DoD's $26M contract for aircraft engines awarded to General Electric, raising questions about competition
Contract Overview
Contract Amount: $26,013,177 ($26.0M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2008-09-16
End Date: 2010-12-31
Contract Duration: 836 days
Daily Burn Rate: $31.1K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: MDEC
Place of Performance
Location: CINCINNATI, HAMILTON County, OHIO, 45215
State: Ohio Government Spending
Plain-Language Summary
Department of Defense obligated $26.0 million to GENERAL ELECTRIC COMPANY for work described as: MDEC Key points: 1. The contract value of $26 million represents a significant investment in aircraft engine maintenance. 2. Awarded to a single, large contractor, the procurement method warrants scrutiny for potential cost efficiencies. 3. The fixed-price contract type suggests a defined scope, but potential for cost overruns remains a risk. 4. The duration of the contract (over two years) indicates a long-term need for these critical parts. 5. The specific NAICS code points to a specialized manufacturing sector within the defense industrial base.
Value Assessment
Rating: fair
Benchmarking the value of this $26 million contract is challenging without specific unit cost data or comparisons to similar sole-source procurements for aircraft engines. The firm fixed-price nature provides some cost certainty, but the absence of competitive bidding means there's no direct market validation of the pricing. Without more granular data on the specific engine parts and services procured, it's difficult to definitively assess if the government received excellent value for money. However, the long-term nature and critical function of aircraft engines suggest a baseline necessity that may justify the expenditure, even if competitive pricing wasn't achieved.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded using a sole-source procurement method, meaning only one vendor, General Electric Company, was solicited. This approach is typically used when only one responsible source is available or when a compelling justification exists for not seeking competition. The lack of multiple bidders means there was no opportunity for price discovery through a competitive bidding process, potentially leading to higher costs for the government compared to a competed contract. The specific reasons for this sole-source award are not detailed in the provided data.
Taxpayer Impact: Sole-source awards limit the government's ability to leverage competition to secure the best possible prices, potentially resulting in taxpayer funds being used less efficiently. This can mean less investment in other critical areas or a need for higher overall defense budgets.
Public Impact
The primary beneficiaries are the U.S. Air Force units relying on operational aircraft powered by General Electric engines. The contract ensures the continued availability and maintenance of critical aircraft engine components, supporting national defense readiness. The geographic impact is likely concentrated around military bases where these aircraft are stationed and maintained. The contract supports jobs within General Electric's manufacturing and maintenance divisions, contributing to the aerospace and defense workforce.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price competition, potentially increasing costs for taxpayers.
- Lack of transparency in the sole-source justification could hide inefficiencies.
- Reliance on a single supplier for critical engine parts poses a long-term supply chain risk.
Positive Signals
- Firm fixed-price contract provides cost certainty for the defined scope.
- Award to a known, established contractor like General Electric suggests a level of reliability and expertise.
- Ensures continued operational readiness for essential military aircraft.
Sector Analysis
The aerospace and defense sector is characterized by high barriers to entry, significant R&D investment, and long product lifecycles. Aircraft engine manufacturing is a highly specialized segment within this sector, dominated by a few major players like General Electric. Contracts for engine parts and maintenance are crucial for maintaining military readiness. Spending in this area is substantial, reflecting the high cost and complexity of advanced aviation technology. This contract fits within the broader category of defense procurement for sustainment and readiness, a critical component of the defense budget.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Given the sole-source nature and the specialized industry, it's unlikely that significant subcontracting opportunities for small businesses would be mandated or easily facilitated within this specific award. The focus is on a large, prime contractor for a complex, high-value item. This contract's structure does not directly contribute to the small business ecosystem through set-asides.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of Defense's contracting and financial management oversight mechanisms. The Defense Contract Management Agency (DCMA) likely plays a role in monitoring performance and compliance. As a sole-source award, the justification and negotiation process would be subject to internal DoD review and potentially oversight from the Government Accountability Office (GAO) if protested. Transparency is limited due to the non-competitive nature, but contract modifications and payment milestones would be tracked.
