DoD awards $40.4M for 12 Navy T700 engines to GE for MH-60R program
Contract Overview
Contract Amount: $40,388,101 ($40.4M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2020-06-03
End Date: 2024-02-29
Contract Duration: 1,366 days
Daily Burn Rate: $29.6K/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-0437 IS TO PROCURE TWELVE EACH NAVY 401C ENGINES IN SUPPORT OF INDIA MH60R PROGRAM.
Place of Performance
Location: CINCINNATI, HAMILTON County, OHIO, 45215
State: Ohio Government Spending
Plain-Language Summary
Department of Defense obligated $40.4 million to GENERAL ELECTRIC COMPANY for work described as: T700 ENGINE REQUIREMENT: THE PURPOSE OF THIS DELIVERY ORDER W58RGZ-20-F-0437 IS TO PROCURE TWELVE EACH NAVY 401C ENGINES IN SUPPORT OF INDIA MH60R PROGRAM. Key points: 1. Contract awarded to a single, established supplier, raising questions about price competitiveness. 2. Sole-source award limits opportunities for market-driven cost reductions. 3. Long contract duration suggests a stable, ongoing need for these specific engines. 4. The award is for a critical component in naval aviation, impacting fleet readiness. 5. No small business participation noted, indicating a focus on large prime contractors. 6. Fixed-price contract shifts some risk to the contractor but requires careful oversight of costs.
Value Assessment
Rating: fair
The contract value of $40.4 million for 12 engines equates to approximately $3.36 million 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 lack of competition suggests potential for higher-than-market pricing. Without comparative bids, assessing true value-for-money is difficult, but the fixed-price nature provides some cost certainty.
Cost Per Unit: N/A
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 item is required and only one source can provide it, or in cases of urgent need. The lack of competition means there was no opportunity for other manufacturers to bid, potentially leading to higher prices than if the contract had been competed.
Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding, as the government did not leverage market forces to drive down costs.
Public Impact
The primary beneficiaries are the U.S. Navy, which receives critical engine components for its MH-60R Seahawk helicopters. This contract ensures the continued operational readiness of naval aviation assets. The geographic impact is primarily within the United States, where General Electric manufactures these engines. The contract supports specialized manufacturing jobs within the aerospace sector.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price competition and potentially increases costs for taxpayers.
- Lack of transparency in pricing due to sole-source nature makes independent cost verification difficult.
- Long contract duration could mask inefficiencies if not actively managed.
Positive Signals
- Award to a known, established contractor with a track record in producing these engines.
- Fixed-price contract provides cost certainty for the government.
- Ensures supply of critical components for essential naval platforms.
Sector Analysis
This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector (NAICS 336412). This is a highly specialized and capital-intensive industry dominated by a few large players. The market for military aircraft engines is characterized by long development cycles, high R&D costs, and significant barriers to entry. Spending in this sector is driven by defense modernization programs and sustainment requirements for existing fleets. Comparable spending benchmarks are difficult to establish publicly due to the proprietary nature of military engine contracts.
Small Business Impact
This contract does not appear to include a small business set-aside. General Electric Company is a large prime contractor. There is no information provided regarding subcontracting plans to small businesses. This award is likely to benefit large aerospace manufacturers and their established supply chains, with limited direct impact on the small business ecosystem for this specific procurement.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of Defense's contracting and financial management regulations. The fixed-price nature implies that the contractor is responsible for managing costs to meet the agreed-upon price. Transparency is limited due to the sole-source award. The Inspector General's office within the DoD may conduct audits or investigations if specific concerns regarding performance, cost, or compliance arise.
Related Government Programs
- MH-60R Seahawk Helicopter Procurement
- Naval Aviation Engine Sustainment
- T700 Engine Family Production
- Defense Contract Management Agency (DCMA) Oversight
Risk Flags
- Sole-source award
- Lack of competition
- Potential for price inflation
Tags
defense, department-of-defense, navy, aircraft-engine, engine-parts-manufacturing, delivery-order, firm-fixed-price, sole-source, large-contract, ohio, t700-engine, mh60r-program
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $40.4 million to GENERAL ELECTRIC COMPANY. T700 ENGINE REQUIREMENT: THE PURPOSE OF THIS DELIVERY ORDER W58RGZ-20-F-0437 IS TO PROCURE TWELVE EACH NAVY 401C ENGINES IN SUPPORT OF INDIA MH60R PROGRAM.
