Army procures 43 T701D engines for $33.5M, impacting aircraft readiness and engine parts manufacturing
Contract Overview
Contract Amount: $33,518,801 ($33.5M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2020-04-21
End Date: 2023-01-31
Contract Duration: 1,015 days
Daily Burn Rate: $33.0K/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-0377 IS TO PROCURE 43 701D ENGINES IN SUPPORT OF THE ARMY PRODUCTION FOR CY 2022 DELIVERIES.
Place of Performance
Location: LYNN, ESSEX County, MASSACHUSETTS, 01905
Plain-Language Summary
Department of Defense obligated $33.5 million to GENERAL ELECTRIC COMPANY for work described as: T700 REQUIREMENT: THE PURPOSE OF THIS DELIVERY ORDER W58RGZ-20- F-0377 IS TO PROCURE 43 701D ENGINES IN SUPPORT OF THE ARMY PRODUCTION FOR CY 2022 DELIVERIES. Key points: 1. Value for money assessed through comparison to similar engine procurements. 2. Competition dynamics indicate a sole-source award, potentially impacting price. 3. Risk indicators include reliance on a single supplier for critical components. 4. Performance context is tied to Army production schedules for CY 2022. 5. Sector positioning is within the aircraft engine and parts manufacturing industry.
Value Assessment
Rating: fair
The contract value of $33.5 million for 43 engines averages approximately $780,000 per engine. Benchmarking against similar military engine procurements is challenging without more specific technical details and market data. However, the firm-fixed-price structure suggests an attempt to control costs, but the lack of competition raises concerns about whether the best possible price was achieved.
Cost Per Unit: Approximately $780,000 per engine, benchmark requires further specific data.
Competition Analysis
Competition Level: sole-source
This delivery order was not competed, indicating a sole-source award. The absence of a competitive bidding process means that multiple suppliers were not evaluated, and the government did not benefit from potential price reductions or innovative solutions that competition might have fostered. The rationale for the sole-source award would typically involve factors like existing sole-source supplier relationships or unique technical requirements.
Taxpayer Impact: The lack of competition means taxpayers may have paid a higher price than if multiple vendors had vied for the contract. This also limits opportunities for new entrants to the market and potentially reduces long-term cost savings through market pressure.
Public Impact
The U.S. Army benefits from the procurement of essential aircraft engines. Services delivered include the supply of 43 T701D engines. Geographic impact is primarily within the U.S. Army's operational theaters. Workforce implications are within the aerospace manufacturing sector, supporting jobs at General Electric.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price discovery and potential savings.
- Reliance on a single supplier for critical engine components.
- Potential for cost overruns if market prices fluctuate significantly.
Positive Signals
- Firm-fixed-price contract provides cost certainty for the government.
- Procurement supports critical Army aviation readiness.
- Long-standing relationship with a known supplier may ensure timely delivery.
Sector Analysis
The aircraft engine and engine parts manufacturing sector is a highly specialized and capital-intensive industry. This contract falls within the defense sub-sector, supplying critical components for military aviation. The market is often characterized by a few large, established players due to high barriers to entry, including technological expertise, regulatory hurdles, and significant R&D investment. Comparable spending benchmarks would typically be found within other military aircraft engine procurements.
Small Business Impact
This contract does not appear to have a small business set-aside. Given the nature of aircraft engine manufacturing, it is unlikely that small businesses would be primary contractors. However, the prime contractor, General Electric, may engage small businesses as subcontractors for specific components or services, though this is not explicitly detailed in the provided data.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of Defense's contracting and financial management regulations. The Army Contracting Command would be responsible for administering the contract. Transparency is facilitated through contract databases like FPDS, though detailed justifications for sole-source awards are not always publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- Army Aviation Modernization Programs
- Aircraft Engine Procurement
- Defense Industrial Base Support
- Aerospace Manufacturing Contracts
Risk Flags
- Sole-source award
- Lack of competitive bidding
- Potential for price non-competitiveness
Tags
defense, department-of-defense, department-of-the-army, aircraft-engine-manufacturing, delivery-order, sole-source, firm-fixed-price, engines, aviation, massachusetts, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $33.5 million to GENERAL ELECTRIC COMPANY. T700 REQUIREMENT: THE PURPOSE OF THIS DELIVERY ORDER W58RGZ-20- F-0377 IS TO PROCURE 43 701D ENGINES IN SUPPORT OF THE ARMY PRODUCTION FOR CY 2022 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 $33.5 million.
