Army awards $53.1M for 68 T701D engines to General Electric, a sole-source contract
Contract Overview
Contract Amount: $53,099,687 ($53.1M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2020-03-30
End Date: 2021-10-31
Contract Duration: 580 days
Daily Burn Rate: $91.6K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: T700 REQUIREMENT: THE PURPOSE OF THIS DELIVERY ORDER W58RGZ-20-F-0337 IS TO PROCURE 68 701D ENGINES IN SUPPORT OF ARMY PROGRAM FOR CY 2021 DELIVERIES.
Place of Performance
Location: LYNN, ESSEX County, MASSACHUSETTS, 01905
Plain-Language Summary
Department of Defense obligated $53.1 million to GENERAL ELECTRIC COMPANY for work described as: T700 REQUIREMENT: THE PURPOSE OF THIS DELIVERY ORDER W58RGZ-20-F-0337 IS TO PROCURE 68 701D ENGINES IN SUPPORT OF ARMY PROGRAM FOR CY 2021 DELIVERIES. Key points: 1. This contract represents a significant investment in critical aviation components for the Army. 2. The sole-source nature of this award warrants scrutiny regarding potential price impacts. 3. Performance will be closely monitored against the firm-fixed-price terms. 4. The delivery order falls within the Aircraft Engine and Engine Parts Manufacturing sector. 5. The contract duration is 580 days, aligning with projected delivery timelines. 6. The award is a delivery order against an existing contract vehicle.
Value Assessment
Rating: fair
The contract value of $53.1 million for 68 engines equates to approximately $781,000 per engine. Benchmarking this against similar sole-source procurements for advanced military engines is challenging due to proprietary pricing and specific technical requirements. However, the absence of competition suggests a potential for higher-than-market pricing. Further analysis would require access to historical pricing data for the T701D engine and comparable engine models.
Cost Per Unit: Approximately $781,000 per engine. Market comparison is difficult without specific engine model data and competitive bids.
Competition Analysis
Competition Level: sole-source
This contract was awarded as a sole-source delivery order, meaning it was not competed. The Department of the Army likely determined that General Electric was the only responsible source capable of fulfilling the requirement for these specific T701D engines. This approach bypasses the competitive bidding process, which could limit price discovery and potentially lead to higher costs for the government.
Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competitive pressure. Without a competitive process, there is less incentive for the contractor to offer the lowest possible price.
Public Impact
The primary beneficiaries are the U.S. Army aviation units that will receive the 68 T701D engines. These engines are crucial for maintaining and enhancing the operational readiness of Army aircraft. The services delivered are the manufacturing and supply of high-performance aircraft engines. The geographic impact is primarily within the United States, supporting Army operations. Workforce implications include continued employment for skilled manufacturing personnel at General Electric.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pricing, potentially increasing costs for taxpayers.
- Lack of competition may reduce incentive for cost optimization by the contractor.
- Dependence on a single supplier for critical components can pose supply chain risks.
Positive Signals
- Award to a known, established supplier (General Electric) suggests reliability in production.
- Firm-fixed-price contract provides cost certainty for the government once awarded.
- Delivery order against an existing contract vehicle may indicate streamlined procurement.
Sector Analysis
The Aircraft Engine and Engine Parts Manufacturing sector is a highly specialized and capital-intensive industry. It is characterized by long product development cycles, stringent quality and performance requirements, and significant barriers to entry. Major players like General Electric dominate the market for advanced military engines. This contract fits within the broader defense industrial base, supporting the sustainment and modernization of military aviation fleets. Comparable spending benchmarks are difficult to establish without detailed specifications of the engine and its intended application.
Small Business Impact
This contract does not appear to involve a small business set-aside. General Electric is a large corporation. There is no explicit information provided regarding subcontracting plans for small businesses. The absence of a set-aside or specific subcontracting goals means that opportunities for small businesses within this specific procurement are not guaranteed and would depend on General Electric's internal sourcing decisions.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. As a delivery order against an existing contract vehicle, some oversight mechanisms may already be in place. Transparency is limited by the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.
