DoD's $29.1M sole-source engine parts contract to GE raises value-for-money questions
Contract Overview
Contract Amount: $29,121,827 ($29.1M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2023-01-01
End Date: 2024-03-15
Contract Duration: 439 days
Daily Burn Rate: $66.3K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: F404 PBL DELIVERY ORDER 1 JAN 2023 - 31 DEC 2023
Place of Performance
Location: LYNN, ESSEX County, MASSACHUSETTS, 01905
Plain-Language Summary
Department of Defense obligated $29.1 million to GENERAL ELECTRIC COMPANY for work described as: F404 PBL DELIVERY ORDER 1 JAN 2023 - 31 DEC 2023 Key points: 1. The contract's sole-source nature limits price discovery and potentially inflates costs. 2. Benchmarking against similar contracts is difficult due to limited public data on specialized engine parts. 3. The long duration (439 days) for a delivery order warrants scrutiny of project management and potential for cost overruns. 4. Performance context is limited, with no specific metrics provided for this delivery order. 5. This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector, dominated by a few key players. 6. The absence of small business participation is noted, with no set-aside or subcontracting requirements indicated.
Value Assessment
Rating: questionable
The contract value of $29.1 million for engine parts is substantial. However, without a competitive bidding process, it is challenging to ascertain if this represents a fair market price. The lack of transparency in pricing mechanisms for sole-source awards makes it difficult to benchmark against similar contracts. Further analysis would require access to detailed cost breakdowns and comparisons with industry standards for comparable engine components.
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. This approach is typically used when only one vendor can provide the required goods or services. While this can ensure access to specialized expertise or proprietary technology, it significantly reduces competitive pressure, potentially leading to higher prices for the government and taxpayers.
Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible pricing through competition, potentially resulting in higher expenditures for taxpayers.
Public Impact
The Department of the Navy benefits from the continued availability of critical aircraft engine parts. This contract ensures the operational readiness of specific aircraft platforms utilized by the Navy. The primary beneficiaries are the military personnel relying on these aircraft for national defense operations. The contract supports specialized manufacturing capabilities within the aerospace sector.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to suboptimal pricing.
- Limited performance metrics make value assessment difficult.
- Sole-source award raises concerns about transparency and accountability.
- Long contract duration could indicate potential for scope creep or delays.
Positive Signals
- Ensures availability of critical aircraft engine parts.
- Maintains operational readiness of essential military assets.
- Supports a key defense industrial base supplier.
Sector Analysis
The Aircraft Engine and Engine Parts Manufacturing sector (NAICS 336412) is highly specialized and capital-intensive, characterized by a few dominant global players like General Electric. This contract for engine parts fits within this critical defense industrial base. Spending in this sector is often driven by defense procurement needs, with significant R&D investments required for advanced engine technologies. Benchmarking is challenging due to the proprietary nature of many components and the limited number of qualified suppliers.
Small Business Impact
This contract was not awarded as a small business set-aside, nor is there an indication of subcontracting requirements for small businesses. The nature of specialized aircraft engine parts often necessitates large, established manufacturers with significant technical capabilities and infrastructure, which may limit opportunities for smaller firms in direct contracting roles. Further investigation into subcontracting plans would be needed to assess any indirect impact on the small business ecosystem.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. As a sole-source award, scrutiny would focus on the justification for the non-competitive procurement and the reasonableness of the price. Transparency is limited due to the lack of a competitive process. Inspector General involvement would likely be triggered by specific allegations of fraud, waste, or abuse.
Related Government Programs
- Aircraft Engine Maintenance and Repair
- Defense Logistics Agency Procurement
- Naval Aviation Sustainment
Risk Flags
- Sole-source award lacks competitive pricing.
- Limited transparency in cost justification.
- Potential for vendor lock-in.
- Absence of small business participation.
