General Electric Company awarded $34.1M contract for aircraft engine parts by Defense Logistics Agency
Contract Overview
Contract Amount: $34,127,128 ($34.1M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2010-07-30
End Date: 2013-04-30
Contract Duration: 1,005 days
Daily Burn Rate: $34.0K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: COLD SECTION MODULE
Place of Performance
Location: LYNN, ESSEX County, MASSACHUSETTS, 01905
Plain-Language Summary
Department of Defense obligated $34.1 million to GENERAL ELECTRIC COMPANY for work described as: COLD SECTION MODULE Key points: 1. Contract awarded on a firm-fixed-price basis, indicating clear cost expectations. 2. Sole-source award suggests potential lack of competition or specialized nature of the parts. 3. Contract duration of over 3 years implies a sustained need for these components. 4. Awarded to a large, established defense contractor with significant experience. 5. Parts manufactured in Massachusetts, potentially impacting regional employment. 6. NAICS code 336412 points to a specialized manufacturing sector.
Value Assessment
Rating: fair
The contract value of $34.1 million for aircraft engine parts over approximately 3 years appears to be within a reasonable range for specialized defense manufacturing. However, without specific details on the exact parts, quantities, and comparison to similar sole-source procurements, a definitive value-for-money assessment is challenging. Benchmarking against industry standards for aircraft engine components would be necessary for a more precise evaluation. The firm-fixed-price structure provides cost certainty but does not inherently guarantee the lowest possible price without competitive pressure.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the only source for a required item. The lack of competition means that the government did not benefit from potential price reductions or innovative solutions that might arise from a bidding process. This approach can lead to higher costs compared to a competitive procurement.
Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive bidding. The government relies on the contractor's pricing without the leverage of alternative offers to ensure the best value.
Public Impact
The primary beneficiaries are the U.S. military branches relying on these aircraft engine parts for operational readiness. The contract ensures the supply of critical components for aircraft maintenance and repair. Manufacturing activities are likely concentrated in Massachusetts, supporting local jobs and the regional economy. The defense industrial base benefits from sustained demand for specialized manufacturing capabilities.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price discovery and potentially increases costs for taxpayers.
- Lack of competition may reduce incentives for the contractor to innovate or offer cost savings.
- Dependence on a single supplier can create supply chain risks if the contractor faces production issues.
Positive Signals
- Award to a large, experienced contractor like General Electric suggests reliability in production and quality.
- Firm-fixed-price contract provides budget certainty for the Defense Logistics Agency.
- Sustained contract duration indicates a long-term need and commitment to supporting critical defense assets.
Sector Analysis
The aerospace and defense manufacturing sector is characterized by high technological complexity, stringent quality requirements, and significant R&D investment. General Electric is a major player in this industry, particularly in aircraft engines. This contract falls under the Aircraft Engine and Engine Parts Manufacturing (NAICS 336412) subsector. Spending in this area is critical for maintaining military aviation capabilities. Comparable spending benchmarks would involve analyzing other sole-source or competitively awarded contracts for similar engine components across different military branches.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the award to a large prime contractor like General Electric suggests that subcontracting opportunities for small businesses may exist, but these are not explicitly detailed in the provided data. The impact on the small business ecosystem would depend on the extent to which GE utilizes small business suppliers for components or services related to this contract.
Oversight & Accountability
Oversight for this contract would primarily fall under the Defense Logistics Agency (DLA) and potentially the Department of Defense's Inspector General. Mechanisms would include contract performance monitoring, quality assurance checks, and financial audits. Transparency is facilitated through contract databases like FPDS, though detailed performance metrics are often internal. The firm-fixed-price nature simplifies some aspects of financial oversight compared to cost-plus contracts.
Related Government Programs
- Aircraft Engine Maintenance and Repair
- Defense Logistics Agency Procurement
- Military Aircraft Parts Manufacturing
- Sole-Source Defense Contracts
Risk Flags
- Sole-source justification requires rigorous review.
- Potential for price escalation without competition.
- Supply chain dependency on a single manufacturer.
