DoD awards $35.7M for 45 AH-64 engines to General Electric, with delivery through May 2024
Contract Overview
Contract Amount: $35,658,137 ($35.7M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2021-07-12
End Date: 2024-05-31
Contract Duration: 1,054 days
Daily Burn Rate: $33.8K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: T700 REQUIREMENT: THE PURPOSE OF DELIVERY ORDER W58RGZ-21- F-0276 IS TO PROCURE FORTY FIVE (45) 701D AH-64 ENGINES IN SUPPORT OF NETHERLANDS PROGRAM, FOR CY 2022 THROUGH 2024 DELIVERIES.
Place of Performance
Location: LYNN, ESSEX County, MASSACHUSETTS, 01905
Plain-Language Summary
Department of Defense obligated $35.7 million to GENERAL ELECTRIC COMPANY for work described as: T700 REQUIREMENT: THE PURPOSE OF DELIVERY ORDER W58RGZ-21- F-0276 IS TO PROCURE FORTY FIVE (45) 701D AH-64 ENGINES IN SUPPORT OF NETHERLANDS PROGRAM, FOR CY 2022 THROUGH 2024 DELIVERIES. Key points: 1. Value for money is assessed by comparing the unit price to similar engine procurements. 2. Competition dynamics indicate a sole-source award, potentially impacting price negotiation. 3. Risk indicators include reliance on a single supplier and potential for cost overruns. 4. Performance context is tied to supporting the Netherlands' AH-64 program. 5. Sector positioning places this contract within the aircraft engine manufacturing industry.
Value Assessment
Rating: fair
The total award of $35.7 million for 45 AH-64 engines equates to approximately $792,400 per engine. Benchmarking this against publicly available data for similar military aircraft engine procurements suggests this price may be within a reasonable range, though specific engine variants and included support packages can significantly influence costs. Without more granular data on the exact engine model and its specifications, a definitive value-for-money assessment is challenging. However, the firm-fixed-price contract type offers some cost certainty.
Cost Per Unit: Approximately $792,400 per engine (based on total award and quantity).
Competition Analysis
Competition Level: sole-source
This delivery order was not competed and was awarded sole-source to General Electric Company. The justification for a sole-source award typically involves factors such as unique capabilities, proprietary technology, or urgent requirements where only one source can reasonably fulfill the need. The lack of competition means that the government did not benefit from a bidding process that could have potentially driven down prices or offered alternative solutions.
Taxpayer Impact: The absence of competition for this significant engine procurement means taxpayers may not have received the most advantageous pricing achievable through a competitive bidding process.
Public Impact
The primary beneficiaries are the Netherlands, receiving critical components for their AH-64 attack helicopters. The services delivered include the procurement and delivery of 45 high-value aircraft engines. The geographic impact is primarily in Massachusetts, where General Electric is based, and ultimately in the Netherlands for operational deployment. Workforce implications are positive for General Electric's manufacturing and support personnel involved in engine production.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price discovery and potential cost savings.
- Potential for price increases in future orders if competition remains absent.
- Dependence on a single supplier for critical aviation components.
Positive Signals
- Firm-fixed-price contract provides cost certainty for this order.
- General Electric is an established and experienced supplier of aircraft engines.
- Delivery order supports a key allied nation's defense capabilities.
Sector Analysis
This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector (NAICS 336412). This industry is characterized by high barriers to entry due to significant research and development costs, complex manufacturing processes, and stringent quality control requirements. Major players like General Electric dominate the market for advanced military aircraft engines. Spending in this sector is often driven by defense procurement cycles and modernization efforts, with contracts typically being large and long-term.
Small Business Impact
This contract does not appear to involve a small business set-aside. Given the specialized nature of military aircraft engine manufacturing and the sole-source award to a large prime contractor, the direct impact on small businesses is likely minimal, unless they are subcontractors to General Electric. There is no explicit indication of subcontracting plans for small businesses within the provided data.
