DoD's $19.4M turbine nozzle segment contract awarded to General Electric Company without competition

Contract Overview

Contract Amount: $19,440,133 ($19.4M)

Contractor: General Electric Company (INC)

Awarding Agency: Department of Defense

Start Date: 2008-09-23

End Date: 2010-07-31

Contract Duration: 676 days

Daily Burn Rate: $28.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE

Sector: Defense

Official Description: NOZZLE SEGMENT TURBINE

Place of Performance

Location: CINCINNATI, HAMILTON County, OHIO, 45215

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $19.4 million to GENERAL ELECTRIC COMPANY (INC) for work described as: NOZZLE SEGMENT TURBINE Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. The fixed-price contract type offers some cost certainty but doesn't mitigate the lack of competition. 3. Performance period spans over 676 days, indicating a significant duration for a sole-source award. 4. The contract falls under Aircraft Engine and Engine Parts Manufacturing, a critical defense sector. 5. No indication of small business participation or set-aside, suggesting limited broader economic impact. 6. The award was a delivery order, implying it's part of a larger, potentially pre-existing agreement.

Value Assessment

Rating: questionable

Benchmarking the value of this specific turbine nozzle segment is challenging without comparable sole-source awards or detailed cost breakdowns. The lack of competition inherently limits the ability to assess if the fixed price represents fair market value. Given the absence of competitive bids, there's a heightened risk that the price may not be optimized, potentially leading to a lower value for money compared to a competed procurement.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded using a sole-source justification, meaning it was not competed. The Department of Defense likely determined that only General Electric Company could provide the required turbine nozzle segments, possibly due to proprietary technology, existing system integration, or unique manufacturing capabilities. The absence of multiple bidders means there was no direct price negotiation driven by market forces.

Taxpayer Impact: Taxpayers may have paid a premium due to the lack of competitive pressure. Without competing the award, the government missed an opportunity to secure potentially lower prices through bidding.

Public Impact

The primary beneficiary is the Department of Defense, ensuring the availability of critical engine components for aircraft. Services delivered include the supply of specialized turbine nozzle segments essential for aircraft engine functionality. The geographic impact is primarily within Ohio, where General Electric Company's facility is located. Workforce implications are likely concentrated within General Electric's manufacturing and engineering divisions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced value for taxpayer dollars.
Sole-source award limits transparency in the pricing structure and justification for the selected vendor.
Absence of small business involvement means missed opportunities for economic inclusion and broader supplier engagement.

Positive Signals

Fixed-price contract type provides some cost predictability for the government.
Award to a known entity (General Electric) suggests a degree of confidence in their capability to deliver.
The contract addresses a specific, critical component for defense aviation, ensuring operational readiness.

Sector Analysis

The aerospace and defense manufacturing sector is characterized by high barriers to entry, significant R&D investment, and often long-standing relationships between prime contractors and the government. Aircraft engine components, like turbine nozzle segments, are highly specialized and require advanced manufacturing processes. Spending in this area is critical for maintaining military readiness. Comparable spending benchmarks are difficult to establish without knowing the specific engine model and technical requirements, but large engine manufacturers like GE are dominant players in this market.

Small Business Impact

This contract does not appear to have a small business set-aside. The award to General Electric Company, a large prime contractor, suggests that subcontracting opportunities might exist within their supply chain. However, without specific subcontracting plans mandated or reported, the direct impact on the small business ecosystem is likely minimal for this particular award.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and procurement regulations. Accountability measures are inherent in the fixed-price structure, though the lack of competition limits the government's leverage in price negotiations. Transparency is reduced due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Engine Manufacturing
Defense Procurement
Sole-Source Contracts
Turbine Components

Risk Flags

Sole-source award lacks competitive justification.
Potential for non-optimal pricing due to lack of competition.
Limited transparency in cost and pricing structure.
No indication of small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $19.4 million to GENERAL ELECTRIC COMPANY (INC). NOZZLE SEGMENT TURBINE

Who is the contractor on this award?

The obligated recipient is GENERAL ELECTRIC COMPANY (INC).

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $19.4 million.

What is the period of performance?

Start: 2008-09-23. End: 2010-07-31.

What is the specific justification provided for awarding this contract on a sole-source basis to General Electric Company?

The provided data indicates the contract was 'NOT COMPETED'. Typically, sole-source awards are justified under specific circumstances outlined in federal acquisition regulations (FAR). For defense contracts, common justifications include: (1) only one responsible source can provide the supplies or services; (2) a national emergency requires the services to be procured from that source; or (3) the agency expressly authorizes the acquisition from a sole source. In the context of specialized aircraft engine parts like turbine nozzle segments, the justification often centers on proprietary technology, unique manufacturing capabilities, or the need for compatibility with existing, fielded aircraft systems where only the original equipment manufacturer (OEM) can provide the necessary parts without compromising performance or safety. Without the specific justification document, it's presumed that GE was the only viable source.

