DoD awards $250M+ for aircraft engine parts, with limited competition and a firm fixed price contract
Contract Overview
Contract Amount: $250,159,471 ($250.2M)
Contractor: General Electric Company
Awarding Agency: Department of Defense
Start Date: 2023-09-30
End Date: 2025-09-30
Contract Duration: 731 days
Daily Burn Rate: $342.2K/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 $250.2 million to GENERAL ELECTRIC COMPANY for work described as: PACER PHANTOM Key points: 1. Contract awarded to General Electric Company for aircraft engine parts. 2. The contract has a duration of 731 days, ending September 30, 2025. 3. The contract type is Firm Fixed Price, indicating price certainty. 4. The award was not competed, raising questions about potential value. 5. The North American Industry Classification System (NAICS) code is 336412, for Aircraft Engine and Engine Parts Manufacturing. 6. The contract was awarded by the Defense Logistics Agency. 7. The contract is for delivery orders, suggesting ongoing needs. 8. The contract is not a small business set-aside.
Value Assessment
Rating: questionable
Benchmarking the value of this $250M+ contract is challenging without specific details on the engine parts and their criticality. However, the lack of competition suggests that the government may not have secured the most competitive pricing. The firm fixed price structure provides cost certainty but doesn't inherently guarantee value for money if the initial price was not rigorously benchmarked against market rates or alternative suppliers. Further analysis would require comparing the unit prices of the specific parts to industry standards and historical pricing for similar components.
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 is typically used when only one vendor can provide the required goods or services, often due to proprietary technology, unique capabilities, or urgent needs where competition is not feasible. The lack of competition limits the government's ability to leverage market forces to drive down prices and potentially explore innovative solutions from a wider range of suppliers.
Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government may not benefit from competitive bidding. This can result in paying a premium for goods or services that might be available at a lower price through a competitive process.
Public Impact
The Department of Defense benefits from the continued supply of critical aircraft engine parts, ensuring operational readiness. The services delivered are the manufacturing and supply of aircraft engine and engine parts. The geographic impact is primarily tied to the contractor's facilities, with potential implications for the supply chain within Kansas. Workforce implications include employment at General Electric Company's facilities involved in manufacturing these parts.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition may lead to higher prices for taxpayers.
- Sole-source awards can limit innovation by excluding potential new entrants.
- Dependence on a single supplier can create supply chain risks.
- Contract duration of over two years requires ongoing monitoring for performance and cost.
Positive Signals
- Firm Fixed Price contract provides cost certainty for the government.
- Award to a known contractor (General Electric) suggests established capabilities.
- Contract supports critical defense logistics and operational readiness.
Sector Analysis
The Aircraft Engine and Engine Parts Manufacturing sector (NAICS 336412) is a highly specialized and capital-intensive industry. It is characterized by high barriers to entry due to complex technology, stringent quality control requirements, and significant research and development investments. Major players like General Electric dominate the market, often holding proprietary designs and certifications. This contract fits within the defense industrial base, supplying essential components for military aircraft, a segment where specialized manufacturing capabilities are paramount and often concentrated among a few key providers.
Small Business Impact
This contract was not a small business set-aside, and there is no indication of subcontracting requirements for small businesses within the provided data. The award to a large prime contractor like General Electric suggests that the primary focus is on established capabilities and production capacity rather than fostering small business participation through this specific award. Further investigation into subcontracting plans would be necessary to assess any indirect impact on the small business ecosystem.
Oversight & Accountability
Oversight for this contract would typically fall under the purview of the Defense Contract Management Agency (DCMA) and the Department of Defense's Inspector General. Mechanisms would include performance monitoring, quality assurance checks, and financial audits to ensure compliance with contract terms and prevent fraud, waste, and abuse. Transparency is facilitated through contract databases, but the specifics of the sole-source justification and pricing negotiations would require deeper access to contract files.
Related Government Programs
- Aircraft Engine Manufacturing
- Defense Logistics Support
- Military Aircraft Maintenance
- Propulsion Systems Procurement
Risk Flags
- Sole-source award
- Lack of competition
- Potential for price inflation
- Supply chain dependency
Tags
defense, department-of-defense, general-electric-company, aircraft-engine-parts, manufacturing, firm-fixed-price, sole-source, defense-logistics-agency, delivery-order, kansas, naics-336412
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $250.2 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 $250.2 million.
