DoD awards $32M for rotor turbine parts, with limited competition and fixed pricing
Contract Overview
Contract Amount: $31,968,905 ($32.0M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2011-10-12
End Date: 2015-05-13
Contract Duration: 1,309 days
Daily Burn Rate: $24.4K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: ROTOR TURBINE, AIRCR
Place of Performance
Location: LYNN, ESSEX County, MASSACHUSETTS, 01905
Plain-Language Summary
Department of Defense obligated $32.0 million to GENERAL ELECTRIC COMPANY for work described as: ROTOR TURBINE, AIRCR Key points: 1. Contract awarded on a firm fixed-price basis, providing cost certainty. 2. Limited competition suggests potential for higher pricing than a fully competed contract. 3. Contract duration of over 3 years indicates a significant need for these parts. 4. The award falls under the Aircraft Engine and Engine Parts Manufacturing NAICS code. 5. No small business set-aside was utilized for this procurement. 6. The contract was awarded by the Defense Logistics Agency, a key DoD support agency.
Value Assessment
Rating: fair
The contract's value of $31.97 million over approximately 3.6 years for aircraft engine parts appears reasonable given the specialized nature of the components. However, without direct comparable contracts for the exact same parts or detailed cost breakdowns, a precise value-for-money assessment is challenging. The firm fixed-price structure helps manage cost overruns, but the limited competition could have led to a higher initial price than if multiple vendors had bid.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
This contract was not competed on a full and open basis. The specific reason for limited competition is not detailed in the provided data, but it often stems from factors like proprietary technology, urgent needs, or a limited number of qualified sources. The lack of broad competition means that the government did not benefit from the price discovery mechanisms inherent in a larger bidding pool.
Taxpayer Impact: Limited competition can result in taxpayers paying a premium, as the government may not secure the lowest possible price when fewer vendors are involved in the bidding process.
Public Impact
The primary beneficiaries are the U.S. military branches relying on operational aircraft. The contract delivers essential rotor turbine parts for aircraft engines, ensuring fleet readiness. The geographic impact is national, supporting military operations across various theaters. Workforce implications include supporting skilled manufacturing jobs in the aerospace sector.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Limited competition may lead to higher costs for taxpayers.
- Lack of transparency in the limited competition justification.
- Potential for vendor lock-in due to specialized parts.
Positive Signals
- Firm fixed-price contract provides cost certainty.
- Award to a known entity (General Electric Company) suggests established capabilities.
- Contract supports critical defense logistics and readiness.
Sector Analysis
This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft engine components. The market for such specialized parts is often characterized by high barriers to entry due to technological complexity, stringent quality requirements, and significant R&D investment. General Electric Company is a major player in this industry. Benchmarking spending in this niche requires comparison to similar sole-source or limited-competition awards for high-value, critical aerospace components.
Small Business Impact
The data indicates that this contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned. This suggests that the primary awardee, General Electric Company, will likely fulfill the contract requirements directly or through its own supply chain, potentially limiting direct opportunities for small businesses in this specific procurement.
Oversight & Accountability
Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA) and the Defense Contract Audit Agency (DCAA), ensuring compliance with contract terms and financial accountability. The firm fixed-price nature of the contract simplifies some aspects of financial oversight compared to cost-plus contracts. Transparency is limited by the 'NOT COMPETED' status, but contract modifications and performance reports would be subject to review.
Related Government Programs
- Aircraft Engine Maintenance and Repair
- Aerospace Component Manufacturing
- Defense Logistics Support Services
- Military Aircraft Parts Procurement
Risk Flags
- Limited competition may result in higher costs.
- Lack of detailed justification for limited competition.
- Potential for sole-source dependency.
Tags
defense, department-of-defense, defense-logistics-agency, aircraft-engine-parts, rotor-turbine, not-competed, firm-fixed-price, general-electric-company, massachusetts, manufacturing, aerospace
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $32.0 million to GENERAL ELECTRIC COMPANY. ROTOR TURBINE, AIRCR
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 $32.0 million.
What is the period of performance?
Start: 2011-10-12. End: 2015-05-13.
What is the specific justification for awarding this contract on a limited competition basis?
The provided data indicates the contract was 'NOT COMPETED'. While the specific justification is not detailed, common reasons for limited competition in defense contracting include the existence of only one or a very limited number of responsible sources capable of meeting the government's requirements, urgent and compelling needs that preclude full and open competition, or specific national security concerns. For specialized aircraft engine parts, it's plausible that General Electric Company holds proprietary rights, unique manufacturing capabilities, or is the sole authorized supplier for these particular components, necessitating a limited competition award.
How does the firm fixed-price (FFP) contract type benefit the government in this scenario?
A Firm Fixed-Price (FFP) contract is advantageous for the government as it establishes a final price that is not subject to adjustment based on the contractor's cost experience in performing the work. This provides maximum price certainty and transfers most of the cost risk to the contractor. For the DoD's procurement of rotor turbine parts, an FFP contract helps in budget planning and prevents unexpected cost increases, assuming the initial price negotiated adequately reflects the scope of work and market conditions. It incentivizes the contractor to control costs efficiently to maximize profit.
What is the historical spending pattern for similar rotor turbine parts by the Defense Logistics Agency?
Analyzing historical spending patterns for similar rotor turbine parts by the Defense Logistics Agency (DLA) would require access to extensive contract databases beyond the provided data. However, the DLA is responsible for procuring a vast array of spare parts and equipment for all branches of the military. Spending on critical engine components like rotor turbines is typically substantial and recurring, driven by fleet readiness requirements and the lifecycle of aircraft. Contracts for such parts often involve long-term agreements, sometimes with limited competition due to manufacturer exclusivity or specialized production needs. A detailed analysis would involve tracking contract awards under the relevant Product Service Codes (PSCs) and NAICS codes over several fiscal years.
What are the potential risks associated with a limited competition award for critical aircraft components?
A primary risk associated with limited competition is the potential for inflated pricing, as the absence of robust competition can reduce the incentive for the contractor to offer the most competitive bid. This can lead to the government paying more than necessary. Another risk is reduced innovation and service quality, as the contractor may face less pressure to improve processes or offer superior support when they are one of the few or only options. Furthermore, it can create vendor dependency, making it difficult and costly to switch suppliers in the future if performance issues arise or if market conditions change.
Can the performance of General Electric Company on similar defense contracts provide insight into the reliability of this award?
General Electric Company (GE) is a major defense contractor with a long history of supplying complex systems, including aircraft engines and components, to the U.S. military. Their track record on similar defense contracts can offer significant insight into their capabilities, reliability, and past performance. Agencies like the DLA often rely on past performance evaluations when making award decisions, even in limited competition scenarios. While specific performance metrics for this contract are not provided, GE's overall standing in the aerospace and defense industry suggests a high likelihood of meeting technical specifications and delivery schedules. However, a thorough assessment would involve reviewing specific past performance reviews and any documented issues on prior related contracts.
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: $31,968,905
Exercised Options: $31,968,905
Current Obligation: $31,968,905
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: W58RGZ09D0041
IDV Type: IDC
Timeline
Start Date: 2011-10-12
Current End Date: 2015-05-13
Potential End Date: 2015-05-13 00:00:00
Last Modified: 2014-04-02
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