How does the $19.4 million contract value compare to historical spending on similar turbine nozzle segments by the Department of Defense?

Directly comparing the $19.4 million value to historical spending on 'similar' turbine nozzle segments is challenging without more granular data. The term 'similar' can encompass variations in material, design complexity, performance specifications, and the specific aircraft engine model. Furthermore, this data point represents a single delivery order with a defined performance period (2008-2010). To establish a meaningful comparison, one would need to analyze: (1) the specific part number and its technical requirements; (2) the quantity of units procured under this order; (3) the price per unit; (4) whether previous procurements of the same part were competed or sole-sourced; and (5) the inflation-adjusted costs of comparable parts over time. Given this is a sole-source award, a direct price-to-price comparison with competitively awarded contracts for the same or highly similar items would be the most insightful, but such data is not readily available here.

What are the potential risks associated with awarding a fixed-price contract on a sole-source basis for critical defense components?

Awarding a fixed-price contract on a sole-source basis for critical defense components presents several risks. Firstly, the primary risk is financial: without competition, the government loses the primary mechanism for ensuring the best possible price. The contractor may set a price that includes a higher profit margin than would be achievable in a competitive environment. Secondly, there's a risk related to innovation and alternative solutions; a sole-source award discourages other potential suppliers from developing competing technologies or more cost-effective manufacturing methods. Thirdly, dependency risk arises, as the government becomes reliant on a single supplier for critical parts, potentially leading to supply chain vulnerabilities if that supplier faces production issues or business disruptions. While fixed-price offers cost certainty, the lack of competition means this certainty might be at a higher, non-optimized cost level.

What is the significance of the 'Aircraft Engine and Engine Parts Manufacturing' North American Industry Classification System (NAICS) code (336412) in the context of this contract?

The NAICS code 336412, 'Aircraft Engine and Engine Parts Manufacturing,' signifies that this contract falls within a highly specialized and technologically advanced segment of the defense industrial base. Companies operating under this code are involved in the design, development, and production of complex components for aircraft propulsion systems. This sector is characterized by stringent quality control, high research and development costs, and significant intellectual property. For the Department of Defense, securing reliable access to parts manufactured under this code is crucial for maintaining the operational readiness and technological superiority of its air fleet. Contracts within this NAICS code often involve long lead times, intricate supply chains, and a limited number of highly capable manufacturers, which can influence procurement strategies, including the prevalence of sole-source awards.

Given the contract duration of 676 days, what are the implications for long-term sustainment and potential obsolescence of the turbine nozzle segments?

A contract duration of 676 days (approximately 22 months) for turbine nozzle segments suggests a need for a consistent supply over a significant period, likely tied to the operational tempo or maintenance schedules of specific aircraft platforms. The implications for long-term sustainment depend on several factors. Firstly, the technology's lifecycle: are these components part of a legacy system, or are they for a currently produced aircraft? If they are for older platforms, obsolescence management becomes a concern, and the government might need to secure long-term supply agreements or explore technology refresh options. Secondly, the contract's end date (July 2010) means that planning for sustainment beyond this period would have been necessary even then. The government would need to consider whether to re-compete the requirement, extend the sole-source award if justified, or source alternative parts. The duration itself doesn't inherently create obsolescence but highlights the need for proactive lifecycle management by the procuring agency.

What does the 'Delivery Order' (aw) status imply about the nature of this contract and its relationship to other potential agreements?

The 'Delivery Order' (aw) status indicates that this contract is not a standalone, fully funded agreement for the entire $19.4 million. Instead, it is likely a task order issued under a broader, pre-existing contract vehicle, such as a Basic Ordering Agreement (BOA), Indefinite Delivery/Indefinite Quantity (IDIQ) contract, or a requirements contract. These overarching contract vehicles establish terms and conditions, pricing structures, and potentially maximum quantities or values, but specific orders are placed as needed. The 'Delivery Order' signifies a specific request for a defined quantity of goods (turbine nozzle segments) to be delivered by a certain date, funded against the ceiling of the parent contract. This approach allows for flexibility and responsiveness to the agency's evolving needs, but it also means that the $19.4 million represents only a portion of the potential total value under the parent agreement.

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: FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1 NEUMANN WAY, CINCINNATI, OH, 45215

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $19,440,133

Exercised Options: $19,440,133

Current Obligation: $19,440,133

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: F3460199D2000

IDV Type: IDC

Timeline