Tags
defense, aircraft-engine-parts, general-electric-company, defense-logistics-agency, sole-source, firm-fixed-price, massachusetts, manufacturing, naics-336412, large-contractor, long-term-contract
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $34.1 million to GENERAL ELECTRIC COMPANY. COLD SECTION MODULE
Who is the contractor on this award?
The obligated recipient is GENERAL ELECTRIC COMPANY.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $34.1 million.
What is the period of performance?
Start: 2010-07-30. End: 2013-04-30.
What is General Electric Company's track record with the Defense Logistics Agency and similar sole-source contracts?
General Electric Company has a long-standing and extensive history of contracting with the Department of Defense, including the Defense Logistics Agency. As a major defense contractor, GE frequently secures contracts for aircraft engines, parts, and related services. While this specific award is sole-source, GE has also been a recipient of numerous competitively awarded contracts. Their track record generally indicates a capacity to meet stringent military specifications and delivery schedules. However, the specifics of past performance on sole-source awards, particularly regarding pricing and efficiency compared to potential alternatives, would require a deeper dive into historical DLA and DoD contract data, focusing on similar sole-source procurements for engine components to assess if previous sole-source awards have resulted in cost efficiencies or challenges.
How does the $34.1 million contract value compare to similar aircraft engine parts procurements, especially sole-source ones?
Comparing the $34.1 million value requires context regarding the specific aircraft engine parts, quantities, and duration. Sole-source contracts inherently lack direct price competition, making external benchmarking difficult. However, industry averages for specialized aerospace components can range significantly. For high-value, complex engine modules, $34.1 million over approximately three years might be considered reasonable if it reflects advanced technology or critical, low-volume parts. Conversely, if the parts are more standardized or the quantity is lower than typical for this price point, it could indicate a premium due to the sole-source nature. A thorough analysis would involve identifying comparable sole-source awards for similar part categories within the DoD or even commercial aerospace sectors, adjusting for inflation and technological differences.
What are the primary risks associated with this sole-source award for aircraft engine parts?
The primary risk associated with this sole-source award is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government has less leverage to negotiate the lowest possible price. Another significant risk is supply chain vulnerability; reliance on a single supplier, General Electric in this case, means that any production disruptions, quality issues, or unforeseen events affecting GE could directly impact the availability of critical aircraft engine parts, potentially grounding aircraft. Furthermore, the absence of competition may reduce the incentive for the contractor to pursue cost-saving innovations or efficiencies over the contract's life.
How effective is the Defense Logistics Agency in ensuring value for money on sole-source contracts like this one?
The Defense Logistics Agency (DLA) employs several mechanisms to ensure value for money, even on sole-source contracts, though the effectiveness can vary. These include conducting market research to confirm the sole-source justification, negotiating prices based on historical data, cost analysis, and industry benchmarks, and utilizing contract clauses that incentivize performance and quality. For sole-source awards, DLA contracting officers must rigorously justify the necessity and price reasonableness. However, the inherent limitation remains the absence of direct price competition. The effectiveness hinges on the contracting officer's negotiation skills, access to accurate cost data, and the government's ability to challenge contractor pricing assumptions. Oversight from the DoD Inspector General also plays a role in identifying potential inefficiencies or overpricing.
What are the historical spending patterns for aircraft engine parts by the Defense Logistics Agency, and how does this contract fit?
The Defense Logistics Agency (DLA) consistently spends billions of dollars annually on aviation parts, including engines and their components, to support the readiness of U.S. military aircraft across all branches. Historical spending patterns show a significant portion allocated to sustainment, maintenance, and repair activities. This $34.1 million contract for specific engine parts fits within this broader pattern of sustainment spending. While the total annual DLA aviation spending is vast, individual contracts like this represent specific needs for particular aircraft platforms or engine types. Analyzing historical data would reveal trends in spending on sole-source versus competitive awards within this category, and the average contract values for similar components, providing context for the size and nature of this particular award.
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
Offers Received: 1
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 1000 WESTERN AVE, LYNN, MA, 06
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $34,127,128
Exercised Options: $34,127,128
Current Obligation: $34,127,128
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: W58RGZ09D0041
IDV Type: IDC
Timeline
Start Date: 2010-07-30
Current End Date: 2013-04-30
Potential End Date: 2013-04-30 00:00:00
Last Modified: 2012-04-18
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