Department of the Army awards $35.8M for T700-GE-701D spare engines to General Electric
Contract Overview
Contract Amount: $35,815,486 ($35.8M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2019-12-16
End Date: 2022-06-30
Contract Duration: 927 days
Daily Burn Rate: $38.6K/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-0191 IS TO PROCURE 50 EACH 701D SPARE ENGINES INCOMPLETE WITHOUT CONTROLS, FOR CY 2021 DELIVERIES IN SUPPORT OF ALC
Place of Performance
Location: LYNN, ESSEX County, MASSACHUSETTS, 01905
Plain-Language Summary
Department of Defense obligated $35.8 million to GENERAL ELECTRIC COMPANY for work described as: T700 ENGINE REQUIREMENT: THE PURPOSE OF THIS DELIVERY ORDER W58RGZ-20-F-0191 IS TO PROCURE 50 EACH 701D SPARE ENGINES INCOMPLETE WITHOUT CONTROLS, FOR CY 2021 DELIVERIES IN SUPPORT OF ALC Key points: 1. This contract focuses on procuring spare engines, a critical component for aircraft readiness. 2. The sole-source award to General Electric suggests a lack of readily available alternatives or a strategic decision to maintain existing supply chains. 3. The firm-fixed-price contract type aims to provide cost certainty for the government. 4. The duration of the contract spans over two years, indicating a sustained need for these spare parts. 5. The procurement is for 50 incomplete engines, highlighting a specific need for components rather than fully assembled units.
Value Assessment
Rating: fair
The contract value of $35.8 million for 50 spare engines equates to approximately $716,309 per engine. Benchmarking this against similar procurements for advanced aircraft engines is challenging without more specific technical details. However, given the specialized nature of military-grade engines, this price may fall within a reasonable range, though a lack of competition makes definitive value assessment difficult. The firm-fixed-price structure provides some cost control, but the absence of competitive bidding limits the ability to ascertain the best possible price.
Cost Per Unit: Approximately $716,309 per engine (incomplete without controls).
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only one vendor, General Electric Company, was solicited. This approach is typically used when a specific product is required, and only one source can provide it, often due to proprietary technology, existing infrastructure, or unique compatibility requirements. The lack of competition means that the government did not benefit from potential price reductions or innovative solutions that might arise from a competitive bidding process.
Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without multiple bids, it's harder to ensure the government received the most cost-effective solution available in the market.
Public Impact
The primary beneficiaries are the U.S. Army aviation units that rely on these T700-GE-701D engines for operational readiness. The services delivered include the procurement of essential spare parts for aircraft maintenance and repair. The geographic impact is national, supporting Army operations across various installations. Workforce implications include supporting manufacturing jobs within General Electric and its supply chain.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price discovery and potential cost savings for taxpayers.
- Procurement of 'incomplete' engines without controls may indicate a complex integration process or reliance on other government-furnished equipment.
- The contract duration of over two years suggests a long-term need, potentially indicating recurring requirements that could benefit from competitive strategies in the future.
Positive Signals
- Firm-fixed-price contract provides budget certainty for the Department of the Army.
- General Electric is a known and established supplier of T700 engines, suggesting a reliable source for critical components.
- The procurement directly supports the operational readiness of Army aviation assets.
Sector Analysis
This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft engine components. The North American Industry Classification System (NAICS) code 336412, Aircraft Engine and Engine Parts Manufacturing, covers companies involved in producing these specialized items. The market for military aircraft engines is highly concentrated, often dominated by a few key players like General Electric due to the high barriers to entry, extensive research and development costs, and stringent performance requirements. Spending on spare parts is a significant component of overall defense logistics and sustainment budgets.
Small Business Impact
This contract does not appear to include a small business set-aside. Given the specialized nature of aircraft engine manufacturing and the sole-source award to a large prime contractor, the direct impact on small businesses through this specific award is likely minimal. However, General Electric may engage small businesses as subcontractors for various components or services, contributing indirectly to the small business ecosystem. Further analysis would be needed to determine the extent of small business subcontracting.
Oversight & Accountability
The contract is a delivery order under a larger contract vehicle, likely subject to the oversight mechanisms of that parent contract. As a firm-fixed-price contract, financial oversight focuses on ensuring delivery according to specifications and schedule. The Department of the Army's contracting officers and program managers are responsible for oversight. Transparency is facilitated through contract databases like FPDS, though detailed justifications for sole-source awards can sometimes be limited in public view. Inspector General involvement would typically be triggered by allegations of fraud, waste, or abuse.
