DoD's $102.7M F414 PBL Support contract awarded to General Electric Company shows potential value concerns
Contract Overview
Contract Amount: $102,735,279 ($102.7M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2021-09-01
End Date: 2021-12-31
Contract Duration: 121 days
Daily Burn Rate: $849.1K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: F414 PBL SUPPORT
Place of Performance
Location: LYNN, ESSEX County, MASSACHUSETTS, 01905
Plain-Language Summary
Department of Defense obligated $102.7 million to GENERAL ELECTRIC COMPANY for work described as: F414 PBL SUPPORT Key points: 1. Contract awarded on a sole-source basis, limiting price competition and potentially increasing costs. 2. Performance period is short (121 days), suggesting a need for ongoing, potentially higher-volume procurements. 3. The contract type is Firm Fixed Price, which can offer cost certainty but may not reflect the best value if competition is absent. 4. No small business set-aside was utilized, indicating missed opportunities for small business participation. 5. The contract falls under Aircraft Engine and Engine Parts Manufacturing, a critical but specialized sector. 6. The base contract value is substantial, warranting close scrutiny of pricing and performance.
Value Assessment
Rating: questionable
The contract's value is difficult to benchmark without competitive data due to its sole-source nature. The base award of $102.7M for a 121-day period suggests a high per-diem cost. While Firm Fixed Price contracts provide cost certainty, the lack of competition raises concerns about whether the government is receiving optimal value for its investment. Further analysis of the specific services and parts provided under this Performance-Based Logistics (PBL) contract is needed to assess true value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning there was no open competition. This approach is typically used when only one source can provide the required goods or services. The lack of competition means that the government did not benefit from the price discovery mechanisms inherent in a competitive bidding process, potentially leading to higher costs.
Taxpayer Impact: Taxpayers may be paying a premium for this contract due to the absence of competitive pressure to drive down prices. Without competing offers, it's harder to ensure the most cost-effective solution was secured.
Public Impact
The primary beneficiaries are the Department of the Navy, ensuring the operational readiness of F414 engines. Services delivered include performance-based logistics support for F414 engines, crucial for naval aviation. The geographic impact is primarily within the United States, supporting naval aviation bases and operations. Workforce implications include the continued employment of skilled technicians and engineers at General Electric and its subcontractors involved in engine support.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pricing and value assessment.
- Short contract duration may indicate a need for frequent, potentially costly, follow-on procurements.
- Lack of small business participation means potential missed opportunities for economic inclusion.
- High dollar value for a short period warrants scrutiny of cost-effectiveness.
Positive Signals
- Performance-Based Logistics (PBL) contracts aim to improve readiness and reduce total ownership costs.
- Firm Fixed Price contract provides cost certainty for the government.
- Award to a sole-source provider suggests specialized capabilities essential for F414 engine support.
Sector Analysis
This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector, a highly specialized and critical industry supporting national defense. The market is dominated by a few key players due to the high barriers to entry, including extensive R&D, complex manufacturing processes, and stringent quality control. General Electric is a major incumbent in this space. Benchmarking comparable spending would involve looking at other PBL contracts for similar high-value, complex aerospace components.
Small Business Impact
This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. This represents a missed opportunity to leverage the capabilities of small businesses within the aerospace supply chain and potentially foster innovation and competition in this sector. The absence of small business involvement could limit the broader economic impact of this significant federal spending.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of Defense's contracting and financial management oversight bodies, potentially including the Defense Contract Management Agency (DCMA) for performance monitoring and the Inspector General for audits and investigations. Transparency is facilitated through contract databases like FPDS, but detailed performance metrics and cost breakdowns may not be publicly available due to proprietary or national security concerns.
Related Government Programs
- F414 Engine Maintenance and Repair Contracts
- Aerospace Component Procurement
- Defense Logistics Support Services
- Aircraft Engine Parts Manufacturing Contracts
Risk Flags
- Sole-source award
- High value for short duration
- Lack of small business participation
Tags
defense, department-of-defense, department-of-the-navy, aircraft-engine-parts-manufacturing, performance-based-logistics, firm-fixed-price, sole-source, large-contract, sustainment, f414-engine, massachusetts
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $102.7 million to GENERAL ELECTRIC COMPANY. F414 PBL SUPPORT
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 $102.7 million.
