DoD's $22.2M aircraft engine contract to General Electric awarded without competition
Contract Overview
Contract Amount: $22,232,713 ($22.2M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2021-08-02
End Date: 2024-05-30
Contract Duration: 1,032 days
Daily Burn Rate: $21.5K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: PACER PHARAOH
Place of Performance
Location: CINCINNATI, HAMILTON County, OHIO, 45215
State: Ohio Government Spending
Plain-Language Summary
Department of Defense obligated $22.2 million to GENERAL ELECTRIC COMPANY for work described as: PACER PHARAOH Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential value for money. 2. The fixed-price contract type suggests cost risks are primarily borne by the contractor. 3. The duration of over 1000 days indicates a long-term need for these aircraft engine parts. 4. The contractor, General Electric, is a major player in the aerospace and defense sector. 5. The contract falls under the Aircraft Engine and Engine Parts Manufacturing industry code. 6. The award was made by the Defense Logistics Agency, a key procurement arm for the DoD.
Value Assessment
Rating: questionable
Without a competitive bidding process, it is difficult to benchmark the value for money. The firm fixed-price contract type is generally favorable for the government in managing cost overruns, but the absence of competition means the government may not have secured the lowest possible price. Further analysis would require comparing this contract's pricing to similar sole-source awards for comparable engine parts or to publicly available pricing data for General Electric's products.
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. This typically occurs when a specific capability or proprietary technology is required, or when only one source is available. The lack of competition limits the government's ability to leverage market forces to drive down prices and potentially limits the range of solutions considered.
Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to ensure the most economical price is achieved. This necessitates robust internal cost analysis and justification by the procuring agency.
Public Impact
The primary beneficiaries are the Department of Defense, ensuring the continued operational readiness of aircraft requiring these specific engine parts. The services delivered involve the manufacturing and supply of critical aircraft engine components. The geographic impact is likely concentrated around the Defense Logistics Agency's operational areas and potentially the contractor's manufacturing facilities. Workforce implications include continued employment for skilled manufacturing and engineering personnel at General Electric.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may result in suboptimal pricing for taxpayers.
- Sole-source awards can reduce market entry for potential competitors, limiting future innovation.
- Dependence on a single supplier can create supply chain risks.
Positive Signals
- Firm fixed-price contract mitigates cost overrun risk for the government.
- Award to a reputable and experienced contractor like General Electric suggests a lower risk of performance failure.
- Long contract duration indicates a stable and predictable supply chain for essential parts.
Sector Analysis
This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector, a critical component of the aerospace and defense industry. This sector is characterized by high barriers to entry due to complex technology, significant R&D investment, and stringent quality control requirements. Major players like General Electric dominate the market for advanced military aircraft engines. Spending in this sector is heavily influenced by defense budgets and modernization programs.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Given the nature of aircraft engine manufacturing, it is likely that the prime contractor, General Electric, would subcontract for specialized components or services. Analysis of subcontracting plans would be necessary to determine the extent of small business participation.
Oversight & Accountability
Oversight for this contract would primarily fall under the Defense Logistics Agency's contracting officers and potentially the Department of Defense's Inspector General. Transparency is limited by the sole-source nature of the award. Accountability measures would be tied to the firm fixed-price terms and delivery schedules outlined in the contract.
Related Government Programs
- Aircraft Engine Manufacturing
- Defense Logistics Agency Procurement
- Department of Defense Aircraft Maintenance
- Sole-Source Defense Contracts
Risk Flags
- Sole-source award
- Lack of competition
- Potential for non-competitive pricing
Tags
defense, department-of-defense, defense-logistics-agency, general-electric-company, aircraft-engine-parts-manufacturing, sole-source, firm-fixed-price, delivery-order, ohio, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $22.2 million to GENERAL ELECTRIC COMPANY. PACER PHARAOH
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 $22.2 million.
What is the period of performance?
