DoD's $11.5M FMS contract for F414 engines to Australia awarded via sole-source to GE
Contract Overview
Contract Amount: $11,531,581 ($11.5M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2019-01-01
End Date: 2019-12-31
Contract Duration: 364 days
Daily Burn Rate: $31.7K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: CIP FOR F414 ENGINES-FMS (AUSTRALIA-COM)
Place of Performance
Location: LYNN, ESSEX County, MASSACHUSETTS, 01905
Plain-Language Summary
Department of Defense obligated $11.5 million to GENERAL ELECTRIC COMPANY for work described as: CIP FOR F414 ENGINES-FMS (AUSTRALIA-COM) Key points: 1. Contract awarded on a sole-source basis, limiting competitive pricing benefits. 2. Focus on aircraft engine parts manufacturing indicates a critical defense supply chain component. 3. The contract's duration and cost structure warrant scrutiny for potential cost overruns. 4. Performance context is tied to foreign military sales, impacting international defense readiness. 5. Sector positioning within aircraft engine manufacturing highlights a specialized industrial capability.
Value Assessment
Rating: fair
The contract value of $11.5 million for F414 engines for Australia (FMS) is difficult to benchmark without more specific details on the quantity and type of engines or parts procured. As a sole-source award, there is an inherent risk that the pricing may not reflect competitive market rates. Further analysis would require comparing this award to similar FMS contracts for the same or comparable engine components, considering factors like inflation and specific customization requirements.
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 responsible source is available or authorized by statute. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices or spurred innovation from multiple vendors. The justification for a sole-source award needs to be robust to ensure taxpayer value.
Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to ensure the best possible price. This can result in less efficient use of public funds compared to competitively awarded contracts.
Public Impact
The primary beneficiary is the Australian government, receiving critical aircraft engine components through the Foreign Military Sales program. Services delivered include the provision of F414 engines or related parts, essential for maintaining the operational readiness of Australian military aircraft. The geographic impact is primarily on Australia's defense capabilities, but also supports the U.S. defense industrial base through foreign military sales. Workforce implications are likely within General Electric's manufacturing facilities, supporting specialized jobs in aircraft engine production.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price competition.
- Foreign Military Sales contracts can have complex pricing structures.
- Reliance on a single contractor for critical engine parts poses supply chain risk.
Positive Signals
- Supports a key U.S. ally's defense capabilities.
- Ensures continued operation of vital military aircraft.
- Maintains a critical segment of the aerospace manufacturing sector.
Sector Analysis
The contract falls within the aerospace and defense sector, specifically focusing on aircraft engine manufacturing. This is a highly specialized and capital-intensive industry dominated by a few major players. The market for advanced jet engines is characterized by long development cycles, high R&D costs, and significant barriers to entry. Spending in this area is often driven by national security requirements and international partnerships, such as Foreign Military Sales.
Small Business Impact
This contract does not appear to involve small business set-asides, as it was awarded directly to General Electric Company, a large prime contractor. There is no information provided regarding subcontracting plans or opportunities for small businesses within this specific award. The focus on a sole-source, high-value component likely means that larger, specialized firms are the primary participants.
Oversight & Accountability
Oversight for this contract would typically be managed by the Department of Defense, likely through the Defense Contract Management Agency (DCMA), which is listed as the 'servicing agency'. Accountability measures would involve ensuring delivery of specified engine components according to the contract terms and quality standards. Transparency is limited due to the sole-source nature and FMS classification, but reporting requirements under FMS should provide some level of oversight.
Related Government Programs
- F414 Engine Production
- Foreign Military Sales Program
- Aircraft Engine Manufacturing
- Defense Contract Management
Risk Flags
- Sole-source award
- Potential for uncompetitive pricing
- Supply chain dependency risk
Tags
defense, department-of-defense, foreign-military-sales, general-electric-company, f414-engines, aircraft-engine-parts-manufacturing, sole-source, cost-plus-fixed-fee, massachusetts, delivery-order
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $11.5 million to GENERAL ELECTRIC COMPANY. CIP FOR F414 ENGINES-FMS (AUSTRALIA-COM)
Who is the contractor on this award?
The obligated recipient is GENERAL ELECTRIC COMPANY.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $11.5 million.
What is the period of performance?
Start: 2019-01-01. End: 2019-12-31.
