Army procures 100 T700-401D engines for $78.1M, a significant investment in aircraft readiness
Contract Overview
Contract Amount: $78,146,200 ($78.1M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2019-12-02
End Date: 2020-12-31
Contract Duration: 395 days
Daily Burn Rate: $197.8K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: T700 ENGINE REQUIREMENT: THE PURPOSE OF THIS DELIVERY ORDER W58RGZ-20-F-0133 IS TO PROCURE 100 EACH 701D ENGINES IN SUPPORT OF ARMY PRODUCTION FOR CY 2020 DELIVERIES.
Place of Performance
Location: LYNN, ESSEX County, MASSACHUSETTS, 01905
Plain-Language Summary
Department of Defense obligated $78.1 million to GENERAL ELECTRIC COMPANY for work described as: T700 ENGINE REQUIREMENT: THE PURPOSE OF THIS DELIVERY ORDER W58RGZ-20-F-0133 IS TO PROCURE 100 EACH 701D ENGINES IN SUPPORT OF ARMY PRODUCTION FOR CY 2020 DELIVERIES. Key points: 1. The contract focuses on acquiring essential aircraft engines, directly impacting operational capabilities. 2. A firm-fixed-price structure aims to control costs for the Department of the Army. 3. The delivery order was not competed, raising questions about potential cost efficiencies. 4. Procurement is for CY 2020 deliveries, indicating a near-term operational need. 5. The supplier, General Electric Company, is a major player in the aerospace engine market. 6. This spending supports the Army's production requirements for its aircraft fleet.
Value Assessment
Rating: fair
The firm-fixed-price contract for 100 T700-401D engines at $78.1 million represents a substantial expenditure. While the price per engine is approximately $781,462, direct comparisons are difficult without knowing the specific configuration and market conditions at the time of award. The lack of competition suggests potential for higher-than-market pricing, though GE's established position may offer some efficiencies. Further benchmarking against similar engine procurements, especially those that were competed, would be necessary for a more definitive value assessment.
Cost Per Unit: Approximately $781,462 per engine. Benchmarking is difficult without specific engine variant and market data, especially given the sole-source nature.
Competition Analysis
Competition Level: sole-source
This delivery order was not competed, indicating a sole-source award to General Electric Company. The rationale for this approach is not detailed in the provided data. Sole-source procurements can sometimes lead to higher prices due to the absence of competitive pressure. Without information on why competition was precluded, it's challenging to assess if this was the most cost-effective method for the government.
Taxpayer Impact: The lack of competition means taxpayers may not have benefited from the potentially lower prices that a competitive bidding process could have generated.
Public Impact
The U.S. Army benefits directly through the acquisition of critical engine components for its aircraft fleet. This procurement ensures the continued operational readiness and maintenance of Army aviation assets. The engines are manufactured in Massachusetts, potentially supporting local and regional economies. The contract supports the Army's production cycle for the fiscal year 2020.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may have resulted in a higher price than could have been achieved through a competitive process.
- Limited transparency into the justification for a sole-source award.
- Potential for price escalation if market conditions change significantly during the contract period.
Positive Signals
- Firm-fixed-price contract provides cost certainty for the government.
- Procurement supports critical Army aviation operational requirements.
- General Electric Company is an established and experienced manufacturer of aircraft engines.
Sector Analysis
This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector (NAICS 336412). This industry is characterized by high barriers to entry, significant R&D investment, and a limited number of major global players, including General Electric. Spending in this sector is crucial for national defense and aerospace innovation. Comparable spending benchmarks would typically involve other large-scale engine procurements for military or commercial aviation, often involving multi-year contracts and substantial dollar values.
Small Business Impact
The data indicates that this contract was not set aside for small businesses, nor does it appear to involve significant subcontracting opportunities for small businesses based on the primary awardee. General Electric Company, as a large prime contractor, may have its own small business subcontracting program, but this specific delivery order does not highlight direct set-aside provisions. The impact on the small business ecosystem is likely minimal for this particular transaction.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. As a delivery order under a larger framework (implied by the 'delivery order' designation), existing oversight mechanisms for that framework would apply. Transparency is limited by the sole-source nature and the lack of detailed justification provided. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- Army Aviation Modernization Programs
- T700 Engine Family Support Contracts
- Department of Defense Aircraft Procurement
- General Electric Aviation Services
Risk Flags
- Sole-source award lacks competitive pricing pressure.
- Potential for higher costs due to lack of competition.
- Supply chain risk associated with single-source provider.