Start: 2021-08-02. End: 2024-05-30.
What is General Electric's track record with sole-source defense contracts?
General Electric, as a major defense contractor, has a history of receiving both competitive and sole-source awards. Sole-source awards to GE often stem from the proprietary nature of their engine technologies or specific sustainment requirements for existing platforms where they are the original equipment manufacturer. While specific data on all sole-source contracts is not readily available, their extensive experience in the aerospace sector suggests a pattern of being a go-to provider for critical engine components and services, particularly for platforms where their engines are standard. Oversight agencies often scrutinize sole-source awards to ensure fair pricing and necessity, and GE's long-standing relationship with the DoD implies a degree of established trust and performance history, though each award warrants independent review.
How does the pricing of this contract compare to similar sole-source awards for aircraft engine parts?
Direct comparison of pricing for this specific $22.2 million contract to similar sole-source awards is challenging without access to detailed pricing breakdowns and specific part numbers or engine models. Sole-source awards inherently lack the direct price discovery mechanism of competitive bidding. To assess value, one would typically look at historical pricing trends for the same or similar parts if previously procured, or benchmark against industry standards for comparable components, factoring in the specific engine type and complexity. The Defense Contract Audit Agency (DCAA) or similar bodies may have conducted internal reviews to ensure the price was fair and reasonable, but this information is not publicly detailed for this specific award.
What are the primary risks associated with this sole-source contract for the Department of Defense?
The primary risk for the Department of Defense (DoD) in this sole-source contract is the potential for paying a premium due to the lack of competition. Without competing bids, there's less assurance that the price reflects the lowest achievable market rate. Another risk is supplier dependency; relying solely on General Electric for these specific engine parts could create vulnerabilities in the supply chain, especially if GE faces production issues, labor disputes, or geopolitical challenges. Furthermore, a lack of competition can stifle innovation over the long term, as potential competitors may not have opportunities to develop and offer alternative solutions or improvements.
How does the 'Aircraft Engine and Engine Parts Manufacturing' (NAICS 336412) sector typically operate within the defense procurement landscape?
The Aircraft Engine and Engine Parts Manufacturing sector is a highly specialized and concentrated industry that plays a crucial role in defense procurement. Companies like General Electric, Pratt & Whitney, and Rolls-Royce dominate this space, often holding intellectual property and unique manufacturing capabilities for advanced jet engines. Defense contracts within this sector are frequently long-term, high-value, and can involve complex sustainment and upgrade programs alongside new production. Due to the technological sophistication and high barriers to entry, competitive procurements can be limited, leading to a higher prevalence of sole-source or limited-competition awards, particularly for sustainment and unique component needs. This necessitates robust government oversight to ensure fair pricing and performance.
What is the historical spending pattern for aircraft engine parts by the Defense Logistics Agency?
The Defense Logistics Agency (DLA) is a significant procurer of aircraft engine parts, supporting the operational readiness of various military branches. Historical spending patterns reveal a consistent and substantial investment in this category, driven by the large and aging military aircraft fleet. DLA often procures parts through both competitive bids and sole-source arrangements, depending on the criticality, availability, and proprietary nature of the components. Spending fluctuates based on fleet modernization programs, depot maintenance schedules, and emergent operational needs. Analyzing DLA's historical data for NAICS code 336412 would show multi-billion dollar annual expenditures, with a significant portion likely attributed to major engine manufacturers like General Electric for sustainment and repair parts.
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, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $22,232,713
Exercised Options: $22,232,713
Current Obligation: $22,232,713
Subaward Activity
Number of Subawards: 2
Total Subaward Amount: $1,640,960
Contract Characteristics
Multi-Year Contract: Yes
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SPE4AX19D9440
IDV Type: IDC
Timeline
Start Date: 2021-08-02
Current End Date: 2024-05-30
Potential End Date: 2024-05-30 00:00:00
Last Modified: 2025-02-18
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