DoD's $137M aircraft engine parts contract to General Electric faces scrutiny over sole-source award
Contract Overview
Contract Amount: $137,294,467 ($137.3M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2018-11-21
End Date: 2024-10-31
Contract Duration: 2,171 days
Daily Burn Rate: $63.2K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: MULTIPLE NSN'S
Place of Performance
Location: CINCINNATI, HAMILTON County, OHIO, 45215
State: Ohio Government Spending
Plain-Language Summary
Department of Defense obligated $137.3 million to GENERAL ELECTRIC COMPANY for work described as: MULTIPLE NSN'S Key points: 1. Contract awarded to General Electric, a major player in aerospace manufacturing. 2. Significant duration of over 2000 days suggests a long-term need for these parts. 3. The contract's value places it in the upper tier for aircraft component procurement. 4. Sole-source award raises questions about potential lack of competitive pricing. 5. Performance context is critical given the essential nature of aircraft engine parts. 6. Sector positioning highlights the defense industry's reliance on specialized manufacturers.
Value Assessment
Rating: questionable
Benchmarking the value of this $137 million contract is challenging without detailed cost breakdowns and comparisons to similar sole-source awards for aircraft engine parts. The firm-fixed-price structure offers some cost certainty, but the lack of competition means there's no direct market comparison to assess if the pricing represents optimal value for the government. Further analysis would require understanding the specific components, their complexity, and the prevailing market rates for comparable parts from other manufacturers, if available.
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 proprietary rights to fulfill the requirement. The lack of competition limits the government's ability to leverage market forces to drive down prices and potentially explore innovative solutions from a wider range of suppliers.
Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as competitive pressures are absent, potentially resulting in less favorable pricing than could be achieved through an open competition.
Public Impact
The Department of Defense benefits through the continued supply of critical aircraft engine parts, ensuring operational readiness of its fleet. Services delivered include the manufacturing and supply of various aircraft engine components, essential for maintenance and repair. Geographic impact is primarily centered around the contractor's facilities in Ohio, where the parts are likely manufactured. Workforce implications include the continued employment of skilled labor within General Electric's manufacturing and engineering divisions.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to inflated prices.
- Potential for vendor lock-in due to specialized nature of parts.
- Limited transparency into cost drivers without competitive bidding.
- Dependence on a single supplier for critical components.
Positive Signals
- General Electric's established track record in aerospace manufacturing.
- Firm-fixed-price contract provides cost predictability.
- Long-term award suggests a stable and ongoing requirement.
- Potential for high-quality, specialized parts due to single-source expertise.
Sector Analysis
The aerospace manufacturing sector, particularly for defense applications, is characterized by high barriers to entry, significant R&D investment, and a limited number of highly specialized suppliers. This contract falls within the Aircraft Engine and Engine Parts Manufacturing industry (NAICS 336412), a critical segment supporting military aviation readiness. Spending in this area is often dominated by sole-source or limited-competition awards due to the proprietary nature of engine designs and the stringent quality and performance requirements. Comparable spending benchmarks are difficult to establish without specific part details, but large-scale engine component procurements can run into hundreds of millions of dollars annually.
Small Business Impact
This contract does not appear to include a small business set-aside. Given the sole-source nature and the likely specialized manufacturing requirements for aircraft engine parts, subcontracting opportunities for small businesses may be limited. However, General Electric, as a large prime contractor, may engage small businesses for specific components or services that fall outside its core manufacturing capabilities, though this is not explicitly detailed in the provided data.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of Defense's contracting and program management offices, specifically the Defense Logistics Agency. Accountability measures are inherent in the firm-fixed-price contract type, which obligates the contractor to deliver specified goods at an agreed-upon price. Transparency is limited due to the sole-source award, but contract modifications, performance reports, and payment data would typically be subject to internal DoD review and potentially public disclosure through contract databases.
