Navy awards $698.8M for EA-18G aircraft engines, a sole-source procurement
Contract Overview
Contract Amount: $698,753,369 ($698.8M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2017-03-29
End Date: 2020-12-31
Contract Duration: 1,373 days
Daily Burn Rate: $508.9K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: USN F414 ENGINES: EA-18G
Place of Performance
Location: LYNN, ESSEX County, MASSACHUSETTS, 01905
Plain-Language Summary
Department of Defense obligated $698.8 million to GENERAL ELECTRIC COMPANY for work described as: USN F414 ENGINES: EA-18G Key points: 1. The contract value represents a significant investment in critical aviation components. 2. Sole-source procurement raises questions about potential price inflation and limited market engagement. 3. The duration of the contract suggests a long-term need for these specific engines. 4. Fixed-price contracts aim to transfer some cost risk to the contractor. 5. The absence of small business participation warrants further investigation into subcontracting opportunities.
Value Assessment
Rating: fair
Benchmarking the value of this contract is challenging due to its sole-source nature. Without competitive bids, it's difficult to ascertain if the $698.8 million represents a fair market price. The contract is for aircraft engines, a high-value, specialized item. Further analysis would require comparing pricing for similar engine models or previous procurements of the same engine type, adjusted for inflation and scope changes. The firm fixed-price structure provides some cost certainty but doesn't inherently guarantee value for money in a non-competitive scenario.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only one vendor, General Electric Company, was solicited. This approach is typically justified when a unique capability or proprietary technology is required, or in cases of urgent need where competition is not feasible. The lack of competition means there was no opportunity for other manufacturers to bid, potentially limiting price discovery and innovation. This procurement strategy bypasses the standard competitive processes designed to ensure the government receives the best possible pricing and terms.
Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without competing offers, the government has less leverage to negotiate lower prices, potentially leading to higher overall expenditure for these essential aircraft engines.
Public Impact
The U.S. Navy benefits from the continued availability of critical engines for its EA-18G Growler aircraft. This contract ensures the operational readiness of a key electronic warfare platform. The procurement supports advanced aerospace manufacturing capabilities within the United States. The contract has implications for the specialized workforce involved in engine production and maintenance.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits price competition and potentially increases costs for taxpayers.
- Lack of transparency in the sole-source justification process.
- No indication of small business participation or subcontracting goals.
- Long contract duration may obscure opportunities for more cost-effective solutions in the future.
Positive Signals
- Firm fixed-price contract provides cost certainty for the government.
- Procurement ensures continued operational capability for a critical defense asset.
- Award to a known, established manufacturer suggests reliability and expertise.
Sector Analysis
The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant R&D investment. Aircraft engine manufacturing is a highly specialized segment within this sector, dominated by a few major global players. The EA-18G Growler is a vital electronic warfare aircraft for the U.S. Navy, and its engines are critical components. Spending in this area is often driven by specific platform requirements and national security needs, leading to specialized procurements that may not always align with broad market competition benchmarks.
Small Business Impact
This contract does not appear to have a small business set-aside component, as indicated by 'sb: false'. Furthermore, the sole-source nature of the award limits the typical avenues for small business subcontracting that might arise in a competitive environment. While General Electric Company may engage small businesses as subcontractors, the initial contract award does not prioritize or mandate such participation. This could mean missed opportunities for small businesses to contribute to this significant defense procurement and potentially limit their access to this segment of the defense industrial base.
Oversight & Accountability
Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. The firm fixed-price nature of the contract provides a degree of financial oversight by establishing a ceiling cost. Transparency regarding the justification for the sole-source award and the negotiation process would be key areas for scrutiny. Inspector General reports related to defense procurements could also provide insights into the efficiency and effectiveness of this spending, although specific details on this contract might not be publicly detailed unless issues arise.
