Air Force awards $20M engine contract to Rolls-Royce for B-52 CERP program

Contract Overview

Contract Amount: $20,026,436 ($20.0M)

Contractor: Rolls-Royce Corporation

Awarding Agency: Department of Defense

Start Date: 2021-11-19

End Date: 2022-03-24

Contract Duration: 125 days

Daily Burn Rate: $160.2K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: B-52 CERP COMMERCIAL ENGINE REPLACEMENT PROGRAM (CERP) ENGINE CONTRACT

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46225

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $20.0 million to ROLLS-ROYCE CORPORATION for work described as: B-52 CERP COMMERCIAL ENGINE REPLACEMENT PROGRAM (CERP) ENGINE CONTRACT Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract is a delivery order under a larger program, indicating phased execution. 3. The firm-fixed-price structure aims to control costs for the government. 4. The duration of the order is relatively short (125 days), suggesting a specific, time-bound need. 5. The contract value is significant, reflecting the critical nature of aircraft engine components. 6. Rolls-Royce is a major player in the aerospace industry, bringing established expertise.

Value Assessment

Rating: good

The contract value of $20 million for engine components appears reasonable given the scale of the B-52 CERP program. Benchmarking against similar large-scale aerospace component procurements would provide further context. The firm-fixed-price contract type is generally favorable for cost control. Without specific per-unit data or comparison to other engine suppliers for this program, a precise value-for-money assessment is challenging, but the competitive award suggests a degree of price efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a full and open competition, indicating that all responsible sources were permitted to submit bids. The specific number of bidders is not provided, but this procurement method generally fosters a competitive environment, which can lead to better pricing and innovation. The Air Force's decision to use full and open competition suggests confidence in the market's ability to provide suitable solutions.

Taxpayer Impact: A competitive award process helps ensure that taxpayer dollars are used efficiently by driving down prices and encouraging the best possible value from the market.

Public Impact

The primary beneficiaries are the U.S. Air Force and its B-52 bomber fleet, ensuring operational readiness. The contract supports the sustainment and modernization of a critical strategic asset. The geographic impact is primarily within the United States, supporting domestic aerospace manufacturing and maintenance. Workforce implications include skilled labor in aerospace engineering, manufacturing, and quality assurance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen technical challenges arise during the delivery order period.
Dependence on a single supplier for critical engine components could pose long-term supply chain risks.
The long-term sustainment costs for the B-52 fleet are not fully detailed in this specific award.

Positive Signals

Award to a reputable and experienced contractor like Rolls-Royce mitigates execution risk.
The firm-fixed-price contract provides cost certainty for this specific delivery order.
The competitive award process suggests a focus on achieving good value for the investment.

Sector Analysis

This contract falls within the aerospace manufacturing sector, specifically focusing on aircraft components. The B-52 CERP program is a significant undertaking to re-engine a vital part of the U.S. strategic bomber fleet. Spending in this sector is characterized by high R&D costs, stringent quality requirements, and long product lifecycles. Comparable spending benchmarks would involve other major aircraft platform sustainment or upgrade programs.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it explicitly mention subcontracting goals for small businesses. As a large-scale procurement for a major defense contractor, the primary focus is likely on the prime contractor's capabilities. However, Rolls-Royce may engage small businesses for specific components or services as part of its supply chain, though this is not detailed in the award information.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Air Force contracting and program management offices. Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of specified components. Transparency is facilitated through contract award databases, though detailed performance metrics may be internal. The Inspector General's office could investigate any allegations of fraud, waste, or abuse.

Related Government Programs

B-52 Bomber Sustainment Programs
Air Force Aircraft Engine Procurement
Aerospace Manufacturing Contracts
Defense Logistics Agency (DLA) Support

Risk Flags

Potential for supply chain disruption
Long-term sustainment cost uncertainty
Dependence on sole-source provider for critical components

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.0 million to ROLLS-ROYCE CORPORATION. B-52 CERP COMMERCIAL ENGINE REPLACEMENT PROGRAM (CERP) ENGINE CONTRACT

Who is the contractor on this award?