Tags
defense, department-of-defense, army, aircraft-engine, manufacturing, firm-fixed-price, delivery-order, sole-source, massachusetts, t700-engine
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $78.1 million to GENERAL ELECTRIC COMPANY. T700 ENGINE REQUIREMENT: THE PURPOSE OF THIS DELIVERY ORDER W58RGZ-20-F-0133 IS TO PROCURE 100 EACH 701D ENGINES IN SUPPORT OF ARMY PRODUCTION FOR CY 2020 DELIVERIES.
Who is the contractor on this award?
The obligated recipient is GENERAL ELECTRIC COMPANY.
Which agency awarded this contract?
Awarding agency: Department of Defense (Department of the Army).
What is the total obligated amount?
The obligated amount is $78.1 million.
What is the period of performance?
Start: 2019-12-02. End: 2020-12-31.
What is the historical spending trend for T700 engines by the Department of the Army?
Historical spending on T700 engines by the Department of the Army has been substantial, reflecting their widespread use across various Army aircraft platforms such as the Black Hawk and Apache helicopters. While specific aggregate figures for T700 procurement over extended periods are not readily available in this dataset, the recurring need for these engines for new production, sustainment, and upgrades suggests consistent, multi-year investment. The Army's budget typically allocates significant funds towards aviation readiness and modernization, with engine procurement and overhaul being a critical component. Analyzing past budgets and contract awards for similar engine types would reveal a pattern of significant, ongoing financial commitment to maintaining and expanding the T700 engine fleet.
How does the per-unit cost of these T700-401D engines compare to previous procurements or other military variants?
The per-unit cost of approximately $781,462 for the T700-401D engines in this delivery order is difficult to benchmark precisely without detailed comparative data. Engine costs can vary significantly based on specific configurations, technological upgrades, order volume, and contract terms (e.g., firm-fixed-price vs. cost-plus). Previous procurements of T700 variants, especially older models or those with different specifications, might show lower per-unit costs due to technological maturity or different market dynamics. Conversely, newer or enhanced variants could command higher prices. Given this was a sole-source award, it's plausible that the price is at the higher end compared to what might be achieved in a competitive environment. A thorough analysis would require access to historical contract data for comparable T700 engine procurements by the Army and potentially other services.
What specific Army aircraft platforms utilize the T700-401D engine, and what is the operational impact of this procurement?
The T700-401D engine is a variant of the widely used T700 engine family, which powers numerous U.S. Army aircraft. Key platforms include the UH-60 Black Hawk utility helicopter and the AH-64 Apache attack helicopter, among others. The procurement of 100 T700-401D engines directly supports the Army's production requirements for CY 2020, meaning these engines are intended for installation on newly manufactured aircraft or potentially as spares for existing fleets undergoing major overhauls or upgrades. This ensures the continued operational readiness and capability of these critical aviation assets, supporting troop transport, combat missions, and logistical support. The timely delivery of these engines is vital to maintaining the Army's air power projection and overall mission effectiveness.
What is General Electric Company's track record with T700 engine production and delivery for the Department of Defense?
General Electric Company (GE) has an extensive and long-standing track record as the primary manufacturer of the T700 engine family, including variants like the T700-401D. They have been supplying these engines to the Department of Defense (DoD) for decades, supporting numerous aircraft programs. GE's history with the T700 is marked by continuous production, technological evolution, and significant delivery volumes. They have consistently met DoD requirements for performance, reliability, and quantity across various contracts. Their established manufacturing capabilities, engineering expertise, and deep understanding of the T700 platform position them as a critical supplier for Army aviation. While specific on-time delivery rates or quality metrics for every contract aren't detailed here, GE's sustained role as the sole source for these engines underscores their proven performance and reliability in supporting military operations.
What are the risks associated with a sole-source procurement for critical aircraft engines like the T700?
Sole-source procurements for critical components like the T700 engine carry several inherent risks. Primarily, the absence of competition can lead to higher prices than might be achieved through a bidding process, potentially increasing costs for taxpayers. There's also a risk of reduced innovation, as the sole provider may face less pressure to improve efficiency or develop cost-saving measures. Dependence on a single supplier can create vulnerabilities in the supply chain; any disruption at the manufacturer's facility (e.g., production issues, labor disputes, geopolitical events) could significantly impact the availability of these essential engines, jeopardizing military readiness. Furthermore, without competitive benchmarking, it can be more challenging for the government to ensure it is receiving the best possible value and to hold the contractor accountable for performance and pricing.
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: 1000 WESTERN AVE, LYNN, MA, 01905
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $78,146,200
Exercised Options: $78,146,200
Current Obligation: $78,146,200
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: W58RGZ15D0048
IDV Type: IDC
Timeline
Start Date: 2019-12-02
Current End Date: 2020-12-31
Potential End Date: 2020-12-31 12:12:00
Last Modified: 2020-10-29
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