Oversight & Accountability
The contract is a firm-fixed-price delivery order, which provides a degree of cost control. Oversight would typically be managed by the contracting officer and relevant program executive office within the Department of the Army. Transparency is limited by the sole-source nature of the award. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- AH-64 Apache Helicopter Program
- Foreign Military Sales (FMS)
- Department of Defense Aircraft Procurement
Risk Flags
- Sole-source award
- Potential for price escalation in future orders
- Dependence on single supplier
Tags
defense, department-of-defense, department-of-the-army, aircraft-engine-manufacturing, sole-source, firm-fixed-price, delivery-order, foreign-military-sales, ah-64-apache, general-electric, massachusetts, large-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $35.7 million to GENERAL ELECTRIC COMPANY. T700 REQUIREMENT: THE PURPOSE OF DELIVERY ORDER W58RGZ-21- F-0276 IS TO PROCURE FORTY FIVE (45) 701D AH-64 ENGINES IN SUPPORT OF NETHERLANDS PROGRAM, FOR CY 2022 THROUGH 2024 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 $35.7 million.
What is the period of performance?
Start: 2021-07-12. End: 2024-05-31.
What is General Electric's track record with AH-64 engine supply?
General Electric has a long-standing and established track record as the primary supplier of engines for the AH-64 Apache attack helicopter program. They have consistently provided engines for various iterations of the AH-64, including the T700 series, which powers many variants. Their experience spans decades, encompassing production, sustainment, and upgrades. This deep familiarity with the platform and its engine requirements positions them as a critical and often sole-source provider for these complex systems, ensuring a high degree of technical expertise and program continuity.
How does the unit cost of these engines compare to market rates or similar contracts?
The unit cost of approximately $792,400 per engine is a significant figure, reflecting the advanced technology and specialized nature of military-grade turbine engines. Benchmarking this against publicly available data for similar military aircraft engine procurements suggests it falls within a plausible range, though direct comparisons are difficult without knowing the exact engine variant, included support, and specific contract terms. Historically, sole-source awards for such specialized equipment can sometimes be at a premium compared to what might be achieved through robust competition. However, the firm-fixed-price nature of this award provides a degree of cost certainty for this specific procurement.
What are the primary risks associated with this sole-source contract?
The primary risk associated with this sole-source contract is the lack of competitive pressure, which can lead to less favorable pricing for the government compared to a competed procurement. There is also a risk of vendor lock-in, where the government becomes highly dependent on General Electric for future engine needs, potentially limiting negotiation leverage in subsequent procurements or sustainment contracts. Furthermore, any production delays or quality issues from a single supplier can have a more significant impact on program timelines and readiness. The long-term sustainment costs also represent a potential risk if not managed effectively.
How effective is the firm-fixed-price contract type in managing costs for this engine procurement?
The firm-fixed-price (FFP) contract type is generally considered effective in managing costs for procurements where the scope of work is well-defined, as is typically the case for manufacturing standard components like aircraft engines. Under an FFP contract, the contractor assumes the risk of cost overruns, providing the government with cost certainty for the agreed-upon price. This structure incentivizes the contractor to control costs efficiently. For this specific procurement of 45 engines, the FFP structure helps mitigate the risk of unexpected price increases for the government, assuming the initial price was negotiated appropriately.
What are the historical spending patterns for AH-64 engines and related components?
Historical spending patterns for AH-64 engines and related components, particularly through the Department of Defense and Foreign Military Sales channels, have been substantial and consistent over several decades. The AH-64 Apache has been a cornerstone of U.S. Army aviation and has been exported to numerous allied nations. Procurements typically involve large quantities of engines, spare parts, and sustainment services, often awarded through multi-year contracts or a series of delivery orders. Spending is driven by fleet readiness requirements, modernization programs, and international demand, with General Electric consistently being the primary engine supplier, leading to significant, recurring contract awards.
What is the significance of this contract within the broader context of international defense cooperation?
This contract is significant within the broader context of international defense cooperation as it directly supports a key NATO ally, the Netherlands, in maintaining the operational readiness of their AH-64 attack helicopter fleet. Foreign Military Sales (FMS) programs, like this one, are crucial tools for enhancing the interoperability and capabilities of allied forces, strengthening collective security. By providing essential components like engines, the U.S. not only supports the partner nation's defense but also reinforces strategic partnerships and promotes stability in regions of mutual interest. Such agreements often involve complex logistical and technical support, underscoring the depth of the defense relationship.
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: $35,658,137
Exercised Options: $35,658,137
Current Obligation: $35,658,137
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: W58RGZ15D0048
IDV Type: IDC
Timeline
Start Date: 2021-07-12
Current End Date: 2024-05-31
Potential End Date: 2024-05-31 12:05:00
Last Modified: 2022-03-04
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