DoD awards $141.7M C-130J Propulsion Sustainment to Rolls-Royce, a sole-source contract

Contract Overview

Contract Amount: $141,710,411 ($141.7M)

Contractor: Rolls-Royce Corporation

Awarding Agency: Department of Defense

Start Date: 2017-02-01

End Date: 2019-01-31

Contract Duration: 729 days

Daily Burn Rate: $194.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::OT::IGF C-130J PROPULSION LONG TERM SUSTAINMENT

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46225

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $141.7 million to ROLLS-ROYCE CORPORATION for work described as: IGF::OT::IGF C-130J PROPULSION LONG TERM SUSTAINMENT Key points: 1. Significant investment in long-term sustainment for critical C-130J aircraft engines. 2. Sole-source award to Rolls-Royce raises questions about price competition and value. 3. Potential risk associated with single-provider reliance for essential aircraft parts. 4. Spending falls within the Aircraft Engine and Engine Parts Manufacturing sector.

Value Assessment

Rating: questionable

The contract value of $141.7M over two years for propulsion sustainment is substantial. Without competitive bidding, it's difficult to benchmark against similar contracts to ensure optimal pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Rolls-Royce Corporation. This lack of competition limits price discovery and potentially leads to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive bidding, as the government did not explore alternative pricing or providers.

Public Impact

Ensures continued operational readiness of the C-130J fleet, vital for global logistics and support. Supports a key defense contractor, potentially impacting jobs and technological development in the aerospace sector. Highlights the challenges of sustaining specialized military equipment with proprietary components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
Sole-source award
Potential for overpricing

Positive Signals

Ensures critical aircraft sustainment
Supports long-term operational capability

Sector Analysis

This contract falls under the Aircraft Engine and Engine Parts Manufacturing sector. Spending in this area is crucial for maintaining military aviation readiness, but often involves specialized, high-cost components where competition can be limited.

Small Business Impact

The awardee, Rolls-Royce Corporation, is a large business. There is no indication of small business participation in this specific contract, which is common for sole-source, specialized defense procurements.

Oversight & Accountability

The sole-source nature of this award warrants close oversight to ensure the government is receiving fair value. Future contract actions should explore competitive strategies where feasible.

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 price competition.
Potential for inflated pricing without competitive benchmarking.
Reliance on a single provider creates supply chain risk.
Lack of transparency in price justification.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $141.7 million to ROLLS-ROYCE CORPORATION. IGF::OT::IGF C-130J PROPULSION LONG TERM 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 $141.7 million.

What is the period of performance?

Start: 2017-02-01. End: 2019-01-31.

What is the justification for the sole-source award, and were alternative competitive strategies considered?

The justification for this sole-source award is not detailed in the provided data. Typically, sole-source contracts are used when only one responsible source can provide the required supplies or services. However, the government should rigorously assess if competition was truly impossible or if market research could have identified other viable options to ensure fair pricing and maximize value.

What are the long-term risks associated with relying on a single provider for C-130J propulsion sustainment?

The primary long-term risk is the potential for escalating costs due to the lack of competitive pressure. Dependence on a single provider can also lead to supply chain vulnerabilities, limited innovation, and reduced negotiating leverage for the government. This could impact the overall sustainment cost and readiness of the C-130J fleet over its lifespan.

How does the firm fixed-price contract type mitigate financial risk for the government in this sole-source scenario?

A firm fixed-price (FFP) contract shifts most of the cost risk to the contractor, Rolls-Royce. This means the government pays a set price regardless of the contractor's actual costs. While FFP is generally preferred for controlling costs, in a sole-source situation, the 'fixed' price itself may be inflated due to the lack of competition, thus limiting the benefit of this contract type.

Industry Classification

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

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

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 and U.S.-Incorporated Business, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $141,710,411

Exercised Options: $141,710,411

Current Obligation: $141,710,411

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA850417D0002

IDV Type: IDC

Timeline