The obligated recipient is ROLLS-ROYCE CORPORATION.

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 $20.0 million.

What is the period of performance?

Start: 2021-11-19. End: 2022-03-24.

What is the specific nature of the engine components being procured under this delivery order?

This delivery order is part of the B-52 Commercial Engine Replacement Program (CERP). While the exact components are not specified in the provided data, the CERP aims to replace the aging TF33 engines on the B-52H Stratofortress with new, more efficient commercial engines. This likely includes the procurement of new engine units, associated hardware, and potentially initial support equipment necessary for integration and testing. The selection of Rolls-Royce suggests the new engines are likely derived from their commercial offerings, such as the AE3007 or similar platforms adapted for military use.

How does the $20 million award compare to the total estimated cost of the B-52 CERP program?

The provided data indicates a $20 million award for a specific delivery order under the B-52 CERP. The total estimated cost for the entire B-52 CERP program is significantly higher, often cited in the billions of dollars, encompassing the development, procurement, and integration of new engines for the entire B-52 fleet. This $20 million represents a fraction of the overall program cost, likely covering initial production, testing, or a specific batch of engines for a subset of the fleet or early integration efforts. Comprehensive program cost data would be needed for a full comparison.

What are the key performance indicators (KPIs) being tracked for this contract?

Specific Key Performance Indicators (KPIs) for this particular delivery order are not detailed in the provided award data. However, for a contract of this nature, typical KPIs would likely include on-time delivery of engine components, adherence to quality specifications (e.g., defect rates, material compliance), performance of the engines against established benchmarks (e.g., fuel efficiency, thrust), and successful integration testing. The firm-fixed-price nature implies that meeting delivery schedules and quality standards are paramount for the contractor to achieve profitability.

What is Rolls-Royce Corporation's track record with the B-52 program or similar military aircraft engine contracts?

Rolls-Royce Corporation has a long and established history in the aerospace industry, including significant experience with military aircraft engines. While their primary commercial engines are being adapted for the B-52 CERP, Rolls-Royce has supplied engines for various military platforms globally. Their track record includes engines for transport aircraft, trainers, and some combat support roles. Their extensive experience in designing, manufacturing, and supporting complex jet engines, coupled with their existing presence in the defense sector, positions them as a capable supplier for this critical program.

What are the potential risks associated with relying on a single supplier for these critical engine components?

Relying on a single supplier like Rolls-Royce for the B-52 CERP engines introduces several potential risks. Foremost is the risk of supply chain disruption; any issue at the contractor's facility, geopolitical instability affecting raw materials, or unforeseen production challenges could halt deliveries. This dependence also reduces the government's leverage in future negotiations for spare parts, upgrades, or sustainment services, potentially leading to higher long-term costs. Furthermore, a sole-source situation can stifle innovation if alternative engine technologies are not explored or developed by competitors.

How does the firm-fixed-price contract type benefit the Air Force in this scenario?

The firm-fixed-price (FFP) contract type offers significant benefits to the Air Force by providing cost certainty. Under an FFP agreement, the contractor, Rolls-Royce, assumes most of the risk associated with cost overruns. This means the price is set upfront and generally does not change, regardless of the contractor's actual costs incurred during production and delivery. This structure incentivizes the contractor to manage its costs efficiently and deliver the specified engine components within the agreed-upon budget, making financial planning more predictable for the Air Force.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: ENGINES AND TURBINES AND COMPONENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: FA810719R0002

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rolls-Royce Holdings PLC

Address: 450 S MERIDIAN ST, INDIANAPOLIS, IN, 46225

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $20,026,436

Exercised Options: $20,026,436

Current Obligation: $20,026,436

Subaward Activity

Number of Subawards: 1

Total Subaward Amount: $812,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA810721D0001

IDV Type: IDC

Timeline