DoD's $218M F414 engine support contract awarded to General Electric, raising questions about competition
Contract Overview
Contract Amount: $218,285,359 ($218.3M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2022-01-01
End Date: 2022-08-31
Contract Duration: 242 days
Daily Burn Rate: $902.0K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: F414 DEPOT COMPONENT SUPPORT PERFORMANCE BASED LOGISTICS
Place of Performance
Location: LYNN, ESSEX County, MASSACHUSETTS, 01905
Plain-Language Summary
Department of Defense obligated $218.3 million to GENERAL ELECTRIC COMPANY for work described as: F414 DEPOT COMPONENT SUPPORT PERFORMANCE BASED LOGISTICS Key points: 1. Contract awarded on a sole-source basis, limiting potential cost savings from competition. 2. Performance-based logistics approach aims to ensure engine readiness and reduce downtime. 3. High value suggests critical importance to naval aviation readiness. 4. Lack of competition may lead to higher-than-market pricing. 5. Contract duration of 242 days is relatively short for a major component support. 6. Focus on component support indicates a strategy to maintain existing assets.
Value Assessment
Rating: questionable
The contract's value of over $218 million for component support is substantial. Without competitive bidding, it is difficult to benchmark the value for money. General Electric, as the original equipment manufacturer, likely possesses unique knowledge, but this also presents an opportunity for inflated pricing. Comparing this to similar sole-source engine component support contracts would be necessary to assess if the pricing is fair.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning only one bidder, General Electric Company, was solicited. This approach bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified for unique capabilities or urgent needs, they limit price discovery and can potentially lead to higher costs for the government.
Taxpayer Impact: The lack of competition means taxpayers may not be receiving the best possible price for these critical engine components and support services. Without competing offers, there's less pressure on the contractor to offer cost-effective solutions.
Public Impact
Naval aviation units relying on F414 engines will benefit from improved component support and potentially higher aircraft readiness. The contract ensures the availability of essential parts and maintenance for a critical aircraft engine. The primary geographic impact is likely within naval air stations and maintenance depots where these aircraft operate. This contract supports specialized technical jobs related to aircraft engine maintenance and logistics.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pressure, potentially increasing costs.
- Lack of transparency in pricing due to non-competitive nature.
- Dependence on a single supplier for critical components.
Positive Signals
- Performance-based logistics aims to ensure high readiness rates.
- General Electric's established expertise in F414 engines.
- Focus on component support can extend the life of existing assets.
Sector Analysis
This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft engine components. The market for such specialized support is often dominated by original equipment manufacturers (OEMs) like General Electric due to proprietary knowledge and design. Comparable spending benchmarks would involve analyzing other sole-source or limited-competition contracts for similar high-value engine support services across the military branches.
Small Business Impact
This contract does not appear to have a small business set-aside component. Given the sole-source nature and the specialized requirements for F414 engine support, it is unlikely that small businesses would be primary contractors. However, General Electric may engage small businesses as subcontractors for specific parts or services, though this is not explicitly detailed in the provided data.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the performance-based logistics (PBL) structure, which ties payment to achieved performance metrics. Transparency is limited due to the sole-source award, but contract modifications and performance reports would be subject to internal review and potentially Inspector General oversight if issues arise.
Related Government Programs
- F414 Engine Maintenance Contracts
- Naval Aviation Component Support
- Performance Based Logistics Contracts
- Sole Source Defense Contracts
Risk Flags
- Sole-source award
- Lack of competitive pricing
- Potential for cost overruns
- Dependence on single supplier
Tags
defense, department-of-defense, department-of-the-navy, aircraft-engine-and-engine-parts-manufacturing, general-electric-company, sole-source, performance-based-logistics, f414-engine, component-support, massachusetts, firm-fixed-price
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $218.3 million to GENERAL ELECTRIC COMPANY. F414 DEPOT COMPONENT SUPPORT PERFORMANCE BASED LOGISTICS
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 $218.3 million.
What is the period of performance?
Start: 2022-01-01. End: 2022-08-31.
What is General Electric's track record with F414 engine support contracts for the Department of Defense?
