Air Force awards $25.7M for C-130J propulsion sustainment to Rolls-Royce Corporation

Contract Overview

Contract Amount: $25,669,927 ($25.7M)

Contractor: Rolls-Royce Corporation

Awarding Agency: Department of Defense

Start Date: 2018-07-26

End Date: 2020-07-31

Contract Duration: 736 days

Daily Burn Rate: $34.9K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: 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 $25.7 million to ROLLS-ROYCE CORPORATION for work described as: C-130J PROPULSION LONG TERM SUSTAINMENT Key points: 1. Contract awarded on a sole-source basis, limiting price competition. 2. Long-term sustainment contract for critical aircraft engine components. 3. Performance period spans over two years, indicating a significant commitment. 4. Firm-fixed-price contract type aims to control costs, but competition is key. 5. Focus on sustainment suggests a need for specialized technical expertise. 6. Contractor is the original equipment manufacturer, implying unique knowledge.

Value Assessment

Rating: fair

The contract value of $25.7 million for a two-year sustainment period for C-130J propulsion systems appears to be within a reasonable range for specialized aerospace components. However, without direct comparable contracts for similar sustainment services or detailed cost breakdowns, a precise value-for-money assessment is challenging. The firm-fixed-price structure provides some cost certainty, but the lack of competition prevents benchmarking against market alternatives.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Rolls-Royce Corporation, was solicited. This approach is typically used when a single source possesses unique capabilities, proprietary technology, or is the original equipment manufacturer, as is the case here. The absence of competition means that the government did not benefit from a competitive bidding process to potentially drive down prices or explore alternative solutions.

Taxpayer Impact: Sole-source awards can lead to higher prices for taxpayers as there is no competitive pressure to ensure the most cost-effective solution is selected.

Public Impact

The U.S. Air Force benefits from continued operational readiness of its C-130J Super Hercules fleet. This contract ensures the availability of critical propulsion system sustainment services. The geographic impact is primarily on Air Force bases operating C-130J aircraft. Workforce implications include the need for specialized technicians and engineers familiar with Rolls-Royce engines.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potential cost savings for the government.
Lack of competition may reduce incentives for the contractor to innovate or improve efficiency.
Dependence on a single supplier for critical sustainment could pose long-term supply chain risks.

Positive Signals

Contractor is the original equipment manufacturer, ensuring specialized knowledge and access to proprietary data.
Firm-fixed-price contract provides cost certainty for the duration of the award.
Sustainment focus ensures continued operational capability for a vital military transport aircraft.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant R&D investment. Propulsion system sustainment is a critical niche within this sector, often dominated by original equipment manufacturers due to proprietary technology and specialized expertise. Spending in this area is driven by the need to maintain the operational readiness of aging and new aircraft fleets. Comparable spending benchmarks are difficult to establish due to the unique nature of sustainment contracts and the specific aircraft platforms involved.

Small Business Impact

This contract does not appear to involve a small business set-aside. As a sole-source award to a large corporation, there are no direct subcontracting opportunities for small businesses mandated by this specific award. The primary impact on the small business ecosystem would be indirect, through the overall health of the defense industrial base that supports large prime contractors.

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 a set budget. Transparency is limited due to the sole-source nature of the award, with details of the negotiation and justification for sole-sourcing not publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

C-130J Super Hercules Sustainment Programs
Aircraft Engine Maintenance, Repair, and Overhaul
Aerospace Propulsion System Support Contracts
Long-Term Service Agreements for Military Aircraft

Risk Flags

Sole-source award
Lack of competition
Potential for higher costs due to single supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.7 million to ROLLS-ROYCE CORPORATION. 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 $25.7 million.

What is the period of performance?

Start: 2018-07-26. End: 2020-07-31.

What is the track record of Rolls-Royce Corporation in providing sustainment services for military aircraft propulsion systems?

