DoD's $44M sole-source contract for aircraft engine parts awarded to General Electric, raising value-for-money questions
Contract Overview
Contract Amount: $44,131,579 ($44.1M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2022-12-14
End Date: 2023-12-31
Contract Duration: 382 days
Daily Burn Rate: $115.5K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: 8509587290!PBL MATERIAL GE
Place of Performance
Location: LYNN, ESSEX County, MASSACHUSETTS, 01905
Plain-Language Summary
Department of Defense obligated $44.1 million to GENERAL ELECTRIC COMPANY for work described as: 8509587290!PBL MATERIAL GE Key points: 1. The contract's sole-source nature limits price discovery and potentially inflates costs. 2. Lack of competition raises concerns about whether the government secured the best possible value. 3. The fixed-price contract type shifts some risk to the government if costs escalate. 4. Performance is tied to aircraft engine parts, critical for military readiness. 5. This spending falls within the Defense Logistics Agency's broader procurement of aircraft components. 6. The contract duration of over a year suggests a sustained need for these parts.
Value Assessment
Rating: questionable
Benchmarking the value of this contract is challenging due to its sole-source nature and the specialized nature of aircraft engine parts. Without competitive bids, it's difficult to ascertain if the $44 million awarded represents a fair market price. The fixed-price contract type, while providing cost certainty, could lead to overpayment if the contractor's actual costs are significantly lower than anticipated. Further analysis would require access to historical pricing for similar parts and contractor cost data.
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 can be justified for unique capabilities or urgent needs, they inherently reduce competition. The lack of multiple bidders means the government did not benefit from the price reductions and innovation that typically arise from a competitive environment.
Taxpayer Impact: Taxpayers may be paying a premium for these aircraft engine parts due to the absence of competition. The government missed an opportunity to leverage market forces to drive down costs and ensure the most cost-effective solution was procured.
Public Impact
The primary beneficiaries are the Department of Defense and its operational readiness, ensuring aircraft are maintained with necessary engine parts. The services delivered are the supply of critical aircraft engine and engine parts. The geographic impact is likely global, supporting military operations wherever these aircraft are deployed. Workforce implications include supporting jobs within General Electric's manufacturing and supply chain operations.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pricing and value assessment.
- Fixed-price contract may not fully protect against contractor cost overruns.
- Lack of transparency in pricing due to non-competitive nature.
- Dependence on a single supplier for critical components.
Positive Signals
- Award to a known, established contractor (General Electric) with expertise in aircraft engines.
- Contract addresses a clear need for essential military hardware.
- Fixed-price contract provides budget predictability for the agency.
Sector Analysis
This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector, a specialized area of the broader aerospace and defense industry. This sector is characterized by high barriers to entry, significant R&D investment, and often involves a limited number of large, established players like General Electric. Spending in this area is critical for national defense, supporting the maintenance and operational capability of military aviation fleets. Comparable spending benchmarks are difficult to establish publicly due to the proprietary nature of engine components and the specialized requirements of defense contracts.
Small Business Impact
This contract does not appear to involve a small business set-aside. As a sole-source award to a large corporation, General Electric, there are no direct subcontracting implications for small businesses mandated by this specific award. The absence of a competitive bidding process also means there's no explicit mechanism within this award to encourage or require subcontracting to small businesses.
Oversight & Accountability
Oversight for this contract would primarily fall under the Defense Logistics Agency (DLA) and the Department of Defense's internal audit and contracting oversight mechanisms. Accountability is managed through contract terms and performance monitoring. Transparency is limited due to the sole-source nature, but contract award data is publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.
Related Government Programs
- Department of Defense Aircraft Procurement
- Defense Logistics Agency Supply Chain Management
- Aircraft Engine Maintenance and Repair Contracts
- Federal Aviation Administration (FAA) Parts Certification
Risk Flags
- Sole-source award
- Lack of competitive bidding
- Potential for non-competitive pricing
- Critical component dependency
Tags
defense, department-of-defense, defense-logistics-agency, aircraft-engine-parts, manufacturing, sole-source, delivery-order, firm-fixed-price, large-contractor, massachusetts, non-competed
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $44.1 million to GENERAL ELECTRIC COMPANY. 8509587290!PBL MATERIAL GE
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 Logistics Agency).
