarily within the United States, supporting defense operations. Workforce implications are likely 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 inflated prices.
- Sole-source award limits opportunities for other suppliers.
- Absence of small business participation noted.
Positive Signals
- Firm-fixed-price contract provides cost certainty.
- Delivery order ensures timely supply of critical parts.
- Awarded to a known, established manufacturer (General Electric).
Sector Analysis
This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector (NAICS 336412). This is a highly specialized and critical industry for national defense, often dominated by a few large manufacturers due to high barriers to entry, including significant R&D investment and complex manufacturing processes. Spending in this sector is directly tied to military readiness and the maintenance of aging aircraft fleets. Comparable spending benchmarks would involve analyzing other sole-source or competed contracts for similar engine components across different military branches.
Small Business Impact
The data indicates that this contract was not set aside for small businesses, nor does it appear to have involved significant subcontracting opportunities for small businesses based on the sole-source nature of the award to a large prime contractor. This represents a missed opportunity to engage the small business industrial base in supporting critical defense needs. Future contracts in this category should explore avenues for small business participation, either through direct awards or subcontracting plans.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of Defense's contracting and financial management oversight mechanisms. The specific Inspector General for the Department of the Navy would likely have jurisdiction. Transparency is limited by the sole-source nature of the award and the lack of detailed justification provided in the data. Accountability would be measured by the successful delivery of parts within the specified timeframe and adherence to the firm-fixed-price terms.
Related Government Programs
- Aircraft Engine Maintenance
- Defense Logistics Agency Contracts
- Naval Aviation Support Contracts
- Propulsion Systems Procurement
- Aerospace Manufacturing Contracts
Risk Flags
- Sole-source award
- Lack of competition
- Potential for overpricing
- Limited small business participation
Tags
defense, department-of-defense, department-of-the-navy, aircraft-engine-parts-manufacturing, sole-source, delivery-order, firm-fixed-price, large-contractor, massachusetts, not-competed
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $79.2 million to GENERAL ELECTRIC COMPANY. DELIVERY ORDER FOR POP 01 JAN 2021 THROUGH 30 APR 2021
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 $79.2 million.
What is the period of performance?
Start: 2020-12-17. End: 2021-04-30.
What is the historical spending pattern for aircraft engine parts from General Electric by the Department of Defense?
Analyzing historical spending patterns for aircraft engine parts from General Electric by the Department of Defense is crucial for understanding long-term cost trends and identifying potential areas of concern. While this specific $79.2 million delivery order covers a short period, a broader review of past contracts would reveal if this represents a typical expenditure level or if there have been significant price escalations over time. Examining the frequency and value of sole-source awards versus competed contracts for similar parts would also provide context. For instance, if the DoD has consistently awarded large sole-source contracts to GE for these parts, it suggests a reliance on a single supplier and potentially less leverage in price negotiations. Conversely, if competed contracts have been the norm, this sole-source award warrants closer scrutiny regarding its justification and pricing.
How does the per-unit cost of these engine parts compare to industry benchmarks or other government contracts?
A key analytical question is how the per-unit cost of the aircraft engine parts in this $79.2 million delivery order compares to industry benchmarks or other government contracts. Without this comparison, it's difficult to ascertain if the government is receiving fair value. This analysis would involve identifying the specific parts procured, their quantities, and the total price, then calculating a per-unit cost. This calculated cost would then be benchmarked against publicly available data for similar parts procured by the DoD or other federal agencies, as well as against commercial market rates if available. Given this was a sole-source award, the per-unit cost might be higher than if it had been competed. If the per-unit cost significantly exceeds benchmarks, it would indicate a potential overpayment and a need for further investigation into the pricing justification.
What is the justification for awarding this contract on a sole-source basis?
The justification for awarding this $79.2 million contract for aircraft engine parts on a sole-source basis is a critical piece of information for assessing its propriety. Federal procurement regulations typically require full and open competition unless specific exceptions apply, such as the existence of only one responsible source, urgent and compelling needs, or specific national security requirements. Understanding the rationale provided by the Department of the Navy for bypassing competition is essential. This might involve technical specifications that only General Electric can meet, proprietary technology, or a critical and immediate need that precluded a competitive solicitation process. Without this justification, the sole-source award raises concerns about potential lack of cost-effectiveness and fairness in the procurement process.
What is General Electric's track record with the Department of Defense regarding aircraft engine contracts?
General Electric (GE) has a long-standing and significant track record as a major supplier of aircraft engines and related parts to the Department of Defense (DoD). They are a primary contractor for numerous military aircraft platforms. Analyzing GE's past performance with the DoD, including on-time delivery rates, quality of products, and responsiveness to contract modifications, provides context for this current award. Furthermore, examining the history of sole-source versus competed contracts awarded to GE for similar engine components can shed light on the typical competitive landscape for their products within the DoD. A history of strong performance and reliable delivery would lend credibility to the award, while a pattern of issues might raise concerns about the contractor's suitability or the management of the contract.
What are the potential risks associated with relying on a sole-source provider for critical aircraft engine parts?
Relying on a sole-source provider like General Electric for critical aircraft engine parts, as seen in this $79.2 million delivery order, presents several potential risks. Firstly, there's the risk of elevated costs due to the absence of competitive pressure, potentially leading to taxpayers footing a higher bill than necessary. Secondly, there's a risk of supply chain vulnerability; if GE faces production issues, natural disasters, or other disruptions, the DoD's ability to procure essential parts could be severely impacted, jeopardizing aircraft readiness. Thirdly, a sole-source arrangement can reduce innovation, as there is less incentive for the supplier to develop more cost-effective or technologically advanced solutions when competition is not a factor. Finally, there's a potential for vendor lock-in, making it difficult and costly to switch to alternative suppliers in the future.
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: $79,240,111
Exercised Options: $79,240,111
Current Obligation: $79,240,111
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: 2020-12-17
Current End Date: 2021-04-30
Potential End Date: 2021-04-30 00:00:00
Last Modified: 2021-06-02
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