Rolls-Royce Corporation has a long-standing and extensive track record in designing, manufacturing, and sustaining propulsion systems for a wide range of military and commercial aircraft. They are the original equipment manufacturer for the AE2100D3 turboprop engines used on the C-130J Super Hercules. Their experience includes providing comprehensive sustainment solutions, such as "power by the hour" agreements, spare parts, maintenance, repair, and overhaul (MRO) services. This includes managing the entire lifecycle of the engine, ensuring availability, reliability, and performance. Their deep technical knowledge and established infrastructure are critical for supporting complex military aviation requirements, often involving long-term contracts with various defense agencies globally.

How does the pricing of this contract compare to similar sustainment contracts for military aircraft engines?

Directly comparing the pricing of this $25.7 million, two-year contract for C-130J propulsion sustainment to other similar contracts is challenging without access to detailed pricing data and specific contract scopes. Sustainment costs are highly variable, depending on the engine type, fleet size, operational tempo, required service levels (e.g., full overhaul vs. component repair), and the specific terms of the contract (e.g., firm-fixed-price vs. cost-plus). As a sole-source award to the OEM, it is plausible that the pricing reflects unique capabilities and established support infrastructure. However, the absence of competitive bidding prevents a definitive assessment of whether this represents optimal value compared to what might be achieved in a competitive environment.

What are the primary risks associated with a sole-source sustainment contract for critical military assets like the C-130J?

The primary risks associated with a sole-source sustainment contract for critical military assets like the C-130J propulsion systems include: 1. **Cost Overruns:** Without competitive pressure, the sole-source provider may charge higher prices than in a competitive market. 2. **Limited Innovation:** The lack of competition can reduce the incentive for the contractor to innovate or find more cost-effective sustainment methods. 3. **Dependency and Lock-in:** The government becomes highly dependent on a single supplier, making it difficult and costly to switch providers even if performance or pricing becomes unsatisfactory. 4. **Supply Chain Vulnerability:** Reliance on a single source can create vulnerabilities if that supplier faces financial difficulties, production issues, or geopolitical disruptions. 5. **Reduced Bargaining Power:** The government's negotiating position is weakened when dealing with a sole provider for essential services.

What is the expected program effectiveness and performance based on the contract type and duration?

The program effectiveness is expected to be high in terms of ensuring the operational readiness of the C-130J fleet's propulsion systems, given that the contract is with the original equipment manufacturer (Rolls-Royce) and covers a two-year period. The firm-fixed-price (FFP) contract type provides a clear budget ceiling and incentivizes the contractor to manage costs efficiently to maintain profitability. Performance is typically measured against defined metrics such as engine availability, reliability, turnaround times for repairs, and adherence to technical specifications. The duration of two years allows for sustained support, crucial for maintaining complex aerospace systems. However, the effectiveness in terms of cost efficiency is inherently limited by the sole-source nature of the award.

How has historical spending on C-130J propulsion sustainment by the Department of the Air Force trended, and how does this award fit?

Historical spending data on C-130J propulsion sustainment by the Department of the Air Force would typically show a consistent need for maintenance, repair, and overhaul services to ensure fleet readiness. Such spending is often characterized by long-term contracts, sometimes sole-sourced to OEMs like Rolls-Royce, due to the specialized nature of the engines. Annual spending can fluctuate based on operational tempo, the age of the fleet, and the specific sustainment strategies employed (e.g., "power by the hour" vs. traditional parts and labor). This $25.7 million award for a two-year period represents a significant, but likely recurring, investment in maintaining a portion of the C-130J fleet's propulsion capabilities. Without specific historical figures, it's difficult to definitively state if this award is higher or lower than previous periods, but it aligns with the expected ongoing costs for such a critical sustainment requirement.

Industry Classification

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

Product/Service Code: ENGINES AND TURBINES AND COMPONENT

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

Financial Breakdown

Contract Ceiling: $25,669,927

Exercised Options: $25,669,927

Current Obligation: $25,669,927

Subaward Activity

Number of Subawards: 20

Total Subaward Amount: $9,438,143

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA850417D0002

IDV Type: IDC

Timeline