What is the period of performance?
Start: 2020-04-21. End: 2023-01-31.
What is the track record of General Electric Company in supplying T701D engines to the U.S. Army?
General Electric Company has a long-standing history of supplying engines for military aircraft, including the T700 family, which powers various Army helicopters like the Black Hawk and Apache. The T701D is a specific variant within this family. The company's extensive experience in this domain suggests a robust understanding of the technical requirements and production capabilities necessary for fulfilling such contracts. Historical performance data, if available through government databases or contractor performance reports, would provide further insight into their reliability, delivery timeliness, and quality control for similar engine procurements. Their established presence in the defense aerospace sector indicates a significant capacity to meet the demands of military contracts.
How does the per-unit cost of $780,000 for the T701D engine compare to market rates or similar military engine procurements?
The per-unit cost of approximately $780,000 for the T701D engine requires careful benchmarking. Without access to detailed technical specifications, production volumes, and specific contract terms for comparable engines, a precise comparison is difficult. However, this figure can be contextualized by considering the complexity and specialized nature of military-grade turbine engines. These engines often involve advanced materials, rigorous testing, and extensive research and development, contributing to higher costs than commercial equivalents. To provide a more accurate assessment, one would need to compare this price against other military turboshaft engines of similar power output and application, ideally from contracts awarded through competitive processes to establish a clearer market rate. Data from other Army aviation procurements or similar engine types from different branches of the military would be valuable.
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. When a single supplier is the only option, there is less incentive for them to offer the most competitive price. This can lead to the government paying more than necessary. Another significant risk is supplier dependency; the Army becomes reliant on General Electric for these critical engines, making them vulnerable to supply chain disruptions, production issues, or future price increases that are not mitigated by market alternatives. Furthermore, the absence of competition can stifle innovation, as there is no external pressure for the supplier to develop more cost-effective or technologically advanced versions of the engine. This reliance also poses a risk if the supplier's financial stability or strategic priorities shift.
How does the procurement of these 43 T701D engines contribute to the overall effectiveness and readiness of the U.S. Army's aviation assets?
The procurement of 43 T701D engines is directly linked to maintaining and enhancing the operational readiness of the U.S. Army's helicopter fleet. The T700 engine family, including the T701D variant, powers a significant number of Army aircraft, such as the UH-60 Black Hawk and potentially AH-64 Apache variants. These engines are critical components that require regular maintenance, overhaul, and replacement to ensure aircraft can perform their missions reliably. Acquiring new engines ensures that the Army has sufficient spares and replacements to keep its aircraft flying, supporting troop transport, combat operations, reconnaissance, and logistical support. Adequate engine availability is fundamental to aviation readiness, directly impacting the Army's ability to deploy and sustain air assets in various operational environments.
What are the historical spending patterns for T700 series engines or similar aircraft engines by the Department of Defense?
Historical spending patterns for T700 series engines and similar military aircraft engines by the Department of Defense typically show consistent, significant investment. The Army, in particular, has been a major customer for these engines due to its large helicopter fleet. Spending often occurs through multi-year contracts, delivery orders against indefinite-delivery/indefinite-quantity (IDIQ) vehicles, and sole-source procurements for specific upgrades or urgent needs. The total dollar amounts can range from tens of millions to billions over the lifecycle of an engine program, reflecting the high cost of development, production, and sustainment. Factors influencing spending include fleet size, operational tempo, modernization efforts, and the availability of competitive alternatives. Analyzing past contract awards for T700 engines and comparable platforms would reveal trends in pricing, contract types, and the volume of engines procured annually.
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: $33,518,801
Exercised Options: $33,518,801
Current Obligation: $33,518,801
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: 2020-04-21
Current End Date: 2023-01-31
Potential End Date: 2023-01-31 12:01:00
Last Modified: 2022-10-06
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