DoD's $137.5M contract for aircraft engines and spares awarded to General Electric Company shows potential value concerns
Contract Overview
Contract Amount: $436,225,977 ($436.2M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2005-03-02
End Date: 2013-06-30
Contract Duration: 3,042 days
Daily Burn Rate: $143.4K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: 200506!000803!5700!FA8104!OC-ALC/LPK !FA810405C0053 !A!N! !N! ! !20050302!20061229!137488664!137488664!001367960!N!GENERAL ELECTRIC COMPANY !ONE NEUMANN WAY !CINCINNATI !OH!45215!15000!061!39!CINCINNATI !HAMILTON !OHIO !+000057488153!N!N!000000000000!2840!GAS TURBINES AND JET ENGINES, ACFT&COMPS !A1B!AIRCRAFT ENGINES AND SPARES !000 !* !336412!E! !3! ! ! ! ! !20200930!B!D! !A! !D!N!J!1!001!N!1G!A!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!Y! ! ! !Y! ! !0001! !
Place of Performance
Location: CINCINNATI, HAMILTON County, OHIO, 45215
State: Ohio Government Spending
Plain-Language Summary
Department of Defense obligated $436.2 million to GENERAL ELECTRIC COMPANY for work described as: 200506!000803!5700!FA8104!OC-ALC/LPK !FA810405C0053 !A!N! !N! ! !20050302!20061229!137488664!137488664!001367960!N!GENERAL ELECTRIC COMPANY !ONE NEUMANN WAY !CINCINNATI !OH!45215!15000!061!39!CINCINNATI !HAMI… Key points: 1. The contract's value of $137.5 million warrants scrutiny given the duration and lack of competitive bidding. 2. Limited competition for this contract may have led to suboptimal pricing for the government. 3. The contract's extended performance period and potential for cost overruns present risk indicators. 4. Performance context is limited due to the non-competitive nature of the award. 5. This contract falls within the Defense sector, specifically for aircraft engine components. 6. The significant dollar amount suggests a critical need for advanced aircraft propulsion systems.
Value Assessment
Rating: questionable
The contract value of $137.5 million for aircraft engines and spares, awarded without competition, raises questions about value for money. Benchmarking against similar sole-source contracts for engine components is difficult without more data, but the lack of competitive pressure suggests the possibility of inflated pricing. The extended performance period also increases the risk of cost growth over time, further impacting the overall value proposition for the taxpayer.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning there was no open competition. This typically occurs when only one vendor can provide the required goods or services, or for reasons of national security. The lack of multiple bidders means the government did not benefit from price discovery through a competitive bidding process, potentially leading to higher costs.
Taxpayer Impact: Sole-source awards mean taxpayers may not be getting the best possible price, as there was no opportunity for multiple companies to bid and drive down costs through competition.
Public Impact
The primary beneficiaries are the U.S. Air Force and potentially other branches of the Department of Defense requiring these specific aircraft engines and spare parts. The services delivered include the provision of critical components for maintaining and operating military aircraft fleets. The geographic impact is national, supporting military readiness across various bases and operational theaters. Workforce implications include supporting jobs within General Electric Company and its supply chain, particularly in manufacturing and engineering roles.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to higher prices.
- Extended contract duration increases risk of cost overruns.
- Sole-source awards can limit innovation and alternative solutions.
- Dependence on a single contractor for critical components.
Positive Signals
- Ensures supply of critical aircraft engine parts.
- Supports a major defense contractor's operations.
- Addresses a specific, potentially unique, technical requirement.
Sector Analysis
The aerospace and defense sector is characterized by high technological complexity and significant government procurement. Contracts for aircraft engines and spare parts are a substantial segment within this sector, often involving long-term sustainment and high-value components. The market is typically dominated by a few large, specialized manufacturers like General Electric. Comparable spending benchmarks would involve analyzing other sole-source or competitively awarded contracts for similar engine types or component categories within the DoD.
Small Business Impact
This contract does not appear to have a small business set-aside component. As a sole-source award to a large prime contractor, it is unlikely to directly benefit small businesses through set-asides. However, General Electric may engage small businesses as subcontractors for parts or services, but the direct impact on the small business ecosystem from this specific award is not evident without further subcontracting data.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of Defense's contract management and financial oversight bodies, such as the Defense Contract Management Agency (DCMA) and potentially the Inspector General's office. Transparency is limited due to the sole-source nature. Accountability measures would focus on contract performance and delivery schedules, but the lack of competition reduces the leverage for cost accountability.
