DoD awards $13M+ for aircraft engine parts, raising questions on competition and value
Contract Overview
Contract Amount: $13,002,383 ($13.0M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2024-02-12
End Date: 2027-03-30
Contract Duration: 1,142 days
Daily Burn Rate: $11.4K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: MPPST, EPDS 24-0004 & 0006
Place of Performance
Location: LYNN, ESSEX County, MASSACHUSETTS, 01905
Plain-Language Summary
Department of Defense obligated $13.0 million to GENERAL ELECTRIC COMPANY for work described as: MPPST, EPDS 24-0004 & 0006 Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant duration of the contract (over 3 years) suggests a long-term need for these parts. 3. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns if not closely monitored. 4. Lack of competition raises concerns about whether the government is achieving the best possible value. 5. The specific NAICS code (336412) points to a specialized manufacturing sector. 6. The award is a delivery order against an existing contract, indicating a pre-established relationship.
Value Assessment
Rating: questionable
Benchmarking the value of this contract is challenging due to the sole-source nature and lack of publicly available comparable pricing. The Cost Plus Fixed Fee structure, while common for complex procurements, requires diligent oversight to ensure costs remain reasonable. Without competitive bids, it's difficult to definitively assess if the $13M+ represents fair market value or if a more cost-effective solution could have been found through open competition.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only one vendor, General Electric Company, was solicited. This approach bypasses the standard competitive bidding process. While sole-source awards are sometimes justified for unique capabilities or urgent needs, they inherently limit price discovery and reduce the pressure on the contractor to offer the most competitive pricing.
Taxpayer Impact: The absence of competition means taxpayers may not be benefiting from the most economical pricing achievable through a bidding process, potentially leading to higher overall expenditure for these aircraft engine parts.
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 contract's geographic impact is primarily centered around the contractor's facilities in Massachusetts. It sustains jobs within the specialized aircraft engine manufacturing sector.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pressure on pricing.
- Cost Plus Fixed Fee contract type requires robust oversight to manage costs.
- Long contract duration may mask inefficiencies if not actively managed.
- Lack of transparency in pricing due to sole-source nature.
Positive Signals
- Award to a known entity (General Electric) suggests a degree of reliability.
- Delivery order against an existing contract implies a streamlined process for an ongoing need.
- The contract supports critical defense capabilities.
Sector Analysis
This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector (NAICS 336412), a highly specialized and capital-intensive industry. The defense sector is a significant consumer of these products, requiring high-reliability components for aircraft. Market dynamics are often characterized by a few large, established players due to the technical expertise and regulatory hurdles involved. Spending in this area is critical for maintaining military readiness.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'ss': false and 'sb': false. There is no explicit information provided regarding subcontracting opportunities for small businesses. Therefore, the direct impact on the small business ecosystem from this specific award is likely minimal, though the prime contractor may engage small businesses in its broader supply chain.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of Defense's contracting and financial management regulations. As a Cost Plus Fixed Fee contract, rigorous financial oversight and auditing are crucial to ensure costs are reasonable and allocable. Transparency is limited by the sole-source nature, but contract performance reviews and milestone tracking would be standard accountability measures. Inspector General involvement is possible if specific concerns regarding fraud, waste, or abuse arise.
Related Government Programs
- Aircraft Engine Maintenance and Repair
- Defense Logistics Agency Contracts
- Naval Aviation Support Programs
- Aerospace Manufacturing Contracts
Risk Flags
- Sole-source award
- Cost-plus contract type
- Long contract duration
Tags
defense, department-of-defense, department-of-the-navy, aircraft-engine-parts, manufacturing, sole-source, cost-plus-fixed-fee, delivery-order, massachusetts, long-term-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $13.0 million to GENERAL ELECTRIC COMPANY. MPPST, EPDS 24-0004 & 0006
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 $13.0 million.
What is the period of performance?
Start: 2024-02-12. End: 2027-03-30.
What is the track record of General Electric Company in fulfilling similar defense contracts, particularly for aircraft engines?
General Electric Company (GE) is a major defense contractor with a long and extensive history of supplying aircraft engines and related parts to the U.S. military, including the Department of the Navy. GE has been a primary provider for various naval aviation platforms, such as the F/A-18 Super Hornet and the P-8 Poseidon. Their track record generally indicates a capacity to produce complex engine components and systems. However, like any large contractor, past performance reviews and specific contract histories would need to be examined to identify any specific issues related to delivery timeliness, cost control, or quality on prior agreements. The scale and complexity of their defense contracts suggest a deep understanding of military requirements, but also highlight the importance of robust oversight due to the high value and critical nature of their products.
How does the Cost Plus Fixed Fee (CPFF) contract type compare to other pricing arrangements in terms of value for money for the government?
The Cost Plus Fixed Fee (CPFF) contract type is often used when the scope of work is not precisely defined or involves significant uncertainty, such as in research and development or complex manufacturing. Under CPFF, the contractor is reimbursed for allowable costs plus a predetermined fixed fee representing profit. While this structure allows flexibility and can facilitate innovation, it carries inherent risks for the government. Unlike fixed-price contracts, CPFF does not provide a strong incentive for the contractor to control costs, as the government bears the risk of cost overruns. The fixed fee, however, does provide some incentive for the contractor to complete the work efficiently to maximize their return on investment. Compared to fixed-price contracts, CPFF can be more expensive for the government if costs escalate significantly. However, it may offer better value than other cost-reimbursement types (like Cost Plus Incentive Fee) if the fixed fee is negotiated appropriately and robust oversight is maintained to scrutinize costs.