Related Government Programs
- Army Aviation Modernization Programs
- T701 Engine Family
- Aircraft Engine Manufacturing
- Defense Procurement
Risk Flags
- Sole-source award
- Lack of competition
- Potential for cost overruns
Tags
defense, department-of-the-army, general-electric, aircraft-engine-manufacturing, delivery-order, sole-source, firm-fixed-price, massachusetts, 53-million-usd, t701d-engine
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $53.1 million to GENERAL ELECTRIC COMPANY. T700 REQUIREMENT: THE PURPOSE OF THIS DELIVERY ORDER W58RGZ-20-F-0337 IS TO PROCURE 68 701D ENGINES IN SUPPORT OF ARMY PROGRAM FOR CY 2021 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 $53.1 million.
What is the period of performance?
Start: 2020-03-30. End: 2021-10-31.
What is the historical spending pattern for T701D engines from General Electric?
Historical spending data for T701D engines from General Electric is not publicly available in detail. However, the T701 engine family has been a workhorse for the U.S. Army for decades, powering platforms like the Black Hawk and Apache helicopters. This suggests a long-standing relationship and consistent procurement needs. The current award of $53.1 million for 68 engines indicates a significant, but not unprecedented, investment. To understand historical patterns, one would need to access detailed contract databases and analyze past delivery orders and contract modifications for this specific engine type over several fiscal years, looking for trends in quantity, price per unit, and total expenditure.
How does the per-unit cost of these T701D engines compare to other similar military aircraft engines?
The per-unit cost of approximately $781,000 for the T701D engines is difficult to benchmark directly against other military aircraft engines without knowing the exact specifications, thrust ratings, and technological sophistication of comparable engines. Military engines vary widely in complexity and cost. For instance, engines for larger transport aircraft or advanced fighter jets can cost significantly more per unit. However, for turboshaft engines of similar power class used in medium-lift helicopters, this price point might be within a reasonable range, especially considering the sole-source nature and potential for specialized modifications. A true comparison would require detailed technical specifications and competitive bid data for alternative engines.
What are the primary risks associated with this sole-source contract for the T701D engines?
The primary risk associated with this sole-source contract is the potential for inflated pricing due to the lack of competition. Without competing bids, General Electric may not have the same incentive to offer the lowest possible price. Another risk is supply chain vulnerability; reliance on a single supplier for critical engine components can create dependencies and potential delays if the supplier faces production issues. Furthermore, the absence of a competitive process limits the government's ability to explore alternative technologies or more cost-effective solutions that might be offered by other manufacturers if the market were open. This also reduces transparency in pricing.
What is the track record of General Electric in delivering aircraft engines to the Department of Defense?
General Electric has a long and extensive track record of delivering aircraft engines to the Department of Defense, spanning many decades. They are a primary supplier for numerous critical military aviation platforms, including helicopters (like the UH-60 Black Hawk and AH-64 Apache, which use variants of the T701 engine) and fixed-wing aircraft. GE is known for its advanced engine technology and manufacturing capabilities. While specific performance metrics for every contract are not always public, their sustained role as a major defense contractor indicates a generally reliable performance history in terms of production and delivery, though like any large manufacturer, they may encounter occasional program challenges or cost overruns on specific projects.
How does this contract align with the Army's broader aviation sustainment and modernization strategy?
This contract for T701D engines directly aligns with the Army's aviation sustainment strategy by providing essential components for maintaining the operational readiness of its helicopter fleet. The T701 engine family is integral to platforms like the UH-60 Black Hawk, which remains a cornerstone of Army aviation. By procuring these engines, the Army ensures that its existing aircraft can continue to fly and perform their missions effectively. In terms of modernization, while this specific order focuses on sustaining current platforms, the continued availability of reliable engines supports the overall health of the aviation enterprise, which is a prerequisite for future modernization efforts. It ensures the foundational capability remains robust.
What are the potential implications of this contract on future engine development or competition?
This sole-source award for T701D engines could have mixed implications for future engine development and competition. On one hand, it ensures the continued supply of a proven engine for existing platforms, supporting current operational needs. On the other hand, by awarding this contract without competition, the Army may be foregoing opportunities to foster competition among engine manufacturers for future requirements or next-generation engines. If the T701D is slated for continued use, this sole-source approach might signal a lack of interest in exploring alternative engine technologies from other potential suppliers, potentially limiting long-term market dynamism and innovation.
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: $53,099,687
Exercised Options: $53,099,687
Current Obligation: $53,099,687
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: 2020-03-30
Current End Date: 2021-10-31
Potential End Date: 2021-10-31 12:10:00
Last Modified: 2022-07-19
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