What is the specific justification for awarding this contract on a sole-source basis to General Electric Company?
The provided data indicates the contract was 'NOT COMPETED' and awarded as a 'sole-source' action. Typically, sole-source awards are justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source is available, or for reasons of urgency, national security, or when a public law expressly requires or authorizes such a procurement. For Foreign Military Sales (FMS) contracts, sole-source awards are common when the acquiring country specifically requests a particular system or component manufactured by a specific U.S. company, and that company is the sole provider. Without the specific justification document (e.g., a Justification and Approval - J&A), it's impossible to definitively state the reason, but it likely relates to the unique nature of the F414 engine and GE's exclusive manufacturing rights or the specific requirements of the Australian government's FMS request.
How does the pricing structure (Cost Plus Fixed Fee) for this contract compare to other F414 engine procurements?
The contract utilizes a Cost Plus Fixed Fee (CPFF) pricing structure. CPFF contracts are characterized by the government reimbursing the contractor for allowable costs incurred, plus a fixed fee representing profit. This structure is often used when the scope of work is not precisely defined, or when there is uncertainty about the costs involved, such as in research and development or complex manufacturing. For F414 engines, especially in an FMS context, CPFF might be employed if specific modifications or unique support elements are required that make precise cost estimation difficult upfront. Benchmarking CPFF contracts is challenging as the 'cost' component can vary significantly. To assess value, one would need to compare the total final costs (reimbursed costs plus fixed fee) against the estimated costs, the fixed fee percentage, and the performance outcomes, ideally against similar FMS or domestic procurements of F414 components or engines under comparable contract types.
What are the potential risks associated with a sole-source award for critical aircraft engine components?
Sole-source awards for critical components like aircraft engines present several risks. Firstly, the lack of competition can lead to higher prices than might be achieved through a competitive bidding process, potentially increasing costs for the government and the allied nation. Secondly, it can reduce the incentive for the sole contractor to innovate or improve efficiency, as there is no competitive pressure. Thirdly, it creates a dependency on a single supplier, which can pose supply chain risks. If the contractor experiences production issues, quality control problems, or faces financial difficulties, it could significantly disrupt the availability of essential parts, impacting the operational readiness of the aircraft. This dependency also gives the sole contractor considerable leverage in negotiations.
What is the historical spending pattern for F414 engines and related parts, both domestically and through FMS?
Historical spending on F414 engines and related parts, both domestically for the U.S. military and through Foreign Military Sales (FMS), has been substantial. The F414 engine is a key component for several U.S. Navy and international aircraft, including the F/A-18 Super Hornet and Growler. Spending typically occurs through multi-year contracts for engine production, spare parts, and sustainment services. FMS spending varies annually based on the needs and budget allocations of allied nations. Analyzing historical data would reveal trends in annual obligations, average unit costs, and the proportion allocated to new production versus sustainment and upgrades. This specific $11.5 million award represents a portion of the overall lifecycle cost associated with F414 engines for Australia, and its significance should be viewed within the broader context of sustained investment in this engine platform.
How does the 'Aircraft Engine and Engine Parts Manufacturing' NAICS code (336412) inform the analysis of this contract?
The North American Industry Classification System (NAICS) code 336412, 'Aircraft Engine and Engine Parts Manufacturing,' precisely categorizes the industrial sector for this contract. This code signifies that the procurement is for goods directly related to the production or remanufacturing of aircraft engines and their components. Companies operating under this NAICS code are typically highly specialized, possess advanced manufacturing capabilities, and adhere to stringent quality and safety standards set by aviation authorities and defense agencies. The presence of this code indicates that the contract supports a critical, high-technology segment of the defense industrial base. It also suggests that the primary contractor, General Electric Company, is a major player within this specific manufacturing domain, likely possessing unique intellectual property, specialized tooling, and extensive experience necessary for producing these complex components.
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
Solicitation ID: N0042119R0001
Offers Received: 1
Pricing Type: COST PLUS FIXED FEE (U)
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: $12,509,931
Exercised Options: $11,626,714
Current Obligation: $11,531,581
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: N0042119G0001
IDV Type: BOA
Timeline
Start Date: 2019-01-01
Current End Date: 2019-12-31
Potential End Date: 2019-12-31 00:00:00
Last Modified: 2026-01-13
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