What is the period of performance?
Start: 2021-09-01. End: 2021-12-31.
What is the historical spending pattern for F414 PBL support with General Electric?
Analyzing historical spending for F414 PBL support with General Electric requires accessing detailed contract databases over several fiscal years. Typically, PBL contracts are structured for longer durations, often spanning multiple years with options. The provided data shows a single delivery order with a short duration (121 days) and a value of $102.7M. This suggests it might be a component of a larger PBL agreement or a specific, high-value support action. Without access to the full contract history, including previous awards, modifications, and option periods, it's challenging to establish a comprehensive spending trend. However, the nature of engine support often implies recurring costs for maintenance, repair, and spare parts, indicating a potentially significant and consistent investment by the DoD in maintaining the F414 fleet over time.
How does the per-unit cost of this contract compare to similar F414 engine support contracts?
Determining a precise per-unit cost for this F414 PBL support contract is challenging without knowing the exact units of service or parts delivered and their associated costs. The contract is awarded on a Firm Fixed Price basis, and its value is $102.7M over 121 days. If we were to approximate a daily burn rate, it would be roughly $849,000 per day. However, PBL contracts often bundle various support elements, making direct per-unit comparisons difficult. To benchmark effectively, one would need access to data on the number of engines supported, the types of maintenance performed (e.g., scheduled overhauls, unscheduled repairs), and the specific spare parts consumed. Comparisons would ideally be made against other F414 PBL contracts or similar engine support contracts for other military aircraft, factoring in differences in engine complexity, operating tempo, and support scope. Given the sole-source nature, direct competitive benchmarking is not feasible.
What are the key performance indicators (KPIs) for this F414 PBL support contract, and how is performance being measured?
Performance-Based Logistics (PBL) contracts, by definition, tie payment and contractor success to achieving specific, measurable performance outcomes rather than simply reimbursing costs. For F414 engine support, key performance indicators (KPIs) would likely include metrics related to engine availability, reliability, turnaround time for repairs, and potentially mission capable rates. For instance, the contract might stipulate a certain percentage of engines must be available for flight operations within a defined timeframe, or that repair cycles must be completed within a specified number of days. The Department of the Navy would be responsible for monitoring these KPIs. Performance measurement would involve tracking these metrics against agreed-upon targets. Failure to meet these targets could result in financial penalties or reduced contractor compensation, while exceeding them might lead to incentive payments, although the specifics depend on the contract's detailed terms and conditions.
What is the risk profile associated with this sole-source contract, and are there mitigation strategies in place?
The primary risk associated with this sole-source contract is the potential for inflated pricing due to the lack of competition. Without competing bids, General Electric faces less pressure to offer the most cost-effective solution. Other risks include potential vendor lock-in, where the government becomes dependent on a single supplier for critical parts and expertise, making future transitions difficult or costly. There's also the risk of performance issues if the contractor prioritizes profit over quality, though the PBL structure aims to mitigate this by linking payment to outcomes. Mitigation strategies could include robust government oversight, detailed performance monitoring against established KPIs, and potentially conducting market research for future procurements to identify potential competitors or alternative solutions. Negotiating favorable terms and ensuring clear contract language regarding deliverables and quality standards are also crucial.
What is the total estimated value of the F414 engine support program over its lifecycle, and how does this contract fit into that?
The provided data reflects a single delivery order valued at $102.7 million with a duration of 121 days. This likely represents a portion of a larger Performance-Based Logistics (PBL) contract or a specific support initiative for the F414 engine. The total lifecycle cost for supporting a major military engine program like the F414 can run into billions of dollars over decades, encompassing initial procurement, sustainment, upgrades, and eventual retirement. This specific contract appears to be focused on the sustainment phase, ensuring operational readiness. To understand its place in the lifecycle, one would need to examine the overarching F414 PBL contract structure, including base contract value, option periods, and total potential value. Without that broader context, this $102.7M award is a significant but isolated data point within a much larger, long-term program.
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, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $102,735,279
Exercised Options: $102,735,279
Current Obligation: $102,735,279
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: N0038321DZN01
IDV Type: IDC
Timeline
Start Date: 2021-09-01
Current End Date: 2021-12-31
Potential End Date: 2021-12-31 00:00:00
Last Modified: 2022-01-03
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