DoD's $78M aircraft engine contract to General Electric raises value and competition concerns
Contract Overview
Contract Amount: $78,016,264 ($78.0M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2022-09-30
End Date: 2026-04-30
Contract Duration: 1,308 days
Daily Burn Rate: $59.6K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: PACER PHANTOM
Place of Performance
Location: ARKANSAS CITY, COWLEY County, KANSAS, 67005
State: Kansas Government Spending
Plain-Language Summary
Department of Defense obligated $78.0 million to GENERAL ELECTRIC COMPANY for work described as: PACER PHANTOM Key points: 1. The contract's value proposition is unclear due to a lack of competitive bidding. 2. Sole-source awards can lead to inflated pricing and reduced innovation. 3. The long duration of the contract presents potential risks for cost overruns. 4. Performance context is limited without comparison to similar, competitively sourced contracts. 5. This contract falls within the critical Defense Logistics Agency's aircraft parts manufacturing sector. 6. The absence of small business participation is noted.
Value Assessment
Rating: questionable
Benchmarking the value of this $78 million contract is challenging due to its sole-source nature. Without competitive bids, it's difficult to ascertain if the pricing reflects fair market value or if taxpayers are receiving optimal value for money. The fixed-price nature offers some cost certainty, but the lack of competition prevents a robust assessment against industry benchmarks or alternative solutions. Further analysis would require access to internal cost data or comparable sole-source awards.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach bypasses the standard procurement process designed to foster competition and identify the best value. The lack of bidders suggests either a unique capability held by General Electric or a potential limitation in the agency's market research. Consequently, the government may not have secured the most advantageous terms possible.
Taxpayer Impact: Sole-source awards limit price discovery and can result in higher costs for taxpayers compared to competitively bid contracts. This reduces the incentive for contractors to offer their best pricing.
Public Impact
The primary beneficiaries are the Department of Defense, ensuring the continued operation of aircraft requiring these specific engines. Services delivered include the manufacturing and supply of aircraft engine and engine parts. The geographic impact is primarily within Kansas, where the contractor is located. Workforce implications include sustained employment for skilled labor at General Electric's facilities.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to higher prices.
- Long contract duration increases risk of cost escalation.
- Absence of small business participation limits broader economic impact.
Positive Signals
- Award to a known, established contractor with expertise in aircraft engines.
- Fixed-price contract type provides some cost predictability.
- Contract ensures critical operational readiness for military aircraft.
Sector Analysis
This contract operates within the aerospace and defense manufacturing sector, specifically focusing on aircraft engines and parts. This is a highly specialized and capital-intensive industry dominated by a few major players. The market size for such components is substantial, driven by global defense spending and commercial aviation needs. This contract represents a significant portion of spending within this niche, supporting critical military aviation capabilities.
Small Business Impact
This contract does not appear to include a small business set-aside, nor is there an indication of significant subcontracting opportunities for small businesses. The sole-source nature further limits the potential for small business involvement. This could mean missed opportunities to foster innovation and economic growth within the small business ecosystem that supports the defense industrial base.
Oversight & Accountability
Oversight for this contract would typically fall under the Department of Defense's contracting and financial management regulations. Accountability measures are inherent in the fixed-price contract type, which shifts some risk to the contractor. Transparency is limited due to the sole-source award, making public scrutiny of the pricing and justification more difficult. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.
Related Government Programs
- Aircraft Maintenance and Repair
- Defense Procurement
- Aerospace Manufacturing
- Military Engine Support
Risk Flags
- Sole-source award lacks competitive justification.
- Potential for inflated pricing due to lack of competition.
- Long contract duration increases cost escalation risk.
- Limited transparency on value for money.
- No apparent small business participation.
Tags
defense, department-of-defense, defense-logistics-agency, aircraft-engine-parts, manufacturing, sole-source, fixed-price, kansas, large-contract, non-competed
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $78.0 million to GENERAL ELECTRIC COMPANY. PACER PHANTOM
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 $78.0 million.
What is the period of performance?
Start: 2022-09-30. End: 2026-04-30.
What is General Electric's track record with similar sole-source defense contracts?
General Electric has a long history of supplying aircraft engines and components to the U.S. military. While specific data on all sole-source contracts is not publicly itemized, the company is a primary contractor for many critical defense platforms. Their track record generally indicates a capacity to deliver complex systems. However, the frequency and justification of sole-source awards to GE, or any major defense contractor, warrant scrutiny to ensure fair pricing and competitive opportunities are not unduly bypassed. Analyzing past sole-source awards for similar engine types or components could provide context on pricing trends and justification validity.
How does the pricing of this contract compare to industry benchmarks for similar aircraft engine parts?
Direct comparison of pricing is difficult without access to detailed cost breakdowns and specific part numbers, especially given the sole-source nature of this award. Industry benchmarks for aircraft engine parts vary widely based on complexity, materials, and volume. However, sole-source awards are inherently less likely to reflect the most competitive market rates. If this contract were competed, it is probable that multiple vendors would offer different pricing structures, potentially leading to a lower overall cost for the government. The absence of competitive bids means the government is relying on GE's proposed pricing without independent market validation.
What are the primary risks associated with a sole-source award of this magnitude and duration?
The primary risks associated with a sole-source award of this magnitude ($78 million) and duration (ending April 2026) include potential overpricing, reduced incentive for innovation, and vendor lock-in. Without competition, General Electric may have less pressure to offer the most cost-effective solutions or to invest in process improvements that could lower costs. The long duration increases the risk of unforeseen cost increases due to inflation, material price fluctuations, or changes in technology, which may not be adequately captured in the fixed-price agreement if not structured carefully. Furthermore, the government becomes heavily reliant on a single supplier for critical components, potentially impacting supply chain resilience.
What is the historical spending pattern for aircraft engine and engine parts manufacturing by the Department of Defense?
The Department of Defense consistently allocates significant funding towards aircraft engine and engine parts manufacturing, reflecting the critical role of air power in national defense. Historical spending data reveals a substantial and ongoing investment in maintaining and upgrading military aircraft fleets. This spending is often concentrated among a few large, specialized aerospace and defense contractors. While specific figures fluctuate annually based on modernization programs and operational tempo, the overall trend indicates a sustained, high-value commitment to this sector. Analyzing past spending patterns can highlight trends in contract types (competitive vs. sole-source) and identify periods of increased or decreased investment.
Are there any performance metrics or key performance indicators (KPIs) associated with this contract?
The provided data does not specify the performance metrics or Key Performance Indicators (KPIs) associated with this contract. Typically, defense contracts, especially those for critical components like aircraft engines, would include detailed specifications regarding quality, delivery timelines, reliability, and technical performance. The fixed-price nature suggests that meeting these defined specifications is a primary requirement. However, without explicit details on the KPIs, it is difficult to assess the contractor's performance obligations and the government's ability to enforce them effectively. Further review of the contract document itself would be necessary to ascertain these details.
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
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Address: 1 NEUMANN WAY, CINCINNATI, OH, 45215
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $78,016,264
Exercised Options: $78,016,264
Current Obligation: $78,016,264
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: SPE4AX16D9408
IDV Type: IDC
Timeline
Start Date: 2022-09-30
Current End Date: 2026-04-30
Potential End Date: 2026-04-30 00:00:00
Last Modified: 2025-03-07
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