DoD's $47.6M contract for aircraft engine parts manufacturing awarded to General Electric Company
Contract Overview
Contract Amount: $47,626,226 ($47.6M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2021-12-14
End Date: 2022-12-31
Contract Duration: 382 days
Daily Burn Rate: $124.7K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: 8508745771!PBL SERVICE SUPPORT GE
Place of Performance
Location: LYNN, ESSEX County, MASSACHUSETTS, 01905
Plain-Language Summary
Department of Defense obligated $47.6 million to GENERAL ELECTRIC COMPANY for work described as: 8508745771!PBL SERVICE SUPPORT GE Key points: 1. Contract awarded for essential aircraft engine parts, supporting critical defense logistics. 2. Sole-source award raises questions about potential price overruns and limited market exploration. 3. Performance period of over a year indicates a sustained need for these components. 4. The contract falls under the Aircraft Engine and Engine Parts Manufacturing sector. 5. Lack of competition may limit opportunities for innovative solutions or cost reductions. 6. Fixed-price contract type aims to control costs, but initial price is substantial.
Value Assessment
Rating: questionable
Benchmarking the value of this sole-source contract is challenging without comparable bids. The $47.6 million price tag for a single year of service for aircraft engine parts is significant. While fixed-price contracts offer some cost certainty, the absence of competition means there's no direct market validation of the pricing. Further analysis would require comparing the unit costs of these parts to similar components or historical pricing for GE's products, if available.
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 considered. This approach bypasses the standard competitive bidding process. While sole-source awards can be justified for unique capabilities or urgent needs, they typically result in higher prices and reduced innovation due to the lack of market pressure. The absence of multiple bidders limits the government's ability to negotiate the best possible price and terms.
Taxpayer Impact: Taxpayers may be paying a premium for these aircraft engine parts due to the lack of competition. Without a bidding process, there is less incentive for the contractor to offer the lowest possible price, potentially leading to less efficient use of federal funds.
Public Impact
The primary beneficiaries are the Department of Defense and its operational readiness, ensuring aircraft engines are maintained. Services delivered include the provision of critical aircraft engine parts, essential for flight operations. Geographic impact is national, supporting military bases and operations across the country. 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 price discovery and potentially increases costs for taxpayers.
- Lack of competition may stifle innovation and prevent the adoption of more cost-effective solutions.
- Dependence on a single supplier for critical components can create supply chain vulnerabilities.
- The substantial dollar amount warrants close scrutiny of performance and pricing justification.
Positive Signals
- Fixed-price contract type provides some cost predictability for the government.
- General Electric is a known entity with established expertise in aircraft engine manufacturing.
- The contract supports critical defense logistics, ensuring operational readiness.
Sector Analysis
The Aircraft Engine and Engine Parts Manufacturing sector is a critical component of the aerospace and defense industry. It involves the design, development, and production of engines and their associated parts for various aircraft. This sector is characterized by high barriers to entry, significant R&D investment, and stringent quality control requirements. Spending in this area is often driven by defense procurement needs, commercial aviation demand, and technological advancements. Comparable spending benchmarks would typically involve analyzing other large sole-source or competitively awarded contracts for similar engine components or maintenance services within the DoD.
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 Company, there are no direct subcontracting opportunities for small businesses mandated by this specific award. The impact on the small business ecosystem is neutral in terms of direct set-aside benefits, but large prime contractors often engage small businesses in their broader supply chains, though this is not explicitly detailed here.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of Defense's contracting and procurement regulations, managed by the Defense Logistics Agency. Accountability measures are inherent in the fixed-price contract terms, requiring delivery of specified parts. Transparency is limited due to the sole-source nature, but contract details are generally available through federal procurement databases. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.
Related Government Programs
- Aircraft Engine Maintenance and Repair
- Defense Logistics Support Services
- Aerospace Manufacturing Contracts
- Propulsion Systems Procurement
Risk Flags
- Sole-source award
- Lack of competition
- High dollar value
Tags
defense, department-of-defense, defense-logistics-agency, aircraft-engine-parts, manufacturing, sole-source, firm-fixed-price, general-electric, massachusetts, large-business
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $47.6 million to GENERAL ELECTRIC COMPANY. 8508745771!PBL SERVICE SUPPORT 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 $47.6 million.
What is the period of performance?
Start: 2021-12-14. End: 2022-12-31.
What is General Electric Company's track record with the Department of Defense for similar aircraft engine parts?
