DoD Awards $59.7M for 20 Engine Assemblies to Rolls-Royce Corporation, Raising Competition Concerns
Contract Overview
Contract Amount: $59,717,296 ($59.7M)
Contractor: Rolls-Royce Corporation
Awarding Agency: Department of Defense
Start Date: 2023-09-30
End Date: 2025-09-30
Contract Duration: 731 days
Daily Burn Rate: $81.7K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: T108 QUICK ENGINE CHANGE ASSEMBLY REPAIRS - QUANTITY 20 EACH
Place of Performance
Location: INDIANAPOLIS, MARION County, INDIANA, 46225
State: Indiana Government Spending
Plain-Language Summary
Department of Defense obligated $59.7 million to ROLLS-ROYCE CORPORATION for work described as: T108 QUICK ENGINE CHANGE ASSEMBLY REPAIRS - QUANTITY 20 EACH Key points: 1. Significant contract value for specialized aircraft engine parts. 2. Sole-source award to a major defense contractor limits competitive pricing. 3. Potential for higher costs due to lack of competition. 4. Sector is critical for national defense readiness.
Value Assessment
Rating: questionable
The contract value of $59.7 million for 20 units suggests a high per-unit cost. Without competitive bidding, it's difficult to assess if this price is optimal compared to potential market rates for similar specialized engine repairs.
Cost Per Unit: $2,985,864.78
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to Rolls-Royce Corporation. This method bypasses competitive price discovery, potentially leading to less favorable pricing for the government.
Taxpayer Impact: The lack of competition may result in taxpayers paying a premium for these essential aircraft engine parts.
Public Impact
Impacts Air Force readiness by ensuring availability of critical engine components. Supports a major defense contractor, potentially influencing market dynamics. Highlights the reliance on specialized manufacturers for advanced aerospace systems.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- High per-unit cost
- Sole-source award
Positive Signals
- Essential for aircraft maintenance
- Long-term contract duration
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, specialized manufacturing, and significant government reliance.
Small Business Impact
The awardee, Rolls-Royce Corporation, is a large business. There is no indication that small businesses were involved in this specific contract, either as prime contractors or subcontractors.
Oversight & Accountability
The Department of the Air Force awarded this contract. Oversight would focus on contract performance, delivery schedules, and adherence to the firm fixed price terms, especially given the sole-source nature.
Related Government Programs
- Aircraft Engine and Engine Parts Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Lack of competitive bidding
- Potential for inflated pricing
- Limited transparency in justification
- Strategic reliance on a single supplier
Tags
aircraft-engine-and-engine-parts-manufac, department-of-defense, in, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $59.7 million to ROLLS-ROYCE CORPORATION. T108 QUICK ENGINE CHANGE ASSEMBLY REPAIRS - QUANTITY 20 EACH
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 $59.7 million.
What is the period of performance?
Start: 2023-09-30. End: 2025-09-30.
What is the justification for the sole-source award, and were alternative sourcing options explored?
The justification for a sole-source award typically involves unique capabilities, proprietary technology, or urgent needs that only one supplier can meet. Without further details, it's unclear if the Air Force thoroughly explored alternatives or if this was a necessary exception to full and open competition. This lack of transparency can obscure potential cost savings.
How does the per-unit cost compare to historical data or industry benchmarks for similar engine repair services?
Benchmarking this high per-unit cost against historical data or similar contracts is crucial for assessing value. Given the sole-source nature, it's possible the price is inflated. A detailed cost analysis or comparison with non-competed contracts for comparable services would be needed to determine if the government is receiving fair market value.
What are the long-term implications of relying on a single supplier for such critical components?
Long-term reliance on a sole-source supplier can create strategic vulnerabilities, including price escalation, supply chain disruptions, and reduced innovation. It also limits the government's leverage in future negotiations. Diversifying the supplier base or developing alternative repair capabilities should be considered to mitigate these risks.
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: $59,717,296
Exercised Options: $59,717,296
Current Obligation: $59,717,296
Subaward Activity
Number of Subawards: 18
Total Subaward Amount: $27,190,109
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: FA812423D0002
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: 2024-12-23
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