What is the total obligated amount?
The obligated amount is $44.1 million.
What is the period of performance?
Start: 2022-12-14. End: 2023-12-31.
What is General Electric's track record with the Department of Defense for similar aircraft engine parts?
General Electric Company has a long-standing and extensive track record as a primary supplier of aircraft engines and parts to the Department of Defense (DoD). They are a major defense contractor with numerous existing contracts for various military aircraft platforms. Their history includes supplying engines for fighter jets, bombers, transport aircraft, and helicopters. While their overall track record is generally strong in terms of technological capability and production, specific performance metrics, past issues, or cost-competitiveness on individual contracts would require a deeper dive into historical contract data and performance reports. The DoD relies heavily on GE for critical engine components, indicating a high level of trust in their capabilities, but also highlighting potential single-source dependencies.
How does the $44 million value compare to similar sole-source contracts for aircraft engine parts?
Directly comparing the $44 million value of this sole-source contract to similar ones is challenging without access to proprietary pricing data and specific part classifications. Sole-source awards, by definition, lack a competitive benchmark. However, the value is substantial, indicating a significant quantity or high-value components. To assess value, one would typically look at historical pricing trends for the same or comparable parts from GE to the DoD, or benchmark against commercial aviation market prices if applicable and adjusted for military specifications. The lack of competition means this figure cannot be definitively validated against market alternatives, making it difficult to ascertain if it represents good or fair value without further internal cost analysis by the agency.
What are the primary risks associated with this sole-source contract for aircraft engine parts?
The primary risks associated with this sole-source contract are centered around cost and supply chain. Firstly, the lack of competition means the government may be paying a higher price than if the contract were competed, potentially leading to inefficient use of taxpayer funds. Secondly, there's a risk of contractor over-reliance; the DoD becomes dependent on General Electric for these critical parts, potentially limiting flexibility and leverage in future negotiations. Thirdly, while it's a fixed-price contract, there's always a residual risk of cost escalation or quality issues that could impact delivery schedules or operational readiness if not managed stringently. Finally, the absence of multiple bidders reduces the incentive for the contractor to innovate or offer cost-saving improvements beyond contractual requirements.
What is the historical spending pattern for aircraft engine parts by the Defense Logistics Agency?
The Defense Logistics Agency (DLA) consistently spends billions of dollars annually on aviation parts, including engines and their components, to support the U.S. military's diverse fleet. Historical data indicates a significant and ongoing investment in this category, reflecting the operational tempo and maintenance needs of military aircraft. Spending patterns are influenced by factors such as the types of aircraft in service, modernization programs, depot maintenance schedules, and geopolitical demands. While specific figures fluctuate year-to-year, the procurement of engine parts remains a core and substantial part of the DLA's aviation supply chain mission. This contract represents a portion of that larger, sustained spending commitment.
How does the fixed-price contract type affect cost control and risk for this procurement?
The Firm Fixed Price (FFP) contract type aims to provide cost certainty for the government by establishing a set price for the goods delivered. This shifts the primary risk of cost overruns from the government to the contractor, General Electric. If GE's costs to produce or procure these engine parts exceed the fixed price, their profit margin will decrease. Conversely, if their costs are lower than anticipated, their profit will increase. While FFP is generally preferred for controlling costs, it can sometimes lead contractors to cut corners on quality if not rigorously monitored, or to inflate initial price proposals to account for potential risks. For specialized items like aircraft engine parts, the government relies on robust technical specifications and quality assurance to mitigate quality risks.
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: $44,131,579
Exercised Options: $44,131,579
Current Obligation: $44,131,579
Subaward Activity
Number of Subawards: 1
Total Subaward Amount: $60,495
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: SPE4AX20D9002
IDV Type: IDC
Timeline
Start Date: 2022-12-14
Current End Date: 2023-12-31
Potential End Date: 2023-12-31 00:00:00
Last Modified: 2023-12-18
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