General Electric Company, as the original equipment manufacturer (OEM) for the F414 engine, has a long-standing and integral track record in supporting these powerplants. They are responsible for the design, production, and initial support of the F414, which powers several key naval aircraft, including the F/A-18E/F Super Hornet and the EA-18G Growler. Their involvement typically includes providing spare parts, depot-level maintenance, engineering support, and performance-based logistics (PBL) services. Historically, the DoD has relied on GE for sustainment of these engines, often through sole-source or limited-competition contracts due to the specialized nature of the technology and the need for OEM expertise. While this ensures technical proficiency, it also necessitates careful oversight to ensure fair pricing and value for taxpayer dollars, as demonstrated by the current contract's structure.
How does the pricing of this contract compare to similar F414 engine support contracts or industry benchmarks?
Directly comparing the pricing of this specific $218 million contract is challenging without access to detailed cost breakdowns and the specific performance metrics tied to the payment structure. However, given that this is a sole-source award to General Electric, the original equipment manufacturer, there is an inherent risk that the pricing may not reflect the most competitive market rates. Performance-based logistics contracts, while aiming for efficiency, can sometimes obscure true costs if not meticulously structured and monitored. Industry benchmarks for engine component support, especially for high-performance military jet engines, are often proprietary and vary significantly based on the scope of work, duration, and specific components covered. Without competitive bids, it's difficult to ascertain if the government is achieving optimal value. A thorough analysis would require comparing the per-unit cost of specific components or the overall cost-per-flight-hour against historical data for similar F414 support contracts or comparable engine programs, adjusted for inflation and scope.
What are the primary risks associated with this sole-source contract for F414 component support?
The primary risk associated with this sole-source contract is the potential for elevated costs due to the lack of competitive pressure. When only one supplier is solicited, there is less incentive for the contractor to offer the most cost-effective pricing, as there are no competing bids to consider. This can lead to the government paying a premium for parts and services. Another risk is vendor lock-in; the Department of the Navy becomes heavily reliant on General Electric for critical F414 components and expertise, potentially limiting flexibility in future procurement strategies. Furthermore, without robust performance metrics and oversight, there's a risk that the contractor may not achieve the desired level of performance or efficiency, impacting aircraft readiness despite the substantial investment. Ensuring transparency in cost build-ups and closely monitoring performance outcomes are crucial mitigation strategies.
How effective is the performance-based logistics (PBL) approach in ensuring F414 engine readiness under this contract?
The performance-based logistics (PBL) approach is designed to enhance the effectiveness of F414 engine support by shifting the focus from transactional parts sales to achieving specific, measurable outcomes related to engine readiness and availability. Under a PBL contract, the contractor, General Electric in this case, is incentivized through payment structures tied to meeting predefined performance metrics, such as minimizing unscheduled removals, ensuring high mission-capable rates, and reducing turnaround times for repairs. This model encourages the contractor to proactively manage the entire support chain, including inventory, maintenance, and engineering, to optimize engine performance and reduce operational disruptions for the Navy. The effectiveness hinges on the clarity and measurability of the defined metrics, the robustness of the government's oversight, and the alignment of incentives. If well-executed, PBL can lead to improved readiness, reduced lifecycle costs, and better long-term sustainment of the F414 fleet.
What is the historical spending pattern for F414 engine support by the Department of the Navy?
Historical spending patterns for F414 engine support by the Department of the Navy indicate a consistent and significant investment in maintaining the readiness of aircraft fleets utilizing these engines, such as the F/A-18E/F Super Hornet and EA-18G Growler. These expenditures typically encompass a range of activities, including the procurement of spare parts, depot-level maintenance and overhaul services, engineering support, and increasingly, performance-based logistics (PBL) contracts. Given that General Electric is the sole designer and manufacturer of the F414, a substantial portion of this historical spending has likely been directed towards GE through sole-source or limited-competition contracts. The total annual spending can fluctuate based on operational tempo, fleet size, engine reliability, and the specific sustainment strategies employed. Over the lifecycle of the F414 engine, the cumulative spending by the Navy has amounted to billions of dollars, reflecting the critical role these engines play in naval aviation capabilities.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Engine and Engine Parts Manufacturing
Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
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, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $218,285,359
Exercised Options: $218,285,359
Current Obligation: $218,285,359
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: N0038321DZN01
IDV Type: IDC
Timeline
Start Date: 2022-01-01
Current End Date: 2022-08-31
Potential End Date: 2022-08-31 00:00:00
Last Modified: 2025-04-30
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