What are the primary risks associated with sole-source defense procurements like this one?
Sole-source defense procurements, such as MPPST, EPDS 24-0004 & 0006, carry several significant risks for the government and taxpayers. The most prominent risk is the lack of price competition, which can lead to inflated prices as the contractor faces no market pressure to offer the lowest possible cost. This absence of competition can also reduce the incentive for the contractor to innovate or improve efficiency. Furthermore, sole-source awards can create vendor lock-in, making it difficult and costly to switch suppliers in the future. There's also a heightened risk of complacency or reduced performance quality if the contractor believes their position is secure regardless of performance. Finally, sole-source awards can be perceived as less transparent and may attract scrutiny regarding the justification for foregoing competition, potentially leading to accusations of favoritism or inefficiency if not properly documented and defended.
What is the typical market size and competitive landscape for aircraft engine and engine parts manufacturing (NAICS 336412)?
The Aircraft Engine and Engine Parts Manufacturing sector (NAICS 336412) is a highly specialized and concentrated industry. It is characterized by a small number of large, global players, such as General Electric, Rolls-Royce, and Pratt & Whitney, who dominate the market due to the immense capital investment, advanced technology, and extensive research and development required. The market size is substantial, driven by demand from commercial aviation, defense, and space sectors. However, the competitive landscape is limited, with high barriers to entry for new firms. This concentration means that for specific, high-technology components or engines, there may be very few, if any, alternative suppliers. Government contracts, particularly for defense applications, represent a significant portion of the demand, often leading to sole-source or limited-competition awards due to the unique specifications and long-standing relationships.
How does the duration of this contract (1142 days) impact the assessment of its value and risk?
The contract duration of 1142 days (approximately 3.1 years) is substantial and has several implications for value and risk assessment. A longer duration suggests a sustained, critical need for these aircraft engine parts, potentially indicating a stable demand that the contractor is well-positioned to meet. From a value perspective, a longer contract can sometimes allow for economies of scale and more predictable budgeting for the agency. However, it also extends the period during which the government is exposed to potential price increases or performance issues. The risk associated with a long-term, sole-source CPFF contract is amplified; the government is locked into this arrangement for an extended period without the benefit of re-evaluating market prices or seeking alternative suppliers. This necessitates robust contract management and continuous monitoring to ensure costs remain controlled and performance standards are met throughout the contract's life.
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
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: $15,186,822
Exercised Options: $15,186,822
Current Obligation: $13,002,383
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: N0042123G0004
IDV Type: BOA
Timeline
Start Date: 2024-02-12
Current End Date: 2027-03-30
Potential End Date: 2027-03-30 00:00:00
Last Modified: 2025-10-21
More Contracts from General Electric Company
- 200607!387702!1700!n00019!naval AIR Systems Command !N0001906C0088 !A!N! !N! ! !20060424!20090131!001408509!001408509!001367960!n!general Electric Company !1000 Western AVE !lynn !ma!01905!37490!009!25!lynn !essex !mass !+000018238000!n!n!000000000000!2840!gas Turbines and JET Engines, Acft & Comps !a1b!aircraft Engines and Spares !000 !NOT Discernable !336412!E! !3! ! ! ! ! !99990909!B! ! !A! !d!u!j!1!001!n!1a!z!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!b!y! ! ! !Y!1719!N00019!0001! ! — $2.4B (Department of Defense)
- Adaptive Engine Transition Program (aetp) — $2.1B (Department of Defense)
- 200608!001069!2100!w58rgz!usa Aviation and Missile Command!w58rgz06c0038 !A!N! !Y! ! !20051215!20101231!137488664!137488664!001367960!n!general Electric Company !1 Neumann WAY !cincinnati !oh!45215!15000!061!39!cincinnati !hamilton !ohio !+000177879422!n!n!000000000000!r706!logistics Support Services !a1b!aircraft Engines and Spares !000 !NOT Discernable !541330!E! !3! ! ! ! ! !99990909!B! ! !A! !d!n!j!1!001!n!1g!z!n!z! ! !Y!C!N! ! ! !a!a!a!a!000!a!d!n! ! ! ! ! ! !0001! ! — $1.6B (Department of Defense)
- 200210!004379!1700!AA427 !naval AIR Systems Command !N0001901C0147 !A!N! !N!P00001 !20020508!20031130!001408509!001408509!001367960!n!general Electric Company Inc !1000 Western AVE !lynn !ma!01910!37490!009!25!lynn !essex !mass !+000060619860!n!n!000000000000!2840!gas Turbines and JET Engines, Acft & Comps !a1b!aircraft Engines and Spares !2bjn!f414-Ge-400 !336412!E! !1! ! !C! ! !99990909!B! ! !A! !d!n!j!1!001!n!1a!a!w!f! ! !N!C!N! ! ! !a!a!a!a!000!a!b!y! ! ! ! ! ! !0001! — $1.5B (Department of Defense)
- F414-GE-400 Engines — $1.2B (Department of Defense)
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)