DoD awards $42.3M for 54 AH-64 Apache helicopter engines to General Electric, bypassing competition
Contract Overview
Contract Amount: $42,315,714 ($42.3M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2021-07-07
End Date: 2024-12-31
Contract Duration: 1,273 days
Daily Burn Rate: $33.2K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: T700 ENGINE REQUIREMENT: THE PURPOSE OF THIS DELIVERY ORDER W58RGZ-21-F-0391 IS TO PROCURE FIFTY-FOUR (54) 701D AH-64 INSTALL ENGINES IN SUPPORT OF THE UAE PROGRAM, FOR CY 2023 AND 2024 DELIVERIES.
Place of Performance
Location: LYNN, ESSEX County, MASSACHUSETTS, 01905
Plain-Language Summary
Department of Defense obligated $42.3 million to GENERAL ELECTRIC COMPANY for work described as: T700 ENGINE REQUIREMENT: THE PURPOSE OF THIS DELIVERY ORDER W58RGZ-21-F-0391 IS TO PROCURE FIFTY-FOUR (54) 701D AH-64 INSTALL ENGINES IN SUPPORT OF THE UAE PROGRAM, FOR CY 2023 AND 2024 DELIVERIES. Key points: 1. Value for money is questionable due to the lack of competitive bidding. 2. Competition dynamics indicate a sole-source award, potentially leading to higher prices. 3. Risk indicators include reliance on a single supplier and potential for cost overruns without market checks. 4. Performance context is tied to supporting the UAE program with critical aircraft components. 5. Sector positioning places this within the Aircraft Engine and Engine Parts Manufacturing industry.
Value Assessment
Rating: questionable
The contract's value of $42.3 million for 54 engines lacks a clear benchmark due to its sole-source nature. Without competitive bids, it is difficult to assess if the pricing reflects fair market value. The fixed-price contract type offers some cost control, but the absence of competition raises concerns about potential overpayment compared to what could have been achieved through a bidding process.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This delivery order was not competed, indicating a sole-source award to General Electric Company. The lack of competition means there were no other bidders to compare against, and the government did not leverage the market to find the best price or terms. This approach limits the government's ability to ensure it is receiving the most advantageous offer.
Taxpayer Impact: Taxpayers may be paying a premium for these engines as the absence of competition removes the downward pressure on pricing that typically occurs in a competitive bidding environment.
Public Impact
The primary beneficiaries are the UAE program and the Department of the Army, ensuring operational readiness. Services delivered include the procurement of 54 T701D AH-64 installation engines. Geographic impact is primarily within the United States for manufacturing and delivery, with the ultimate use supporting international programs. Workforce implications are positive for General Electric's manufacturing operations and associated supply chains.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to inflated pricing.
- Sole-source awards can reduce transparency in pricing.
- Dependence on a single supplier can create supply chain vulnerabilities.
Positive Signals
- Procurement of critical components ensures program continuity.
- Firm fixed-price contract provides cost certainty.
- Award supports a known, established supplier with a track record on this equipment.
Sector Analysis
This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector (NAICS 336412). This is a specialized industry dominated by a few large players. The market for high-performance military aircraft engines is characterized by long development cycles, high R&D costs, and significant barriers to entry. Spending in this sector is often driven by defense modernization programs and foreign military sales, with contracts typically being large and long-term.
Small Business Impact
This contract does not appear to involve small business set-asides, as it was awarded directly to General Electric Company, a large prime contractor. There is no information provided regarding subcontracting plans for small businesses. The lack of a competitive process also limits opportunities for small businesses to participate as prime contractors or through subcontracting on this specific award.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Transparency is limited due to the sole-source nature of the award. Accountability measures would rely on contract performance monitoring and adherence to the firm fixed-price terms. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- AH-64 Apache Helicopter Procurement
- Aircraft Engine Manufacturing
- Foreign Military Sales
- Department of Defense Aircraft Parts
Risk Flags
- Sole-source award
- Lack of competition
- Potential for inflated pricing
- Limited transparency
Tags
defense, department-of-the-army, general-electric-company, delivery-order, not-competed, sole-source, aircraft-engine-manufacturing, ah-64-apache, firm-fixed-price, uae-program, massachusetts, fy2023
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $42.3 million to GENERAL ELECTRIC COMPANY. T700 ENGINE REQUIREMENT: THE PURPOSE OF THIS DELIVERY ORDER W58RGZ-21-F-0391 IS TO PROCURE FIFTY-FOUR (54) 701D AH-64 INSTALL ENGINES IN SUPPORT OF THE UAE PROGRAM, FOR CY 2023 AND 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 $42.3 million.