Related Government Programs
- Aircraft Engine Maintenance and Repair
- Defense Logistics Agency Procurement
- Military Aircraft Parts Manufacturing
- General Electric Defense Contracts
Risk Flags
- Sole-source award
- Lack of competitive pricing
- Potential for cost overruns
- Supply chain dependency
Tags
defense, department-of-defense, general-electric, aircraft-engine-parts, sole-source, firm-fixed-price, defense-logistics-agency, ohio, large-contract, manufacturing, aerospace
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $137.3 million to GENERAL ELECTRIC COMPANY. MULTIPLE NSN'S
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 $137.3 million.
What is the period of performance?
Start: 2018-11-21. End: 2024-10-31.
What is General Electric's track record with the Department of Defense for similar aircraft engine parts contracts?
General Electric has a long and extensive history of supplying aircraft engines and parts to the Department of Defense across various branches and platforms. Their track record includes numerous large-scale contracts, often awarded on a sole-source or limited-competition basis due to the highly specialized nature of their products and proprietary technologies. While specific performance metrics for past contracts are not detailed here, GE is a recognized leader in the aerospace industry, known for its engineering capabilities and production capacity. However, like any large defense contractor, they have faced scrutiny in the past regarding pricing and contract terms on certain awards, underscoring the importance of robust oversight even for established suppliers.
How does the $137 million value of this contract compare to other sole-source awards for aircraft engine parts?
The $137 million value positions this contract as a significant procurement within the realm of aircraft engine parts. Sole-source awards for such critical components can vary widely depending on the specific engine model, the complexity and quantity of parts required, and the duration of the contract. While this figure is substantial, it is not uncommon for long-term sustainment contracts for major defense platforms to reach or exceed this value. Without knowing the exact NSNs (National Stock Numbers) and the specific parts covered, a precise comparison is difficult. However, it indicates a substantial, ongoing requirement for a particular set of engine components, likely supporting a significant portion of the DoD's aviation fleet.
What are the primary risks associated with a sole-source award of this magnitude for critical aircraft components?
The primary risks associated with a sole-source award of this magnitude for critical aircraft components include potential price inflation due to the absence of competitive bidding, reduced incentive for the contractor to innovate or improve efficiency, and the risk of vendor lock-in. Taxpayers may bear a higher cost than if the contract were competed. Furthermore, reliance on a single supplier for essential parts can create vulnerabilities in the supply chain, especially if the contractor experiences production issues, financial instability, or geopolitical disruptions. The government also has less leverage to negotiate favorable terms or explore alternative solutions when competition is absent.
How effective is the firm-fixed-price contract type in managing costs for this sole-source award?
The firm-fixed-price (FFP) contract type is generally considered effective in managing costs by shifting the risk of cost overruns to the contractor. For this sole-source award, the FFP structure provides a degree of cost certainty for the government, as the price is set upfront. However, its effectiveness in ensuring the *best possible* price is diminished without competition. The contractor bears the risk of increased costs, but since there's no competitive benchmark, the initial fixed price might be set at a level that accounts for this risk and potentially includes higher profit margins than might be achievable in a competitive environment. Therefore, while FFP provides budget predictability, it doesn't guarantee cost efficiency in a sole-source scenario.
What is the historical spending pattern for aircraft engine parts by the Defense Logistics Agency?
The Defense Logistics Agency (DLA) is a major procurer of aviation parts and sustainment services for the U.S. military. Historical spending patterns for aircraft engine parts by DLA are substantial, reflecting the continuous need to maintain and operate a large and diverse fleet of aircraft. DLA manages complex supply chains, often awarding large, multi-year contracts for engine components, spare parts, and related services. Spending in this category is consistently high, often in the billions of dollars annually across all aviation platforms. Awards can range from highly competitive solicitations for common parts to sole-source contracts for proprietary or specialized components, similar to the General Electric award detailed here.
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: 1 NEUMANN WAY, CINCINNATI, OH, 45215
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $137,294,467
Exercised Options: $137,294,467
Current Obligation: $137,294,467
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: SPE4AX16D9408
IDV Type: IDC
Timeline
Start Date: 2018-11-21
Current End Date: 2024-10-31
Potential End Date: 2024-10-31 00:00:00
Last Modified: 2024-10-24
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