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 $40.4 million.
What is the period of performance?
Start: 2020-06-03. End: 2024-02-29.
What is General Electric's track record with T700 engines and the MH-60R program?
General Electric has a long-standing history of producing T700 engines, which are a core component for various military helicopter platforms, including the MH-60R Seahawk. The company is a primary supplier for these engines, indicating a deep understanding of the technical specifications and performance requirements. Their established role suggests a reliable supply chain and manufacturing capability for this specific engine model. Past performance data, if publicly available through sources like the Federal Procurement Data System (FPDS) or CPARS (Contractor Performance Assessment Reporting System), would provide further insight into their delivery timeliness, quality, and overall performance on previous contracts related to T700 engines and naval aviation.
How does the $3.36 million per-engine cost compare to market rates or similar contracts?
Benchmarking the per-engine cost of $3.36 million is challenging due to the sole-source nature of this award and the proprietary details of military engine contracts. Publicly available data on comparable engine procurements, especially for specialized military applications like the T700 for the MH-60R, is scarce. Generally, advanced military turbine engines are high-cost items due to complex design, materials, and rigorous testing. Without competitive bids or access to detailed cost breakdowns, it's difficult to definitively state if this price is above or below market rates. However, sole-source awards inherently lack the price discovery mechanism that competition provides, suggesting a potential for higher costs compared to a fully competed contract.
What are the primary risks associated with this sole-source contract?
The primary risk associated with this sole-source contract is the potential for inflated pricing due to the lack of competition. Without competing offers, the government has limited leverage to negotiate the best possible price. Another risk is vendor lock-in; the reliance on a single supplier for a critical component can make future procurements difficult and potentially more expensive if alternatives are not developed or considered. There's also a risk of complacency from the contractor, as the absence of competitive pressure might reduce incentives for continuous cost reduction or innovation. Finally, if GE faces production issues or supply chain disruptions, the government has limited recourse to alternative suppliers, potentially impacting program timelines and readiness.
How effective is the fixed-price contract type in managing costs for this engine procurement?
A Firm Fixed Price (FFP) contract type, as used here, is generally effective in providing cost certainty for the government. Under an FFP contract, the contractor agrees to a total price for a well-defined product or service, and is responsible for controlling costs to achieve profitability. This shifts the risk of cost overruns from the government to the contractor. For the DoD, this means the total expenditure for the 12 engines is capped at $40.4 million, assuming no contract modifications. This structure incentivizes the contractor to be efficient in its production processes. However, the effectiveness is contingent on the initial price being fair and reasonable, which is harder to ascertain in a sole-source environment.
What are the historical spending patterns for T700 engines or similar naval aviation components?
Historical spending on T700 engines and related components for naval aviation programs like the MH-60R has been substantial, reflecting the high cost and critical nature of these systems. Over the years, the Department of Defense has awarded numerous contracts for the procurement and sustainment of T700 engines across various platforms. These contracts often involve significant dollar values, running into tens or hundreds of millions of dollars over the life of a program, due to the engines' complexity and the large number of helicopters in the fleet. Spending patterns are influenced by fleet size, operational tempo, modernization efforts, and the engine's service life. Analyzing past contract awards for T700 engines can reveal trends in pricing, volume, and the duration of sustainment efforts, though specific figures are often tied to individual contract actions and may not be directly comparable due to evolving requirements and market conditions.
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: $40,388,101
Exercised Options: $40,388,101
Current Obligation: $40,388,101
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: 2020-06-03
Current End Date: 2024-02-29
Potential End Date: 2024-02-29 12:02:00
Last Modified: 2024-02-28
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