DoD's $90M GE engine parts contract awarded without competition, raising value concerns
Contract Overview
Contract Amount: $90,006,588 ($90.0M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2023-08-01
End Date: 2024-10-31
Contract Duration: 457 days
Daily Burn Rate: $197.0K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: F414 FS DELIVERY ORDER AUG 2023 - DEC 2023
Place of Performance
Location: LYNN, ESSEX County, MASSACHUSETTS, 01905
Plain-Language Summary
Department of Defense obligated $90.0 million to GENERAL ELECTRIC COMPANY for work described as: F414 FS DELIVERY ORDER AUG 2023 - DEC 2023 Key points: 1. Significant contract value awarded on a sole-source basis. 2. Lack of competition may limit price discovery and potentially increase costs. 3. Contract duration extends over a year, indicating ongoing need. 4. Focus on aircraft engine parts suggests critical defense sustainment. 5. The award is a delivery order under a larger contract vehicle. 6. Contractor has a substantial history with the government, indicated by BR.
Value Assessment
Rating: questionable
The contract's value of approximately $90 million for engine parts, awarded without competition, warrants scrutiny. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The firm-fixed-price structure provides some cost certainty, but the absence of competition raises questions about whether the government secured the best possible value. Further analysis would require comparing the unit prices to historical data or industry benchmarks for similar engine components.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded using a sole-source justification, meaning it was not competed. The data indicates a 'NOT COMPETED' status. This approach bypasses the standard competitive procurement process, which typically involves soliciting bids from multiple vendors. While sole-source awards can be necessary in specific circumstances (e.g., unique capabilities, urgent needs), they limit the government's ability to leverage market competition to drive down prices and ensure optimal value.
Taxpayer Impact: The lack of competition means taxpayers may not be benefiting from the most cost-effective pricing available. Without competitive pressure, the awarded price might be higher than what could have been achieved through an open bidding process.
Public Impact
The Department of the Navy benefits from the continued supply of critical aircraft engine parts. This contract supports the operational readiness of naval aviation assets. The primary service delivered is the provision of engine components. The contract is geographically focused on Massachusetts for delivery. 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 for taxpayers.
- Sole-source awards can reduce transparency in government spending.
- Dependence on a single supplier could create supply chain risks.
- Limited opportunity for new or smaller businesses to enter the market.
Positive Signals
- Firm-fixed-price contract provides cost certainty for the government.
- Award supports critical defense sustainment, ensuring operational readiness.
- Contractor has a long-standing relationship and likely established expertise.
- Delivery order structure suggests it's part of an existing framework.
Sector Analysis
This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector (NAICS 336412). This industry is characterized by high barriers to entry due to complex technology, stringent quality requirements, and significant capital investment. Major players like General Electric dominate the market for military aircraft engines and their components. Government spending in this sector is crucial for maintaining defense readiness and technological superiority, often involving long-term sustainment contracts.
Small Business Impact
This contract was not set aside for small businesses, nor does it indicate any specific subcontracting requirements for small businesses. As a sole-source award to a large, established contractor, it is unlikely to directly benefit the small business ecosystem through set-asides. However, the prime contractor may engage small businesses as subcontractors, though this is not explicitly detailed in the provided data.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a delivery order under a larger contract vehicle, existing oversight mechanisms for that vehicle would apply. Transparency is limited due to the sole-source nature. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.
Related Government Programs
- Aircraft Engine Maintenance, Repair, and Overhaul
- Defense Logistics Agency (DLA) Aviation Support
- Naval Air Systems Command (NAVAIR) Procurement
- Propulsion Systems Contracts
Risk Flags
- Sole-source award lacks competitive pricing.
- Potential for price escalation due to lack of competition.
- Supply chain dependency on a single manufacturer.
- Limited transparency in procurement process.