Related Government Programs
- T700 Engine Program
- Army Aviation Sustainment
- Aircraft Spare Parts Procurement
- Defense Logistics Agency (DLA) Contracts
Risk Flags
- Sole-source award
- Lack of competitive bidding
- Potential for premium pricing
- Limited transparency on 'incomplete' engine details
Tags
defense, department-of-the-army, general-electric-company, aircraft-engine-manufacturing, spare-parts, sole-source, firm-fixed-price, t700-engine, massachusetts, delivery-order, large-contractor
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $35.8 million to GENERAL ELECTRIC COMPANY. T700 ENGINE REQUIREMENT: THE PURPOSE OF THIS DELIVERY ORDER W58RGZ-20-F-0191 IS TO PROCURE 50 EACH 701D SPARE ENGINES INCOMPLETE WITHOUT CONTROLS, FOR CY 2021 DELIVERIES IN SUPPORT OF ALC
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 $35.8 million.
What is the period of performance?
Start: 2019-12-16. End: 2022-06-30.
What is the specific technical configuration and condition of the 'incomplete' T700-GE-701D spare engines being procured, and why are controls excluded?
The provided data indicates the procurement is for '50 EACH 701D SPARE ENGINES INCOMPLETE WITHOUT CONTROLS'. This suggests the engines are being acquired in a state that requires separate acquisition or integration of control systems. The exclusion of controls could be due to several factors: the Army may already possess sufficient control systems, they may be procuring controls under a different contract vehicle, or the engines are intended for a specific application where standard controls are not applicable or need to be customized. Understanding the exact configuration and the rationale for excluding controls is crucial for assessing the total lifecycle cost and ensuring interoperability with existing Army aviation platforms. Without this detail, the 'per-unit cost' is only a partial picture of the total investment required for a fully functional engine.
What is General Electric's historical performance and track record with T700 engine deliveries and support for the Department of Defense?
General Electric has a long-standing and extensive track record as the primary developer and manufacturer of the T700 engine family, which powers numerous U.S. Army and other military aircraft, including helicopters like the Black Hawk and Apache. Historically, GE has been a critical supplier, delivering thousands of these engines and their components over several decades. While specific performance metrics for this particular delivery order are not detailed, GE's overall relationship with the DoD for T700 engines is characterized by deep technical expertise and a significant market share. Issues that may arise typically relate to delivery timelines, component reliability, or cost negotiations, but the company is generally considered a reliable source for these complex systems. The sole-source nature of this award underscores the reliance on GE's established capabilities and intellectual property related to the T700 series.
How does the $716,309 per-engine cost benchmark against other recent T700 engine spare part procurements or similar military engine components?
Benchmarking the per-unit cost of $716,309 for these 'incomplete' T700-GE-701D spare engines is challenging without more granular data. The T700 engine family has seen numerous variants and upgrades over its service life, and the cost of spare parts can vary significantly based on the specific model, included components, and quantity ordered. Furthermore, the 'incomplete without controls' designation means this figure represents only a portion of the cost for a fully operational engine. Publicly available data often aggregates costs or focuses on complete engine procurements. However, historical data suggests that major military engine spare parts can range from hundreds of thousands to over a million dollars each, depending on complexity. Given the specialized nature and high performance requirements of military aviation engines, this price point, while substantial, may not be an outlier, especially in a sole-source context. A more precise comparison would require access to detailed specifications and pricing from other recent, comparable sole-source or competitively awarded contracts for similar engine modules.
What are the potential risks associated with relying on a sole-source provider like General Electric for critical spare engine components?
The primary risk associated with sole-source procurement is the lack of competitive pressure, which can lead to higher prices than might be achieved in a competitive environment. This reduces the government's leverage in price negotiations and potentially results in less value for taxpayer money. Another significant risk is vendor lock-in; the reliance on a single supplier can make it difficult and costly to switch to alternative providers in the future, even if better options emerge. Furthermore, a sole-source arrangement can increase vulnerability to supply chain disruptions if the sole provider experiences production issues, financial instability, or geopolitical challenges. The government's ability to influence production priorities or secure timely deliveries may also be diminished compared to situations with multiple qualified suppliers.
What is the projected sustainment cost and operational impact of these 50 spare engines over their lifecycle for the Army's aviation fleet?
The provided data focuses solely on the procurement cost of the spare engines and does not include information on their projected sustainment costs or specific operational impacts. The lifecycle cost of these engines will encompass not only the initial purchase price but also maintenance, repair, overhaul, logistics support, and eventual disposal. The operational impact hinges on how effectively these spare engines contribute to maintaining the readiness rates of the Army's T700-powered aircraft fleet. If these spares help reduce aircraft downtime and improve mission availability, the operational benefit could be significant, justifying the investment. However, without data on expected engine reliability, maintenance intervals, and the current readiness status of the affected aircraft, a precise assessment of the lifecycle cost and operational impact is not possible from this contract alone. This information would typically be part of a broader program sustainment plan.
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: $35,815,486
Exercised Options: $35,815,486
Current Obligation: $35,815,486
Actual Outlays: $13,901,768
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: W58RGZ15D0048
IDV Type: IDC
Timeline
Start Date: 2019-12-16
Current End Date: 2022-06-30
Potential End Date: 2022-06-30 12:06:00
Last Modified: 2022-06-27
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