What is the period of performance?
Start: 2023-09-30. End: 2025-09-30.
What is the historical spending pattern for aircraft engine parts from General Electric Company to the Department of Defense?
Analyzing historical spending patterns for aircraft engine parts from General Electric Company to the Department of Defense requires access to comprehensive contract databases beyond the scope of this single award. However, General Electric is a major, long-standing supplier to the DoD for aircraft engines and related components across various platforms. Past spending would likely show significant, recurring investments in engine maintenance, repair, and overhaul (MRO) services, as well as the procurement of new engines and spare parts. The total value of these contracts over time would be in the billions of dollars, reflecting the high cost and critical nature of aviation propulsion systems for military operations. Trends might also indicate shifts in technology, platform upgrades, or changes in operational tempo influencing demand for specific parts.
How does the firm fixed price (FFP) structure compare to other contract types for similar defense procurements?
The Firm Fixed Price (FFP) contract structure is common in defense procurements, especially for well-defined goods like manufactured parts. It offers the government the highest degree of cost certainty, as the contractor assumes the risk of cost overruns. This contrasts with Cost-Plus contracts (e.g., Cost-Plus-Fixed-Fee or Cost-Plus-Incentive-Fee), where the government bears more of the cost risk but may achieve greater flexibility or access to cutting-edge technology. For standard, high-volume production items like aircraft engine parts, FFP is often preferred to control budgets. However, if the initial price is not accurately estimated or if unforeseen issues arise, the contractor may realize higher profit margins, potentially reducing the perceived 'value for money' compared to a well-negotiated incentive-based contract.
What are the potential risks associated with a sole-source award for critical defense components?
Sole-source awards for critical defense components carry several significant risks. Firstly, the lack of competition can lead to inflated prices, as the government does not benefit from market-driven price discovery. Secondly, it can foster complacency in the contractor, potentially reducing incentives for innovation, efficiency, or proactive quality improvements. Thirdly, it creates a single point of failure in the supply chain; if the sole-source provider experiences production issues, quality problems, or financial instability, the defense mission could be severely jeopardized. This dependence also limits the government's leverage in negotiations and contract management. Mitigating these risks often involves extensive pre-award price analysis, robust oversight, and potentially developing alternative sources over the long term.
What is the typical profit margin for contractors in the aircraft engine parts manufacturing sector for government contracts?
Determining the typical profit margin for contractors in the aircraft engine parts manufacturing sector for government contracts is complex and varies significantly based on factors like contract type, specific components, competition level, and the contractor's overhead structure. Generally, profit margins on defense contracts are subject to oversight and are often negotiated within established guidelines. For Firm Fixed Price (FFP) contracts, the profit is embedded in the price, and the contractor's actual profit depends on their ability to manage costs effectively. While specific figures are often proprietary, industry analyses suggest that profit margins for defense contractors can range from low single digits to potentially 10-15% or higher, depending on risk and performance. Sole-source contracts, due to reduced competitive pressure, might allow for higher negotiated profit margins if not rigorously scrutinized.
How does the Defense Logistics Agency (DLA) ensure the quality and reliability of aircraft engine parts procured through contracts like this?
The Defense Logistics Agency (DLA) employs a multi-faceted approach to ensure the quality and reliability of procured aircraft engine parts. This includes establishing stringent technical specifications and quality assurance clauses within the contract itself. DLA often relies on contractor self-certification, backed by rigorous government source inspections and audits. They may also utilize Product Quality Deficiency Reports (PQDRs) to track and address any issues that arise post-delivery. Furthermore, DLA works closely with the manufacturers and the end-users (e.g., specific military branches) to monitor performance data and address any emerging concerns. For critical components like engine parts, adherence to aerospace standards (e.g., AS9100) and specific military specifications is paramount, with potential for source inspections at the manufacturing facility.
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: $250,159,471
Exercised Options: $250,159,471
Current Obligation: $250,159,471
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: 2023-09-30
Current End Date: 2025-09-30
Potential End Date: 2025-09-30 00:00:00
Last Modified: 2025-09-15
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