DoD awards $63.3M for T108 propulsion system sustainment to Rolls-Royce Corporation

Contract Overview

Contract Amount: $63,289,569 ($63.3M)

Contractor: Rolls-Royce Corporation

Awarding Agency: Department of Defense

Start Date: 2022-12-05

End Date: 2023-02-04

Contract Duration: 61 days

Daily Burn Rate: $1.0M/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: T108 (AE 2100D3) PROPULSION SYSTEM SUSTAINMENT

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46225

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $63.3 million to ROLLS-ROYCE CORPORATION for work described as: T108 (AE 2100D3) PROPULSION SYSTEM SUSTAINMENT Key points: 1. Significant contract value for aircraft engine parts manufacturing. 2. Sole-source award raises questions about price discovery and competition. 3. Potential risk associated with single-supplier dependency for critical components. 4. Focus on sustainment suggests long-term operational needs for the Air Force.

Value Assessment

Rating: questionable

The contract value of $63.3M for a 61-day duration appears high, especially given the lack of competition. Benchmarking against similar sustainment contracts for complex aerospace components is difficult without more data, but the sole-source nature warrants scrutiny.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating a lack of competitive bidding. This method limits price discovery and may result in higher costs for taxpayers compared to a fully competed procurement.

Taxpayer Impact: The absence of competition for this substantial award likely means taxpayers are not benefiting from the most cost-effective pricing available.

Public Impact

Ensures operational readiness of Air Force aircraft by maintaining critical propulsion systems. Supports a major defense contractor, Rolls-Royce Corporation, and its manufacturing capabilities. Potential for increased costs due to sole-source award impacts overall defense budget allocation.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of competition
High contract value for short duration

Positive Signals

Ensures critical system sustainment
Supports established contractor

Sector Analysis

This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector, a critical component of the aerospace and defense industry. Spending in this area is often characterized by high R&D costs, long product lifecycles, and significant reliance on specialized expertise, leading to concentrated market structures.

Small Business Impact

The awardee, Rolls-Royce Corporation, is a large business. There is no indication in the provided data that small businesses were involved in this specific contract, either as prime contractors or subcontractors.

Oversight & Accountability

The sole-source nature of this award suggests that standard competitive oversight processes may have been bypassed. Further review would be needed to confirm if appropriate justification and approval for the sole-source acquisition were documented and followed.

Related Government Programs

Aircraft Engine and Engine Parts Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Sole-source award limits competition.
Potential for inflated pricing due to lack of competition.
Dependency on a single supplier for critical components.
High contract value for a short performance period.
Lack of transparency regarding justification for sole-sourcing.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $63.3 million to ROLLS-ROYCE CORPORATION. T108 (AE 2100D3) PROPULSION SYSTEM SUSTAINMENT

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 $63.3 million.

What is the period of performance?

Start: 2022-12-05. End: 2023-02-04.

What is the justification for the sole-source award of this significant propulsion system sustainment contract?

The justification for a sole-source award typically involves factors such as unique capabilities, proprietary technology, or urgent and compelling needs where only one source can reasonably fulfill the requirement. Without specific documentation, it's impossible to confirm the exact reason, but it warrants investigation to ensure it aligns with federal procurement regulations and serves the best interest of the government.

How does the per-unit cost of sustainment for the T108 propulsion system compare to similar engines or previous contracts?

Benchmarking the per-unit cost is challenging without access to detailed cost breakdowns and historical data for comparable contracts. The sole-source nature of this award makes direct comparison difficult, as competitive pressures that drive down costs are absent. A thorough cost analysis by the agency would be necessary to determine if the price is fair and reasonable.

What is the long-term strategy for ensuring competitive sourcing or mitigating risks associated with sole-source sustainment of critical propulsion systems?

Agencies should explore strategies to foster future competition, such as developing alternative sources, investing in technology transfer, or structuring future contracts to encourage new entrants. For sole-source awards, risk mitigation might involve robust performance monitoring, strategic sourcing initiatives, and contingency planning to address potential supply chain disruptions or price escalations.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA812421R0003

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: $75,480,027

Exercised Options: $75,480,027

Current Obligation: $63,289,569

Subaward Activity

Number of Subawards: 27

Total Subaward Amount: $79,734,610

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA812423D0002

IDV Type: IDC

Timeline