General Electric Company (GE) has a long-standing and extensive track record as a major supplier of aircraft engines and parts to the Department of Defense (DoD). They are a primary original equipment manufacturer (OEM) for many military aircraft platforms, including fighter jets, bombers, and transport planes. GE has historically secured numerous large contracts for engine production, spare parts, and maintenance services. Their experience spans decades, involving complex engineering, manufacturing, and sustainment programs. While this specific contract is sole-source, GE's overall history with the DoD suggests a deep understanding of military requirements and a proven capability to deliver complex aerospace components. However, the sole-source nature of this award means that direct comparisons to competitively won contracts for identical items are not possible, and scrutiny of GE's pricing and performance on this specific award remains important.
How does the $47.6 million value compare to other sole-source awards for aircraft engine parts?
Comparing the $47.6 million value of this sole-source contract to other similar awards is challenging due to the inherent limitations of sole-source procurements. Sole-source contracts are, by definition, not competed, meaning there isn't a direct market price discovery mechanism. However, based on general knowledge of the aerospace and defense industry, contracts in the tens of millions of dollars for specialized aircraft engine parts are not uncommon, especially when dealing with OEMs like General Electric who possess unique manufacturing capabilities and intellectual property. The value is significant and warrants scrutiny, but without comparable bids or detailed cost breakdowns, it's difficult to definitively state if it's high or low relative to a competitive market. The duration of the contract (approximately one year) also influences the annual cost, which would be around $47.6 million per year.
What are the primary risks associated with this sole-source award for aircraft engine parts?
The primary risks associated with this sole-source award are centered around cost and competition. Firstly, the lack of competition means the government may be paying a premium for these parts, as there is no market pressure to drive down prices. General Electric, as the sole provider, has significant leverage. Secondly, there's a risk of reduced innovation; without the incentive of a competitive bid, GE may have less motivation to invest in cost-saving process improvements or alternative designs. Thirdly, there's a potential for supply chain vulnerability. While GE is a large company, over-reliance on a single source for critical components can be risky if the supplier faces production issues, labor disputes, or geopolitical challenges. Finally, the substantial dollar amount increases the financial risk if the parts do not meet quality standards or if the program experiences unforeseen cost escalations, despite the firm fixed-price nature.
How effective is the fixed-price contract type in managing costs for this specific award?
The firm fixed-price (FFP) contract type is generally considered effective in managing costs for the government, as it shifts the majority of the cost risk to the contractor. Under an FFP agreement, the contractor agrees to a set price for the work or supplies, regardless of their actual costs. This provides budget certainty for the government. For this $47.6 million award, the FFP structure means that General Electric is obligated to deliver the specified aircraft engine parts for the agreed-upon price. If GE's costs exceed the contract price, they absorb the loss. Conversely, if their costs are lower, they retain the profit. While FFP is good for cost control, its effectiveness in this sole-source scenario is tempered by the initial pricing. If the baseline price was inflated due to the lack of competition, the FFP structure still locks in that potentially higher cost for the government.
What are the historical spending patterns for aircraft engine parts by the Defense Logistics Agency?
The Defense Logistics Agency (DLA) is responsible for providing a wide range of logistics support, including aviation parts, to the U.S. military. Historical spending patterns for aircraft engine parts by the DLA are substantial and fluctuate based on operational tempo, fleet readiness requirements, and modernization programs. DLA procures billions of dollars worth of aviation-related items annually, encompassing engines, components, repair services, and related support. Spending on engine parts specifically is driven by the maintenance, repair, and overhaul (MRO) needs of various aircraft platforms. While specific historical figures for DLA's spending on aircraft engine parts from General Electric are not provided in this data, it is known that major engine manufacturers like GE are significant recipients of DoD contracts through DLA and other agencies. Trends often show consistent demand for parts supporting legacy fleets, alongside investments in components for newer aircraft. The nature of sole-source awards, like this one, can contribute to overall spending levels if they become the default method for procuring certain critical parts.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Engine and Engine Parts Manufacturing
Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS
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: $47,626,226
Exercised Options: $47,626,226
Current Obligation: $47,626,226
Actual Outlays: $37,313,789
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: SPE4AX21D9416
IDV Type: IDC
Timeline
Start Date: 2021-12-14
Current End Date: 2022-12-31
Potential End Date: 2022-12-31 00:00:00
Last Modified: 2023-03-02
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