Related Government Programs
- Aircraft Engine Maintenance and Repair
- Defense Logistics Agency Procurement
- Air Force Materiel Command Contracts
- Propulsion Systems Procurement
- Aviation Component Manufacturing
Risk Flags
- Sole-source award
- Lack of competition
- Extended performance period
- Potential for cost overruns
Tags
defense, department-of-defense, general-electric-company, aircraft-engines, spare-parts, sole-source, firm-fixed-price, ohio, large-business, non-competitive
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $436.2 million to GENERAL ELECTRIC COMPANY. 200506!000803!5700!FA8104!OC-ALC/LPK !FA810405C0053 !A!N! !N! ! !20050302!20061229!137488664!137488664!001367960!N!GENERAL ELECTRIC COMPANY !ONE NEUMANN WAY !CINCINNATI !OH!45215!15000!061!39!CINCINNATI !HAMILTON !OHIO !+000057488153!N!N!000000000000!2840!GAS TURBINES AND JET ENGINES, ACFT&COMPS !A1B!AIRCRAFT ENGINES AND SPARES !000 !* !336412!E! !3! ! ! ! ! !20200
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 Contract Management Agency).
What is the total obligated amount?
The obligated amount is $436.2 million.
What is the period of performance?
Start: 2005-03-02. End: 2013-06-30.
What is the historical spending pattern for this specific contract vehicle or similar sole-source awards to General Electric for aircraft engines?
Historical spending data for this specific contract (FA810405C0053) indicates a total value of $137,488,664, with an obligated amount of $137,488,664. The contract was awarded in 2005 and completed in 2013. Analyzing similar sole-source awards to General Electric for aircraft engines would require a broader search across federal procurement databases. However, sole-source awards for complex defense systems like engines are not uncommon, often justified by proprietary technology or unique capabilities. The pattern for such awards typically involves significant dollar values and long performance periods, reflecting the lifecycle costs of advanced aerospace components. Without access to a comprehensive database of all sole-source awards and their justifications, a precise historical spending pattern comparison is challenging, but the trend is generally towards substantial, long-term commitments for critical defense assets.
How does the per-unit cost of the engine components under this contract compare to market rates or other government contracts?
Determining the per-unit cost for engine components under this contract is not feasible with the provided data. The contract value is a total amount for a range of parts and potentially services over several years, and specific unit pricing is not detailed. Furthermore, as a sole-source award, there is no direct competitive benchmark to establish 'market rates' in the traditional sense. General Electric is a primary manufacturer of many military aircraft engines, and their pricing is often based on internal cost structures and negotiated terms rather than open market competition. To perform a meaningful comparison, one would need detailed specifications of the parts procured, their quantities, and pricing data from other contracts (ideally competitively awarded) for identical or highly similar components, which is not available in this summary.
What are the specific risks associated with General Electric's performance on this contract, given its sole-source nature?
The primary risk associated with General Electric's performance on this sole-source contract is the potential for complacency and reduced incentive to optimize costs or delivery schedules, as there is no competitive pressure. While GE is a reputable contractor, the lack of competition means the government has less leverage to push for efficiencies. Other risks include potential supply chain disruptions affecting GE's ability to deliver parts, technical issues arising with the engines or components that could lead to delays or increased costs, and the possibility of cost overruns if initial estimates were inaccurate or unforeseen issues arise during the contract's extended performance period. The government's reliance on a single supplier for critical components also poses a strategic risk if GE's operational status or business priorities change.
What was the justification for awarding this contract on a sole-source basis instead of through full and open competition?
The provided data indicates the contract was 'NOT COMPETED'. While the specific justification is not detailed, common reasons for sole-source awards in the defense sector include: proprietary technology where only one company possesses the necessary intellectual property or manufacturing capability; unique technical requirements that only one contractor can meet; urgent and compelling needs where the time required for competition would be detrimental to national security; or when the value of the contract is below the threshold requiring full competition (though this contract's value likely exceeds such thresholds). For aircraft engines and critical components, it is often the case that only the original equipment manufacturer (OEM), like General Electric, has the design data, specialized tooling, and expertise to provide the required parts and support.
How does this contract's value and duration compare to other major aircraft engine procurements by the DoD?
This contract, valued at approximately $137.5 million and spanning over 8 years (from March 2005 to June 2013, including modifications), represents a significant but not extraordinary expenditure for aircraft engine components within the Department of Defense. Major aircraft engine procurements, especially for new platforms or fleet-wide upgrades, can easily run into billions of dollars and span decades. For instance, contracts for the engines of fighter jets like the F-35 or bombers like the B-21 involve vastly larger sums and longer sustainment periods. This particular contract appears to be for sustainment or specific component support rather than a full engine program. Its duration is substantial, reflecting the long service life of military aircraft, but its total value is moderate compared to the largest DoD aerospace 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: ONE NEUMANN WAY, CINCINNATI, OH, 90
Business Categories: Category Business, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Contract Characteristics
Cost or Pricing Data: YES
Timeline
Start Date: 2005-03-02
Current End Date: 2013-06-30
Potential End Date: 2013-06-30 00:00:00
Last Modified: 2012-08-03
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