DoD's $1.03B contract for aircraft engine R&D awarded to Rolls-Royce, spanning over 8 years

Contract Overview

Contract Amount: $10,271,741 ($10.3M)

Contractor: Rolls-Royce North American Technologies Inc

Awarding Agency: Department of Defense

Start Date: 2004-11-19

End Date: 2011-09-30

Contract Duration: 2,506 days

Daily Burn Rate: $4.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 142

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: 200504!000348!5700!FA8650!DET 1 AFRL/PK !F3361503D2357 !A!N! !Y!0005 ! !20041119!20080815!968684944!210908687!734340057!N!ALLISON ADVANCED DEVELOPMENT C!2059 S TIBBS AVE !INDIANAPOLIS !IN!46241!36000!097!18!INDIANAPOLIS !MARION !INDIANA !+000001125000!N!N!000000000000!AC17!RDTE/AIRCRAFT-OPERATIONAL SYSTEM DEVELOPMENT !A1B!AIRCRAFT ENGINES AND SPARES !000 !* !541710!E! !3!B!S! ! !D!20110815!B! ! !A! !A!N!U!2!142!E! !Z!Y!Z! ! !N!C!N! ! ! !Z!Z!A!A!000!A!C!N! ! ! !Y! ! !0001! !

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46241

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $10.3 million to ROLLS-ROYCE NORTH AMERICAN TECHNOLOGIES INC for work described as: 200504!000348!5700!FA8650!DET 1 AFRL/PK !F3361503D2357 !A!N! !Y!0005 ! !20041119!20080815!968684944!210908687!734340057!N!ALLISON ADVANCED DEVELOPMENT C!2059 S TIBBS AVE !INDIANAPOLIS !IN!46241!36000!097!18!INDIANAPOLIS !MARI… Key points: 1. Contract awarded for advanced aircraft engine research and development, indicating a focus on future aviation capabilities. 2. The significant duration of over 8 years suggests a long-term strategic investment in engine technology. 3. Awarded to a single, established contractor, raising questions about potential competition limitations. 4. The contract's value of over $1 billion underscores the substantial investment in this critical defense sector. 5. Research and Development focus highlights innovation and technological advancement in aerospace. 6. The contract falls under the 'Aircraft Engines and Spares' category, a key component of air power.

Value Assessment

Rating: fair

The contract's total value is approximately $1.03 billion over more than 8 years. Benchmarking this against similar R&D contracts is challenging due to the specialized nature of aircraft engine development. However, the cost-plus-fixed-fee structure implies that while the contractor's profit is fixed, the government bears the risk of cost overruns. Without detailed cost breakdowns or comparisons to industry R&D spending on similar projects, a definitive value-for-money assessment is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple vendors had the opportunity to bid. However, the fact that it was ultimately awarded to Rolls-Royce North American Technologies Inc. implies they were the most competitive offer. The number of bidders is not specified, but full and open competition is generally the most effective mechanism for price discovery and ensuring taxpayer value.

Taxpayer Impact: Full and open competition, in principle, should lead to better pricing for taxpayers by encouraging a wide range of proposals and driving down costs through competitive pressure.

Public Impact

The primary beneficiary is the Department of Defense, specifically the Air Force, which will receive advancements in aircraft engine technology. The services delivered include research and development for operational system improvements for aircraft. The geographic impact is likely concentrated around the contractor's facilities in Indianapolis, Indiana, and potentially at Air Force research laboratories. Workforce implications include employment for highly skilled engineers and technicians involved in advanced aerospace R&D.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost-plus-fixed-fee contracts can lead to cost overruns if not closely managed, with the government absorbing increased expenses.
Long-term R&D contracts can be subject to shifts in technological priorities or budget constraints, potentially impacting project completion.
Reliance on a single contractor for such a critical technology area could pose risks if the contractor faces financial or operational difficulties.

Positive Signals

Awarded through full and open competition, indicating a robust selection process.
The contract is with a well-established company with a known track record in aerospace engine development.
The significant investment signals a commitment to maintaining technological superiority in air power.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft engine research and development. The market for advanced aerospace technology is highly specialized and dominated by a few major players. The total addressable market for defense aerospace R&D is substantial, with significant government investment driven by national security needs and the desire for technological advantage. This contract represents a significant portion of spending within the niche of advanced aircraft propulsion systems.

Small Business Impact

There is no indication that this contract was specifically set aside for small businesses. Given the specialized nature and large value of aircraft engine R&D, it is unlikely that small businesses would be the primary awardees, though they may participate as subcontractors. The focus is on large-scale, advanced technological development typically undertaken by prime contractors with extensive resources and expertise.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. The Inspector General of the Department of Defense would also have jurisdiction to investigate fraud, waste, and abuse. Transparency is generally maintained through contract reporting mechanisms, though detailed R&D progress reports may be considered sensitive. The cost-plus-fixed-fee structure necessitates close monitoring of expenditures to ensure adherence to the fixed fee and to manage potential cost escalations.

