DoD awards $50M sole-source contract to General Electric for aircraft engine parts during COVID-19
Contract Overview
Contract Amount: $49,997,560 ($50.0M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2020-06-12
End Date: 2022-04-29
Contract Duration: 686 days
Daily Burn Rate: $72.9K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: COVID-19 FUNDING FOR PACER PHANTOM COVID-19 DPA3
Place of Performance
Location: CINCINNATI, HAMILTON County, OHIO, 45215
State: Ohio Government Spending
Plain-Language Summary
Department of Defense obligated $50.0 million to GENERAL ELECTRIC COMPANY for work described as: COVID-19 FUNDING FOR PACER PHANTOM COVID-19 DPA3 Key points: 1. Contract awarded under unusual circumstances, potentially impacting price discovery. 2. Sole-source award raises questions about competition and potential for overpayment. 3. Long performance period of 686 days suggests significant supply chain integration. 4. Focus on critical aircraft engine parts highlights national security implications. 5. Awarded during the COVID-19 pandemic, potentially influencing urgency and terms. 6. Geographic concentration in Ohio for a major defense contractor.
Value Assessment
Rating: questionable
Without comparable contract data or a competitive bidding process, it is difficult to definitively assess the value for money. The $49.9 million award to General Electric for aircraft engine parts, particularly under a sole-source justification, warrants scrutiny. Benchmarking against similar sole-source awards for comparable parts or against General Electric's commercial pricing for similar components would be necessary to determine if the price is fair and reasonable. The lack of competition inherently limits the government's ability to secure the best possible price.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only one bidder, General Electric Company, was solicited. The justification for this approach is not detailed in the provided data but is often related to urgency, unique capabilities, or lack of viable alternatives. The absence of competition means that the government did not benefit from a bidding process that could have driven down prices or improved terms.
Taxpayer Impact: Sole-source awards limit the government's leverage in price negotiations, potentially leading to higher costs for taxpayers. Without competing offers, there is less assurance that the price reflects market value.
Public Impact
The Department of Defense benefits from the continued supply of critical aircraft engine parts, ensuring operational readiness. General Electric Company, a major aerospace manufacturer, receives significant revenue and maintains its role as a key defense supplier. The contract supports jobs within General Electric's manufacturing facilities, likely concentrated in Ohio. The services delivered are essential for maintaining the airworthiness of military aircraft, indirectly supporting national security operations.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price competition and taxpayer value.
- Lack of transparency in the justification for sole-sourcing.
- Potential for cost overruns without competitive pressure.
- Long contract duration could mask inefficiencies if not closely monitored.
Positive Signals
- Award to a known, established contractor with expertise in aircraft engines.
- Ensures supply of critical components for defense readiness.
- Contract awarded during a period of national emergency (COVID-19), potentially addressing urgent needs.
Sector Analysis
The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government procurement. Contracts for aircraft engine parts are crucial for maintaining military aviation capabilities. General Electric is a dominant player in this market. Spending in this category is substantial, reflecting the high cost of advanced aerospace technology and the critical nature of defense readiness. This contract fits within the broader category of defense logistics and sustainment.
Small Business Impact
The provided data indicates that small business participation was not a stated factor in this contract (sb: false). As a sole-source award to a large prime contractor, there is a potential for limited subcontracting opportunities for small businesses unless specifically mandated or pursued by General Electric. The absence of a small business set-aside means that the primary focus was likely on meeting the defense requirement directly, rather than fostering small business engagement.
Oversight & Accountability
Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA), responsible for ensuring performance, quality, and cost reasonableness. The Inspector General of the Department of Defense may also conduct audits or investigations into sole-source procurements, especially those exceeding significant dollar thresholds. Transparency is limited by the sole-source nature, but contract modifications and performance reports would be subject to review.