Related Government Programs
- EA-18G Growler Aircraft Procurement
- Naval Aviation Engine Maintenance and Support
- Defense Industrial Base Manufacturing
- Aerospace Component Supply Contracts
Risk Flags
- Sole-source procurement
- Lack of competition
- Potential for price inflation
- No small business set-aside
Tags
defense, department-of-the-navy, aircraft-engine-manufacturing, sole-source, definitive-contract, firm-fixed-price, massachusetts, large-contract, engines, ea-18g, general-electric
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $698.8 million to GENERAL ELECTRIC COMPANY. USN F414 ENGINES: EA-18G
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 Navy).
What is the total obligated amount?
The obligated amount is $698.8 million.
What is the period of performance?
Start: 2017-03-29. End: 2020-12-31.
What is the historical spending trend for EA-18G engines?
Historical spending data for EA-18G engines prior to this $698.8 million award would provide crucial context. Analyzing previous contracts for the same engine type, including their values, durations, and competitive nature, can reveal trends in pricing and procurement strategies. For instance, if previous awards were also sole-source and at similar price points (adjusted for inflation), it might indicate a consistent, albeit non-competitive, approach. Conversely, if prior procurements were competed or significantly cheaper, this current award would warrant closer examination for potential cost increases or justification for the sole-source approach. Without specific historical data, it's difficult to definitively assess if this $698.8 million represents an escalation or a standard cost for these specialized components.
What specific justification was provided for the sole-source award?
The justification for a sole-source award is critical for understanding why competitive bidding was bypassed. Typically, justifications cite reasons such as unique technical capabilities, proprietary technology, urgent and compelling needs, or the unavailability of alternatives. For General Electric's F414 engines used in the EA-18G, the justification likely centers on the specialized nature of the engine and its integration with the aircraft platform, potentially arguing that only GE can provide the required performance and support. A thorough review of the official justification document (e.g., a Justification and Approval or J&A) would detail these reasons and assess their validity. This document is essential for determining if the sole-source award was appropriate and served the government's best interests.
How does the firm fixed-price (FFP) structure impact cost control in this sole-source contract?
A Firm Fixed Price (FFP) contract aims to provide cost certainty by obligating the contractor (General Electric) to a set price regardless of their actual costs. This structure shifts the risk of cost overruns to the contractor. For the government, this means the total expenditure is known upfront, which is beneficial for budgeting. However, in a sole-source scenario, the FFP price itself might be higher than it would be under competition. While the government knows the total cost, the FFP doesn't guarantee that the price negotiated was the lowest possible. The effectiveness of FFP in controlling costs here is thus dependent on the negotiation leverage the government had during the sole-source procurement process, which is inherently limited compared to a competitive bid.
What are the performance metrics or key performance indicators (KPIs) associated with these engines?
Performance metrics and Key Performance Indicators (KPIs) for aircraft engines typically include reliability rates (e.g., Mean Time Between Failures - MTBF), thrust output, fuel efficiency, durability (lifespan before overhaul), and compliance with stringent environmental and safety standards. For the F414 engines powering the EA-18G, the Navy would have specific requirements related to these parameters to ensure mission effectiveness and operational readiness. While the contract value and duration are known, the specific performance targets and how they are measured and verified are usually detailed in the contract's Statement of Work (SOW) or Performance Work Statement (PWS). Understanding these KPIs is crucial for assessing the true value and effectiveness of the procurement beyond just the dollar amount.
Are there any known issues or past performance concerns with General Electric's F414 engines or the contractor?
Assessing General Electric's past performance regarding the F414 engines and similar defense contracts is vital. While the contract was awarded, it doesn't preclude potential issues. Information regarding engine reliability, delivery timeliness, quality control, and responsiveness to issues in previous contracts would inform the risk assessment. Publicly available data, contractor performance assessment reports (CPARS), or Inspector General reports might contain relevant details. If there have been significant issues in the past, such as premature failures, production delays, or cost overruns on previous F414 contracts or comparable engine programs, it could indicate a higher risk for this current award, despite the sole-source nature.
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, 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: $711,283,965
Exercised Options: $698,753,369
Current Obligation: $698,753,369
Actual Outlays: $99,222,244
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Timeline
Start Date: 2017-03-29
Current End Date: 2020-12-31
Potential End Date: 2020-12-31 00:00:00
Last Modified: 2022-09-14
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