Tags
defense, department-of-defense, department-of-the-navy, aircraft-engine-parts, manufacturing, sole-source, delivery-order, firm-fixed-price, massachusetts, general-electric, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $90.0 million to GENERAL ELECTRIC COMPANY. F414 FS DELIVERY ORDER AUG 2023 - DEC 2023
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 $90.0 million.
What is the period of performance?
Start: 2023-08-01. End: 2024-10-31.
What is the historical spending pattern for this specific engine part or similar components from General Electric?
Analyzing historical spending data for this specific engine part or similar components from General Electric is crucial for assessing value. Without access to detailed historical procurement records for this exact item, a precise comparison is difficult. However, the 'BR' value of 196951 suggests a significant prior contract or baseline value associated with this contractor or program. If this $90M delivery order represents a substantial increase or is significantly out of line with previous spending levels for comparable periods or quantities, it would indicate a potential issue with pricing or scope. Further investigation into the unit costs and quantities procured in past contracts would be necessary to establish a reliable spending trend and identify any anomalies.
How does the pricing of this contract compare to other sole-source awards for similar aircraft engine parts within the Department of Defense?
Comparing the pricing of this $90 million sole-source award to other similar sole-source contracts for aircraft engine parts within the Department of Defense is challenging without specific data on comparable contracts. Sole-source awards inherently lack direct price competition, making benchmarking difficult. However, defense agencies often maintain internal databases or use industry cost models to assess the reasonableness of prices for sole-source procurements. If this contract's unit prices or overall cost per engine part significantly exceed benchmarks derived from other sole-source awards or established cost-estimating relationships for similar components, it would raise concerns about value for money. The absence of competition means that such comparisons are essential for oversight.
What specific justification was provided for awarding this contract on a sole-source basis instead of competing it?
The justification for awarding this contract on a sole-source basis is critical for understanding why competition was bypassed. Common justifications include the proprietary nature of the technology, the existence of only one responsible source capable of meeting the requirement, or urgent and compelling circumstances where competition is not feasible. For aircraft engine parts, it often relates to specific engine models requiring parts manufactured or certified only by the original equipment manufacturer (OEM), such as General Electric in this case. Without the specific justification document (e.g., a Justification and Approval - J&A), it's impossible to definitively assess its validity. However, the 'NOT COMPETED' status implies such a justification was formally accepted by the agency.
What are the potential risks associated with relying on a single contractor for critical aircraft engine parts?
Relying on a single contractor, like General Electric in this case, for critical aircraft engine parts presents several risks. Firstly, there's a risk of price escalation, as the government has limited leverage without competitive alternatives. Secondly, supply chain disruptions are a significant concern; any issue at the contractor's facility (e.g., labor disputes, natural disasters, production problems) could halt the supply of essential parts, impacting aircraft readiness. Thirdly, there's a risk of technological stagnation, as the lack of competition might disincentivize the contractor from innovating or offering more cost-effective solutions. Finally, dependence on one supplier can reduce the government's flexibility and bargaining power over the long term.
What is the expected performance period and delivery schedule for these engine parts?
The contract has a performance period extending from August 1, 2023, to October 31, 2024, covering a duration of approximately 15 months (457 days). This timeframe indicates a sustained need for these specific aircraft engine parts. The award is a delivery order, suggesting that the parts will be delivered according to a schedule outlined within the order or a related delivery plan. The extended period implies that these parts are essential for ongoing operations and maintenance activities rather than a one-time requirement. The firm-fixed-price nature suggests that the total cost is established upfront, though the delivery schedule dictates when funds are utilized.
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: $90,006,588
Exercised Options: $90,006,588
Current Obligation: $90,006,588
Subaward Activity
Number of Subawards: 58
Total Subaward Amount: $7,718,314
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: N0038323DDM01
IDV Type: IDC
Timeline
Start Date: 2023-08-01
Current End Date: 2024-10-31
Potential End Date: 2025-12-31 00:00:00
Last Modified: 2025-08-25
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