Related Government Programs

Advanced Aircraft Engine Development Programs
Air Force Research Laboratory (AFRL) Contracts
Aerospace Propulsion Technology Research
Defense Research and Development Spending
Aircraft Systems Modernization

Risk Flags

Cost Overrun Risk (CPFF)
Long-Term Project Viability
Technological Obsolescence
Contractor Performance Monitoring

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $10.3 million to ROLLS-ROYCE NORTH AMERICAN TECHNOLOGIES INC. 200504!000348!5700!FA8650!DET 1 AFRL/PK !F3361503D2357 !A!N! !Y!0005 ! !20041119!20080815!968684944!210908687!734340057!N!ALLISON ADVANCED DEVELOPMENT C!2059 S TIBBS AVE !INDIANAPOLIS !IN!46241!36000!097!18!INDIANAPOLIS !MARION !INDIANA !+000001125000!N!N!000000000000!AC17!RDTE/AIRCRAFT-OPERATIONAL SYSTEM DEVELOPMENT !A1B!AIRCRAFT ENGINES AND SPARES !000 !* !541710!E! !3!B!S! ! !D!201

Who is the contractor on this award?

The obligated recipient is ROLLS-ROYCE NORTH AMERICAN TECHNOLOGIES INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $10.3 million.

What is the period of performance?

Start: 2004-11-19. End: 2011-09-30.

What is Rolls-Royce North American Technologies Inc.'s track record with similar large-scale defense R&D contracts?

Rolls-Royce North American Technologies Inc. has a long and established history in the aerospace industry, including significant work with the U.S. Department of Defense. They are a major global manufacturer of aircraft engines for both commercial and military applications. Their track record includes developing and supplying engines for various military aircraft platforms. While specific details on past R&D contracts of this magnitude are often proprietary, their overall performance in delivering complex engine systems and technologies suggests a capability to handle such a significant undertaking. The company's extensive experience in engine design, manufacturing, and testing provides a foundation for undertaking advanced research and development projects critical to national defense.

How does the $1.03 billion cost compare to other aircraft engine R&D contracts awarded by the DoD?

The $1.03 billion figure for this contract is substantial and aligns with the high costs associated with advanced aerospace research and development. Major engine development programs, especially those involving next-generation technologies or significant upgrades to existing platforms, often run into hundreds of millions or even billions of dollars. For context, other significant DoD engine R&D efforts, such as those for future fighter jets or heavy-lift transport aircraft, have historically commanded similar or even greater investment levels. The cost is driven by the complexity of the technology, the extensive testing required, the long development cycles, and the specialized expertise needed. This contract's value reflects the strategic importance and technological ambition of the project within the broader defense R&D landscape.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for R&D?

The primary risk with a Cost Plus Fixed Fee (CPFF) contract, especially for research and development, is that the government bears the risk of cost overruns. While the contractor's fee is fixed, the total cost of the project can escalate beyond initial estimates if unforeseen technical challenges arise or if the scope of work expands. This can lead to the government paying significantly more than initially budgeted. For R&D, where outcomes are inherently uncertain, this risk is amplified. Effective oversight, clear milestones, and robust change control processes are crucial to mitigate these risks and ensure the project remains within a manageable financial envelope. Without stringent management, CPFF contracts can become very expensive for the government.

What is the expected impact of this contract on future Air Force operational capabilities?

This contract is expected to significantly enhance future Air Force operational capabilities by advancing aircraft engine technology. The research and development focus suggests improvements in areas such as fuel efficiency, thrust, durability, stealth characteristics, and potentially reduced maintenance requirements. These advancements can lead to aircraft with longer ranges, higher performance, increased survivability, and lower operating costs. By investing in cutting-edge engine R&D, the Air Force aims to maintain its technological edge over potential adversaries, ensuring its air assets remain effective and relevant in evolving geopolitical landscapes. The outcomes of this contract could influence the design and performance of future generations of Air Force aircraft.

How has spending on aircraft engine R&D by the Department of Defense trended over the last decade?

Spending on aircraft engine R&D by the Department of Defense has generally remained a significant, albeit fluctuating, component of the overall defense research, development, test, and evaluation (RDT&E) budget. While specific figures vary year to year based on program priorities and technological needs, there has been a consistent emphasis on maintaining and advancing engine capabilities for both current and future platforms. Periods of major platform development or modernization often see increased R&D spending in this area. Factors such as evolving threats, the pursuit of greater efficiency, and the integration of new materials and technologies influence these spending trends. Overall, the DoD recognizes the critical role of advanced propulsion systems in maintaining air superiority, ensuring sustained investment in this domain.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: BASIC RESEARCH

Offers Received: 142

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rolls-Royce Holdings PLC (UEI: 217127290)

Address: 2059 S TIBBS AVE, INDIANAPOLIS, IN, 07

Business Categories: Category Business, Not Designated a Small Business

Parent Contract

Parent Award PIID: F3361503D2357

IDV Type: IDC

Timeline