DoD's $30.6M contract for aircraft engine parts manufacturing awarded to General Electric Company
Contract Overview
Contract Amount: $30,574,263 ($30.6M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2009-04-21
End Date: 2013-06-30
Contract Duration: 1,531 days
Daily Burn Rate: $20.0K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: ENGINEERING SERVICES CIP TF34
Place of Performance
Location: CINCINNATI, HAMILTON County, OHIO, 45215, UNITED STATES OF AMERICA
State: Ohio Government Spending
Plain-Language Summary
Department of Defense obligated $30.6 million to GENERAL ELECTRIC COMPANY for work described as: ENGINEERING SERVICES CIP TF34 Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Significant duration of over 4 years suggests a substantial, long-term need. 3. The contract type (Cost Plus Fixed Fee) can incentivize cost overruns. 4. Awarded to a single, large incumbent contractor, potentially hindering new market entrants. 5. The North American Industry Classification System (NAICS) code 336412 points to a specialized manufacturing sector. 6. The contract's value is substantial, indicating a critical component for defense operations.
Value Assessment
Rating: questionable
Benchmarking the value of this specific contract is challenging without comparable sole-source awards for similar engineering services. The Cost Plus Fixed Fee (CPFF) contract type, while offering flexibility, carries inherent risks of cost escalation. Without competitive bidding, it's difficult to ascertain if the fixed fee adequately reflects market rates or if the overall cost represents optimal value for the government. Further analysis would require access to detailed cost breakdowns and historical pricing for similar services from General Electric or other manufacturers.
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 among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or is the sole provider of the required goods or services. The lack of competition means that the government did not benefit from the price discovery mechanisms that typically occur in a competitive bidding process, potentially leading to higher costs.
Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure to lower prices. The government's negotiating position is weakened when dealing with a sole-source provider.
Public Impact
The primary beneficiaries are the Department of Defense, ensuring the availability of critical aircraft engine parts for its fleet. Services delivered include engineering support and manufacturing of components essential for aircraft engine maintenance and operation. The geographic impact is likely concentrated around General Electric's manufacturing facilities and the military bases utilizing the affected aircraft. Workforce implications include the employment of skilled engineers, technicians, and manufacturing personnel at General Electric.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
- Cost Plus Fixed Fee contract type can lead to cost overruns if not closely managed.
- Long contract duration (over 4 years) increases exposure to potential performance issues or changing requirements without re-competition.
Positive Signals
- Award to General Electric, a known incumbent with established expertise in aircraft engine manufacturing, suggests continuity and reliability.
- The contract addresses a critical need for specialized aircraft engine parts, vital for national defense operations.
- The specific NAICS code indicates a focus on a highly specialized and technical manufacturing capability.
Sector Analysis
This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft engine and engine parts manufacturing (NAICS 336412). This is a highly specialized and capital-intensive industry dominated by a few large, established players like General Electric. The market is characterized by long product development cycles, stringent quality requirements, and significant government procurement. Comparable spending benchmarks would involve other large sole-source or competitively awarded contracts for similar high-value aerospace components.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Given the sole-source nature and the likely specialized requirements, it is improbable that small businesses would be primary subcontractors unless they possess unique, niche capabilities directly supporting General Electric's production. The impact on the small business ecosystem is likely minimal for this specific award, though large prime contractors like GE often have subcontracting programs that may indirectly involve small businesses.
Oversight & Accountability
Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance, quality, and compliance with contract terms. Accountability measures would be embedded in the contract's reporting requirements and performance metrics. Transparency is limited due to the sole-source nature, but contract award data is publicly available. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.
Related Government Programs
- Aircraft Engine Maintenance and Repair Contracts
- Defense Logistics Agency Procurement
- Naval Air Systems Command Contracts
- Air Force Materiel Command Contracts
Risk Flags
- Sole-source award
- Cost-plus contract type
- Long contract duration
Tags
defense, aircraft-engine-parts-manufacturing, general-electric-company, sole-source, cost-plus-fixed-fee, department-of-defense, defense-contract-management-agency, ohio, large-contract, engineering-services, long-term-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $30.6 million to GENERAL ELECTRIC COMPANY. ENGINEERING SERVICES CIP TF34
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 $30.6 million.
What is the period of performance?
Start: 2009-04-21. End: 2013-06-30.
What is General Electric's track record with similar sole-source defense contracts?
General Electric has a long history of contracting with the Department of Defense for aircraft engines and related parts. While specific data on all sole-source contracts is not readily available in this dataset, GE is a primary contractor for numerous military aircraft platforms. Their track record generally includes delivering complex systems and components, but like any large defense contractor, they have faced scrutiny over pricing and performance on various contracts. Analyzing past performance on similar sole-source awards would require a deeper dive into historical contract databases and performance reviews to assess consistency and identify any recurring issues or successes.
How does the Cost Plus Fixed Fee (CPFF) structure compare to other contract types in terms of value for money?
Cost Plus Fixed Fee (CPFF) contracts are designed to provide the contractor with a fixed fee regardless of the final cost incurred, while the government pays the actual allowable costs. This structure can be beneficial when the scope of work is not well-defined or is expected to change, offering flexibility. However, it inherently shifts cost risk to the government, as the contractor has less incentive to control costs once the fee is fixed. Compared to Firm-Fixed-Price (FFP) contracts, where the contractor bears most of the cost risk and has a strong incentive for efficiency, CPFF contracts generally offer less value for money from a cost control perspective, unless specific circumstances necessitate the flexibility it provides.
What are the primary risks associated with sole-source awards in the defense sector?
The primary risks associated with sole-source awards in the defense sector include a lack of price competition, which can lead to inflated costs for taxpayers. There's also a reduced incentive for the contractor to innovate or improve efficiency, as they face no direct competitive pressure. Sole-sourcing can also create vendor lock-in, making it difficult and costly to switch providers in the future. Furthermore, it can stifle competition and innovation within the broader defense industrial base by limiting opportunities for new or smaller companies to enter the market and demonstrate their capabilities.
What is the typical duration and value range for aircraft engine parts manufacturing contracts?
The duration and value of aircraft engine parts manufacturing contracts can vary significantly based on the specific engine type, the complexity of the parts, and the intended use (e.g., new production vs. sustainment). Contracts for sustainment and repair of existing fleets, like this one appears to be, can often span several years due to the long operational life of military aircraft. Values can range from millions to billions of dollars. This $30.6 million contract over approximately four years falls within a moderate range for specialized component manufacturing, especially considering it's for a specific set of parts rather than an entire engine system.
How does the 'Aircraft Engine and Engine Parts Manufacturing' NAICS code (336412) reflect the nature of this contract?
The NAICS code 336412 specifically identifies establishments primarily engaged in manufacturing aircraft engines and engine parts. This classification indicates that the contract is for highly specialized, precision-engineered components critical to the function of aircraft propulsion systems. Companies operating under this code typically possess advanced manufacturing capabilities, adhere to rigorous quality control standards (such as AS9100), and often have long-standing relationships with major aerospace manufacturers and government defense agencies. The code confirms the technical nature and high-stakes importance of the goods or services procured.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Engine and Engine Parts Manufacturing
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
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: 1 NEUMANN WAY, CINCINNATI, OH, 45215
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $42,060,287
Exercised Options: $42,060,287
Current Obligation: $30,574,263
Contract Characteristics
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: F3365799D2050
IDV Type: IDC
Timeline
Start Date: 2009-04-21
Current End Date: 2013-06-30
Potential End Date: 2013-06-30 00:00:00
Last Modified: 2015-06-18
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