Tags
defense, department-of-defense, department-of-the-navy, sole-source, aircraft-engine-parts, general-electric-company, firm-fixed-price, delivery-order, massachusetts, 336412, non-competitive
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $29.1 million to GENERAL ELECTRIC COMPANY. F404 PBL DELIVERY ORDER 1 JAN 2023 - 31 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 $29.1 million.
What is the period of performance?
Start: 2023-01-01. End: 2024-03-15.
What is General Electric Company's track record with sole-source defense contracts?
General Electric Company (GE) has a long history of securing defense contracts, including sole-source awards, particularly for its specialized aerospace and propulsion systems. These awards are often justified by the proprietary nature of their technology, the need for commonality across platforms, or the lack of alternative suppliers. While GE is a critical supplier to the Department of Defense, the frequency and value of sole-source awards warrant consistent review to ensure fair pricing and prevent potential over-reliance on a single vendor. Analyzing past sole-source awards, their justifications, and subsequent performance can provide context for current procurement decisions, though specific data on pricing and competition for individual contracts is often limited in the public domain.
How does the pricing of this contract compare to similar engine parts procured competitively?
Direct comparison of pricing for this $29.1 million sole-source contract to similar engine parts procured competitively is challenging due to the limited public availability of detailed pricing data for specialized aerospace components. Sole-source awards inherently lack the price discovery mechanism inherent in competitive bidding. To assess value, one would need access to GE's cost breakdowns, historical pricing trends for these specific parts, and data from other government agencies or commercial entities that may have procured comparable items through competitive means. Without such granular data, benchmarking relies on broader industry cost structures and expert analysis, which can be subjective and less definitive than direct price comparisons.
What are the primary risks associated with sole-source procurement of critical aircraft engine parts?
The primary risks associated with sole-source procurement of critical aircraft engine parts include inflated costs due to the absence of competitive pressure, potential for reduced innovation as the supplier faces less incentive to improve efficiency or offer new solutions, and a heightened risk of vendor lock-in. This can lead to the government being dependent on a single supplier, potentially at unfavorable terms. Furthermore, the lack of transparency in pricing can obscure potential inefficiencies or excessive profit margins. Ensuring robust contract oversight, including detailed cost analysis and performance monitoring, becomes crucial to mitigate these risks when competitive alternatives are not feasible.
What is the historical spending pattern for aircraft engine parts by the Department of the Navy?
Historical spending by the Department of the Navy on aircraft engine parts is substantial, reflecting the significant operational demands and maintenance requirements of its aviation fleet. This spending typically involves a mix of competitive and sole-source procurements, with sole-source awards often concentrated on highly specialized components or systems where GE, as a primary manufacturer, is the only viable option. Analyzing historical data reveals consistent investment in sustainment and readiness for various aircraft platforms. Trends may show shifts in spending based on fleet modernization programs, new aircraft introductions, or changes in maintenance philosophies. Understanding these patterns helps contextualize the current contract's value and necessity within the broader budget allocation for naval aviation sustainment.
Are there alternative suppliers for these specific aircraft engine parts, and why was this contract sole-sourced?
The determination that this contract for specific aircraft engine parts was sole-sourced implies that, at the time of award, the Department of the Navy assessed that General Electric Company was the only source capable of providing the required items. This could be due to proprietary technology, unique manufacturing processes, specific certifications, or the need for parts designed to work exclusively with GE engines. While alternative suppliers might exist for more common engine components, highly specialized or proprietary parts often limit the competitive landscape. The official justification for the sole-source award would typically detail the specific reasons, such as the existence of a patent, exclusive rights, or the unavailability of substitute products that meet the government's requirements.
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: $29,121,827
Exercised Options: $29,121,827
Current Obligation: $29,121,827
Subaward Activity
Number of Subawards: 2
Total Subaward Amount: $292,876
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: N0038319DUS01
IDV Type: IDC
Timeline
Start Date: 2023-01-01
Current End Date: 2024-03-15
Potential End Date: 2024-03-15 00:00:00
Last Modified: 2024-02-15
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