Related Government Programs
- Aircraft Engine Manufacturing
- Defense Logistics
- Military Aircraft Sustainment
- Propulsion Systems Procurement
Risk Flags
- Sole-source award
- Lack of competition
- Potential for overpricing
- Long-term vendor dependency
Tags
defense, department-of-defense, defense-logistics-agency, aircraft-engine-manufacturing, sole-source, firm-fixed-price, large-contract, general-electric, us-air-force, engine-parts
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $26.0 million to GENERAL ELECTRIC COMPANY. MDEC
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 $26.0 million.
What is the period of performance?
Start: 2008-09-16. End: 2010-12-31.
What specific aircraft engine components or services does this $26 million contract cover?
The provided data indicates the contract falls under NAICS code 336412 (Aircraft Engine and Engine Parts Manufacturing) and was awarded to General Electric Company. While the exact components or services are not detailed, this code suggests the contract likely involves the manufacturing, repair, or overhaul of aircraft engines, engine parts, or related components for military aircraft. Given the duration and value, it could encompass a range of activities from supplying specific parts like turbine blades or fuel nozzles to providing comprehensive engine maintenance and support services essential for maintaining fleet readiness.
Why was this contract awarded on a sole-source basis instead of being competed?
The data indicates the contract was 'NOT COMPETED' and awarded sole-source. Without further details, the specific justification for this sole-source award is unknown. Common reasons for sole-source procurements include situations where only one vendor possesses the necessary technical capabilities, proprietary technology, or unique qualifications to meet the requirement. It could also be due to urgent and compelling circumstances where competition is not feasible, or if the cost of competition is deemed prohibitive relative to the contract value. A thorough review of the contract file and justification documentation would be needed to ascertain the precise rationale.
How does the $26 million contract value compare to historical spending on similar aircraft engine parts by the Defense Logistics Agency?
To assess this, one would need to analyze historical spending data for NAICS code 336412 or specific contract line items related to aircraft engine parts procured by the Defense Logistics Agency (DLA) over several fiscal years. Comparing the $26 million award to the average annual spending or the range of values for similar sole-source or competed contracts would provide context. If DLA typically spends significantly more or less on comparable engine sustainment, it could indicate whether this contract is unusually large or small. Without access to that historical spending database, a direct comparison is not possible from the provided data alone.
What are the potential risks associated with a sole-source award to General Electric for aircraft engine parts?
The primary risk of a sole-source award is the lack of competitive pressure, which can lead to inflated pricing and reduced incentive for the contractor to innovate or improve efficiency. There's also a risk of vendor lock-in, where the government becomes overly dependent on a single supplier, potentially facing supply chain disruptions or unfavorable terms in the future. Furthermore, without competition, it's harder to benchmark performance and ensure the government is receiving the best possible value. The long-term reliance on one supplier for critical components like aircraft engines can also pose strategic risks if the supplier's business or technological focus shifts.
What is General Electric's track record with the Department of Defense, particularly for aircraft engine contracts?
General Electric is a major, long-standing defense contractor with a significant history of supplying aircraft engines and related services to the Department of Defense (DoD). They are one of the primary manufacturers of jet engines for military aircraft across various branches. Their track record typically includes numerous large contracts, some competed and some sole-source, for engine development, production, and sustainment. While specific performance metrics for this particular $26 million contract are not available, GE's overall presence indicates extensive experience and established relationships within the DoD aerospace sector. A deeper dive would involve reviewing past contract performance ratings and any documented issues.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Engine and Engine Parts Manufacturing
Product/Service Code: ENGINE ACCESSORIES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: ONE NEUMANN WAY, CINCINNATI, OH, 90
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $26,013,177
Exercised Options: $26,013,177
Current Obligation: $26,013,177
Contract Characteristics
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: FA810405G0003
IDV Type: IDC
Timeline
Start Date: 2008-09-16
Current End Date: 2010-12-31
Potential End Date: 2010-12-31 00:00:00
Last Modified: 2010-09-21
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