What is the period of performance?
Start: 2021-07-07. End: 2024-12-31.
What is General Electric Company's track record with supplying T701D engines for AH-64 helicopters?
General Electric Company is the original equipment manufacturer for the T701D engine, which powers the AH-64 Apache helicopter. They have a long-standing relationship with the U.S. Army and international partners for the production, maintenance, and support of these engines. Their track record is generally considered strong in terms of technical capability and production capacity for this specific engine type. This familiarity and established supply chain are often factors in sole-source or limited-competition awards for critical components where maintaining interoperability and existing support infrastructure is paramount.
How does the per-unit cost of these engines compare to similar contracts or market rates?
A direct per-unit cost comparison is challenging without access to competitive bidding data or publicly available pricing for identical engine procurements. As this was a sole-source award, the government did not have the benefit of market competition to establish a benchmark price. While the contract is firm fixed-price, which provides cost certainty, the absence of competition means the price may not reflect the lowest achievable market rate. Benchmarking would require access to historical sole-source awards for the same engine or detailed cost breakdowns, which are not readily available.
What are the primary risks associated with this sole-source award?
The primary risks associated with this sole-source award include potential overpayment due to the lack of competitive pricing pressure, and a reduced incentive for the contractor to offer the most cost-effective solution. There is also a risk of supply chain disruption if General Electric faces production issues, as there are no alternative suppliers for this specific engine. Furthermore, the absence of competition limits the government's leverage in future negotiations or contract modifications. Reliance on a single source can also impact long-term strategic sourcing and potentially stifle innovation from other market players.
How does this contract contribute to the operational effectiveness of the AH-64 Apache fleet?
This contract is crucial for maintaining the operational readiness and effectiveness of the AH-64 Apache fleet, particularly for the UAE program. By procuring 54 new T701D engines, the Department of the Army ensures that these attack helicopters have the necessary powerplants for continued flight operations, training, and potential deployment. The timely delivery of these engines prevents potential grounding of aircraft due to engine unavailability, directly supporting mission accomplishment and the overall combat capability of the Apache fleet.
What is the historical spending pattern for AH-64 Apache engines by the Department of the Army?
Historical spending patterns for AH-64 Apache engines by the Department of the Army typically involve significant, multi-year procurements and sustainment contracts, often with General Electric as the primary supplier. These contracts are usually large in value due to the complexity and cost of the engines. Spending is driven by fleet size, operational tempo, planned upgrades, and attrition rates. While specific figures fluctuate annually, the Army consistently invests substantial resources to ensure the availability of engines for its Apache fleet, often through competitive processes when feasible, but also through sole-source awards for specific configurations or urgent needs.
What is the significance of the 'Delivery Order' contract type in this context?
A 'Delivery Order' is typically issued under an existing contract or agreement, such as a Basic Ordering Agreement (BOA) or a Master Agreement. In this case, it signifies that the framework for procuring these engines (likely including terms, conditions, and potentially pre-negotiated pricing elements) was established previously. However, the 'NOT COMPETED' designation for this specific delivery order indicates that the competition requirement was waived or not applied for this particular procurement action, even if the overarching contract vehicle might have been competed initially. This means the decision to award these 54 engines to General Electric was made without a new competitive solicitation.
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: $42,315,714
Exercised Options: $42,315,714
Current Obligation: $42,315,714
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: 2021-07-07
Current End Date: 2024-12-31
Potential End Date: 2024-12-31 12:12:00
Last Modified: 2024-11-25
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