Related Government Programs
- Defense Logistics Agency (DLA) Procurement
- Aircraft Engine Maintenance, Repair, and Overhaul (MRO)
- COVID-19 Emergency Procurement
- Sole-Source Defense Contracts
- General Electric Defense Contracts
Risk Flags
- Sole-source award
- Lack of competitive bidding
- Potential for price escalation
- National security implications of critical parts supply
Tags
defense, department-of-defense, general-electric, aircraft-engine-parts, sole-source, firm-fixed-price, covid-19-funding, dla, ohio, large-contract, non-competed
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $50.0 million to GENERAL ELECTRIC COMPANY. COVID-19 FUNDING FOR PACER PHANTOM COVID-19 DPA3
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 $50.0 million.
What is the period of performance?
Start: 2020-06-12. End: 2022-04-29.
What was the specific justification provided by the Department of Defense for awarding this contract on a sole-source basis to General Electric?
The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are justified under circumstances such as urgent and compelling needs, unique capabilities possessed by only one source, or when it is impractical to obtain competition. For a contract related to aircraft engine parts, potential justifications could include proprietary technology, specialized manufacturing processes, or a critical need to maintain the operational readiness of specific aircraft platforms where only General Electric could provide the necessary components within the required timeframe. Further investigation into the contract file or agency justifications would be required to ascertain the precise reasoning.
How does the $49.9 million contract value compare to historical spending on similar aircraft engine parts by the Defense Logistics Agency or Department of Defense?
Without specific part numbers or detailed specifications, a direct comparison of the $49.9 million contract value to historical spending on similar aircraft engine parts is challenging. However, the Defense Logistics Agency (DLA) and various branches of the DoD procure vast quantities of engine components annually. General Electric is a primary supplier for many military aircraft engines. To assess value, one would need to benchmark this award against previous contracts for the same or functionally equivalent parts, considering factors like quantity, specifications, and inflation. A significant deviation from historical pricing for comparable items, especially in a sole-source context, would raise concerns about cost efficiency.
What are the key performance indicators (KPIs) and oversight mechanisms in place to ensure General Electric meets the delivery and quality standards for these aircraft engine parts?
While specific KPIs are not detailed in the provided data, standard oversight mechanisms for defense contracts of this nature include stringent quality assurance clauses, delivery schedules, and acceptance testing. The Defense Contract Management Agency (DCMA) would typically be responsible for monitoring performance, ensuring compliance with technical specifications, and verifying timely delivery. Penalties for non-performance or quality defects are usually stipulated in the contract. Furthermore, the contract type (Firm Fixed Price) generally places the cost risk on the contractor, incentivizing them to meet performance targets efficiently. Regular progress reports and potential site visits by government representatives would also form part of the oversight.
What is the potential impact of this contract on the broader aerospace and defense supply chain, particularly concerning lead times and material availability?
This contract, awarded during the COVID-19 pandemic, likely aimed to secure critical components and maintain the availability of essential aircraft engine parts. The $49.9 million value suggests a substantial quantity or high-value components. The long duration (686 days) indicates a significant commitment and potential impact on the supply chain. It could tie up manufacturing capacity and raw materials within General Electric's network. For the broader supply chain, this sole-source award might reduce opportunities for other suppliers and could influence lead times for other customers if GE prioritizes this defense order. Ensuring transparency in GE's supply chain management is crucial to avoid disruptions.
Given the sole-source nature, what steps can be taken to mitigate risks related to contractor performance and potential price increases in future contract actions?
To mitigate risks associated with sole-source contracts, the government can implement several strategies. Firstly, conducting thorough market research to identify potential alternative sources or technologies for future procurements is essential. Secondly, negotiating robust contract terms, including clear performance standards, detailed specifications, and options for price adjustments based on objective market indicators, can provide leverage. For future actions, the agency should actively seek opportunities to introduce competition, perhaps by breaking down the requirement into smaller, more accessible components or by encouraging new entrants into the market. Strong oversight and regular performance reviews are also critical to ensure the contractor remains accountable and efficient.
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: $49,997,560
Exercised Options: $49,997,560
Current Obligation: $49,997,560
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: SPE4AX16D9408
IDV Type: IDC
Timeline
Start Date: 2020-06-12
Current End Date: 2022-04-29
Potential End Date: 2022-04-29 00:00:00
Last Modified: 2025-04-24
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