DoD's $35.6M engine sustainment contract awarded to Rolls-Royce Corporation for T108 engines

Contract Overview

Contract Amount: $35,571,810 ($35.6M)

Contractor: Rolls-Royce Corporation

Awarding Agency: Department of Defense

Start Date: 2023-06-01

End Date: 2023-07-31

Contract Duration: 60 days

Daily Burn Rate: $592.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: T108 ENGINE, NACELLE, AND PROPELLER SUSTAINMENT

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46225

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $35.6 million to ROLLS-ROYCE CORPORATION for work described as: T108 ENGINE, NACELLE, AND PROPELLER SUSTAINMENT Key points: 1. Contract focuses on sustainment of critical T108 engine components, ensuring operational readiness. 2. Sole-source award to Rolls-Royce Corporation suggests unique technical expertise or existing platform integration. 3. Short performance period (60 days) indicates a potential need for immediate support or a bridge to a larger effort. 4. Firm Fixed Price contract type aims to control costs and provide predictability for the government. 5. The contract falls under Aircraft Engine and Engine Parts Manufacturing (NAICS 336412), a specialized sector.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging due to its limited scope and short duration. The total award amount of $35.6 million for a 60-day period suggests a high per-diem cost, which could be justified by the specialized nature of engine sustainment. However, without comparable recent contracts for T108 engine sustainment or detailed cost breakdowns, a definitive value-for-money assessment is difficult. The firm fixed-price structure provides cost certainty, but the absence of competition limits the government's ability to negotiate the best possible price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to Rolls-Royce Corporation. This indicates that the government determined Rolls-Royce was the only responsible source capable of meeting the requirement, likely due to proprietary technology, existing support infrastructure, or unique expertise related to the T108 engine. The lack of competition means the government did not benefit from a bidding process that could have driven down prices or spurred innovation from multiple vendors.

Taxpayer Impact: Sole-source awards limit opportunities for taxpayers to benefit from competitive pricing, potentially leading to higher costs than if multiple vendors had vied for the contract.

Public Impact

The primary beneficiaries are the Department of the Air Force, ensuring the operational readiness of aircraft utilizing T108 engines. Services delivered include sustainment of T108 engines, nacelles, and propellers, crucial for aircraft functionality. The geographic impact is primarily within the operational theaters of the U.S. Air Force, wherever these aircraft are deployed. Workforce implications may involve specialized technicians and engineers required for engine maintenance and repair.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Short contract duration may indicate a reactive need or a gap in long-term planning.
Lack of detailed cost breakdown makes independent value assessment difficult.

Positive Signals

Firm Fixed Price contract provides cost certainty for the government.
Award to established contractor (Rolls-Royce) suggests reliability and existing expertise.
Focus on sustainment ensures continued operational capability of critical assets.

Sector Analysis

The aerospace and defense sector, particularly aircraft engine manufacturing and maintenance, is characterized by high barriers to entry, significant R&D investment, and a limited number of major players like Rolls-Royce. This contract falls within the sustainment sub-sector, which is critical for maintaining the readiness of aging military fleets. Spending in this area is often driven by long-term platform life cycles and the need for specialized, proprietary support. Comparable spending benchmarks are difficult to establish without knowing the specific T108 engine variant and its operational tempo.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Given the sole-source nature and the specialized requirements of engine sustainment, it is unlikely that small businesses would be primary contractors. However, Rolls-Royce Corporation may engage small businesses as subcontractors for specific components or services, though this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. Accountability measures are inherent in the firm fixed-price structure, which obligates the contractor to deliver specified services within the agreed-upon cost. Transparency is limited due to the sole-source nature and the short performance period, which may not warrant extensive public reporting beyond the basic award notice. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Engine Maintenance
Propulsion System Support
Aerospace Component Manufacturing
Defense Logistics Support
Military Aircraft Sustainment

Risk Flags

Sole-source award
Short contract duration
Limited transparency on cost breakdown

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $35.6 million to ROLLS-ROYCE CORPORATION. T108 ENGINE, NACELLE, AND PROPELLER 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 $35.6 million.

What is the period of performance?

Start: 2023-06-01. End: 2023-07-31.

What is the historical spending pattern for T108 engine sustainment by the Department of Defense?

