General Electric awarded $30.4M for 39 T701D engines, supporting Army aviation needs
Contract Overview
Contract Amount: $30,400,773 ($30.4M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2020-04-08
End Date: 2021-12-31
Contract Duration: 632 days
Daily Burn Rate: $48.1K/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-0352 IS TO PROCURE 39 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 $30.4 million to GENERAL ELECTRIC COMPANY for work described as: T700 REQUIREMENT: THE PURPOSE OF THIS DELIVERY ORDER W58RGZ-20- F-0352 IS TO PROCURE 39 701D ENGINES IN SUPPORT OF ARMY PROGRAM FOR CY 2021 DELIVERIES Key points: 1. The contract value represents a significant investment in maintaining and upgrading Army aviation capabilities. 2. Sole-source award suggests limited market alternatives or specific technical requirements. 3. The firm-fixed-price structure aims to provide cost certainty for the government. 4. Delivery spans two fiscal years, indicating a phased procurement approach. 5. The procurement falls within the broader context of military aircraft engine manufacturing and support. 6. The absence of small business participation warrants further examination of subcontracting opportunities.
Value Assessment
Rating: fair
Benchmarking the value of this specific delivery order is challenging without comparable sole-source engine procurements. The total award of $30.4 million for 39 engines averages approximately $780,000 per engine. This figure needs to be compared against historical pricing for similar engine models and configurations, as well as against prices for engines procured through competitive means, if available. The firm-fixed-price contract type provides a degree of cost control, but the absence of competition limits the government's ability to leverage market forces for potentially better pricing.
Cost Per Unit: Approximately $780,000 per engine (based on total award and quantity).
Competition Analysis
Competition Level: sole-source
This delivery order was awarded on a sole-source basis, meaning it was not competed among multiple potential suppliers. This typically occurs when a specific contractor possesses unique capabilities, intellectual property, or when there are urgent needs that preclude a full and open competition. The lack of competition means that the government did not benefit from the price discovery mechanisms inherent in a competitive bidding process, potentially leading to higher costs than might be achieved otherwise.
Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure on pricing. The justification for a sole-source award should be robust to ensure the government is obtaining fair value.
Public Impact
The primary beneficiaries are the U.S. Army aviation units requiring T701D engines for their aircraft. The contract ensures the continued operational readiness and modernization of critical Army helicopter fleets. The delivery of engines supports ongoing Army aviation maintenance and sustainment programs. Workforce implications may include specialized manufacturing and technical support roles within General Electric and its supply chain.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pricing advantages for taxpayers.
- Lack of transparency in the justification for sole-source procurement.
- Potential for higher per-unit costs compared to a competitive environment.
- No explicit small business set-aside, raising questions about subcontracting opportunities.
Positive Signals
- Firm-fixed-price contract provides cost certainty for the government.
- Procurement directly supports critical Army aviation readiness.
- Delivery order is part of a larger, established program for engine sustainment.
Sector Analysis
The aircraft engine and engine parts manufacturing sector is highly specialized and dominated by a few key players, including General Electric. This contract falls within the defense industrial base, specifically supporting military aviation platforms. The market for military jet and turboprop engines is characterized by long development cycles, high R&D costs, and stringent performance requirements, often leading to limited competition for specific platforms. Spending in this area is crucial for maintaining national security and technological superiority.
Small Business Impact
This contract was not awarded as a small business set-aside, nor does it appear to have specific requirements for small business subcontracting mentioned in the provided data. The absence of such provisions means that opportunities for small businesses to participate in this specific procurement are not guaranteed. Further analysis would be needed to determine if General Electric has existing subcontracting plans with small businesses for engine components or support services related to this award.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. The firm-fixed-price nature of the contract simplifies some aspects of financial oversight by establishing a ceiling cost. Transparency regarding the justification for the sole-source award is crucial for accountability. The Defense Contract Audit Agency (DCAA) may also conduct audits to ensure cost allowability and reasonableness, depending on the contract's specifics and value.
Related Government Programs
- Army Aviation Modernization Programs
- T700 Engine Family Support
- Military Aircraft Engine Procurement
- Defense Industrial Base Sustainment
Risk Flags
- Sole-source award
- Lack of competition
- Potential for price premium
Tags
defense, department-of-defense, department-of-the-army, aircraft-engine-manufacturing, delivery-order, sole-source, firm-fixed-price, general-electric, massachusetts, army-aviation, engine-parts
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $30.4 million to GENERAL ELECTRIC COMPANY. T700 REQUIREMENT: THE PURPOSE OF THIS DELIVERY ORDER W58RGZ-20- F-0352 IS TO PROCURE 39 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 $30.4 million.
What is the period of performance?
Start: 2020-04-08. End: 2021-12-31.
What is the historical spending trend for T701D engines by the Department of the Army?
Analyzing historical spending on T701D engines by the Department of the Army requires access to detailed contract databases and budget reports. Generally, such spending would fluctuate based on fleet readiness requirements, aircraft retirement or upgrade schedules, and the availability of competitive alternatives. Over the past decade, the Army has consistently invested in its aviation platforms, which include helicopters powered by the T700 engine family. This includes funding for new engine procurements, overhauls, spare parts, and sustainment services. The specific amount spent annually can vary significantly, influenced by major fleet recapitalization efforts or unforeseen operational demands. Without specific historical data for this engine model, it's difficult to provide precise figures, but it represents a consistent line item within the Army's aviation maintenance and procurement budgets, reflecting the enduring role of these engines in supporting critical missions.
How does the per-unit cost of these T701D engines compare to similar military engine procurements?
The per-unit cost of approximately $780,000 for the T701D engines in this delivery order needs careful comparison. Military engine procurements are highly variable due to differences in engine models, required performance specifications, quantities ordered, and whether the procurement is competitive or sole-source. The T701D is a mature engine used in various Army helicopters like the Black Hawk and Apache. If this price is compared to newer, more powerful, or more complex engines for different aircraft, it might appear lower. Conversely, if it's higher than previous T701D procurements or comparable engines acquired competitively, it could indicate a less favorable price. Benchmarking requires identifying contracts for the same or very similar engine configurations, ideally procured competitively, and adjusting for inflation and quantity discounts. Given this is a sole-source award, it is likely to be at the higher end of the potential price range.
What are the specific risks associated with a sole-source award for critical aircraft engines?
Sole-source awards for critical components like aircraft engines carry several inherent risks. The primary risk is financial: without competition, the government may pay a premium price, as the contractor faces less pressure to offer the most competitive terms. This can lead to inefficient use of taxpayer funds. Secondly, there's a risk of vendor lock-in, where the government becomes overly reliant on a single supplier, potentially limiting future flexibility in sourcing or technology upgrades. This reliance can also reduce the incentive for the sole-source provider to innovate or improve efficiency if they are guaranteed business. Furthermore, the lack of competitive benchmarking makes it harder to objectively assess whether the awarded price represents fair market value. Finally, sole-source awards can sometimes mask underlying issues with program planning or market analysis that may have led to the lack of viable alternatives.
What is General Electric's track record in delivering aircraft engines to the Department of Defense?
General Electric (GE) has a long and extensive track record of delivering a wide range of aircraft engines to the Department of Defense (DoD), encompassing both fixed-wing and rotary-wing platforms. GE is a primary supplier for numerous critical military aircraft, including fighter jets (e.g., F110, F414), bombers, transport aircraft, and helicopters (e.g., T700 family). The company is known for its technological capabilities and has consistently been awarded major engine contracts. While GE generally maintains a strong reputation for performance and reliability, like any large defense contractor, it has faced scrutiny over pricing, delivery schedules, and contract modifications on various programs. Its historical performance indicates a capacity to meet complex military specifications, but the specifics of past performance on similar sole-source contracts would be relevant for a complete assessment.
What are the potential performance implications of relying on a single supplier for T701D engines?
Relying on a single supplier like General Electric for T701D engines, while ensuring consistency in manufacturing and specifications, also presents potential performance implications. On the positive side, it guarantees uniformity in engine design, maintenance procedures, and parts compatibility across the fleet, simplifying logistics and training. However, the lack of competition could potentially lead to complacency in performance enhancement or responsiveness to evolving operational needs. If GE faces production challenges, supply chain disruptions, or internal resource constraints, the Army's ability to procure engines or critical spare parts could be significantly impacted without alternative sources. This dependency underscores the importance of robust contract management and close monitoring of the supplier's performance and capacity to ensure sustained operational readiness.
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: $30,400,773
Exercised Options: $30,400,773
Current Obligation: $30,400,773
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: 2020-04-08
Current End Date: 2021-12-31
Potential End Date: 2021-12-31 12:12:00
Last Modified: 2022-07-26
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