Historical spending data for T108 engine sustainment by the Department of Defense is not readily available in the provided snippet. However, the current award of $35.6 million for a 60-day period suggests a significant annual investment if this level of support is consistently required. To understand historical patterns, one would need to access broader contract databases and analyze awards for similar sustainment services over multiple fiscal years. Factors influencing historical spending would include the number of T108-equipped aircraft in the Air Force inventory, their operational tempo, and the evolving maintenance requirements dictated by engine age and technological updates. Without this broader context, it's difficult to ascertain if this $35.6M represents an increase, decrease, or stable level of spending compared to previous periods.

What specific T108 engine variants are covered by this contract, and what is their operational status?

The provided data does not specify the exact variants of the T108 engine covered by this contract, nor does it detail their current operational status. The T108 is a turboprop engine, and its variants might be used across different aircraft platforms within the Air Force. Understanding the specific variants is crucial for assessing the technical complexity and potential risks associated with their sustainment. Information on operational status, such as the readiness rates of the aircraft employing these engines, would provide context for the urgency and importance of this sustainment effort. This level of detail is typically found in the Performance Work Statement (PWS) or Statement of Objectives (SOO) associated with the contract, which are not included here.

What are the key performance indicators (KPIs) and service level agreements (SLAs) for this contract?

The provided data does not explicitly list the Key Performance Indicators (KPIs) or Service Level Agreements (SLAs) for this T108 engine sustainment contract. However, for a contract of this nature, typical KPIs would likely revolve around engine availability, turnaround time for repairs, quality of maintenance performed (e.g., defect rates), and adherence to scheduled maintenance. SLAs would define the acceptable response times for service requests, the required level of technical support, and potentially metrics related to the operational readiness of the engines post-sustainment. The firm fixed-price nature implies that Rolls-Royce is obligated to meet certain performance standards to receive full payment, but the specific metrics are essential for a thorough evaluation of contract performance and value.

What is Rolls-Royce Corporation's track record with T108 engine sustainment and similar defense contracts?

Rolls-Royce Corporation is a well-established global company with extensive experience in designing, manufacturing, and supporting aircraft engines, including turboprop and turboshaft variants. While the specific T108 engine details are not provided, Rolls-Royce has a long history of supporting military aviation propulsion systems. Their track record typically includes managing complex sustainment programs, adhering to stringent military specifications, and maintaining high levels of operational availability for their engines. Assessing their specific track record for the T108 would involve reviewing past performance evaluations (e.g., Contractor Performance Assessment Reporting System - CPARS), any prior contracts for this engine type, and their overall reputation within the defense aerospace sector for reliability and technical proficiency.

How does the $35.6M award compare to the total lifecycle cost of the T108 engine program?

Comparing the $35.6 million award for a 60-day sustainment period to the total lifecycle cost of the T108 engine program requires significant additional data. The lifecycle cost encompasses research and development, procurement, sustainment (maintenance, repair, spare parts), and eventual disposal. This $35.6 million represents a short-term operational expense for sustainment. To gauge its proportion of the total lifecycle cost, one would need to know the total number of T108 engines procured, their expected service life, the average annual sustainment cost over that life, and the total number of years the engine is projected to remain in service. If the T108 is a mature engine supporting a long-standing platform, this $35.6M might represent a fraction of the annual sustainment budget, or it could be a substantial portion if it covers a major overhaul or a critical component replacement for a limited number of engines.

What are the potential risks associated with a sole-source award for critical engine sustainment?

The primary risk associated with a sole-source award for critical engine sustainment is the lack of competitive pressure, which can lead to inflated pricing and reduced incentive for the contractor to innovate or improve efficiency. Taxpayers may end up paying more than necessary. Another risk is vendor lock-in; the government becomes dependent on a single provider, potentially limiting future flexibility in sourcing or technology upgrades. If the sole-source provider experiences financial difficulties, operational disruptions, or fails to meet performance expectations, the government has limited immediate alternatives, potentially jeopardizing the operational readiness of the affected aircraft. This dependence also reduces the government's leverage in negotiations for future contracts or modifications.

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

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: $35,571,810

Exercised Options: $35,571,810

Current Obligation: $35,571,810

Subaward Activity

Number of Subawards: 10

Total Subaward Amount: $29,300,046

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA812423D0002

IDV Type: IDC

Timeline