Air Force awards $83M C-130J propulsion sustainment contract to Rolls-Royce Corporation

Contract Overview

Contract Amount: $82,950,980 ($83.0M)

Contractor: Rolls-Royce Corporation

Awarding Agency: Department of Defense

Start Date: 2021-09-29

End Date: 2026-03-25

Contract Duration: 1,638 days

Daily Burn Rate: $50.6K/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 $83.0 million to ROLLS-ROYCE CORPORATION for work described as: C-130J PROPULSION LONG TERM SUSTAINMENT Key points: 1. Contract focuses on long-term sustainment of C-130J Super Hercules aircraft engines. 2. Sole-source award raises questions about competition and potential cost efficiencies. 3. Performance period extends over five years, indicating a significant commitment. 4. The contract type is Firm Fixed Price, which shifts cost risk to the contractor. 5. This award is part of a broader strategy to maintain aging aircraft fleets.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source propulsion sustainment contract is challenging due to the lack of competitive bids. The total award value of approximately $83 million over five years suggests a substantial investment in maintaining critical C-130J aircraft. Without comparable contract data or a competitive bidding process, it is difficult to definitively assess if the pricing represents optimal value for the government. However, the firm fixed-price structure aims to provide cost predictability.

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 bypasses the standard competitive bidding process, which typically involves multiple companies vying for the contract. While sole-source awards can be justified for specialized services or when only one vendor possesses the necessary capabilities, they limit price discovery and may result in higher costs compared to a competitive environment.

Taxpayer Impact: Sole-source awards mean taxpayers do not benefit from the cost savings that can arise from competitive bidding, potentially leading to higher overall expenditure for this sustainment effort.

Public Impact

The U.S. Air Force's C-130J Super Hercules fleet directly benefits from this contract, ensuring operational readiness. This contract supports the sustainment of critical airlift capabilities for military operations and logistical support. The geographic impact is national, as C-130J aircraft are deployed across various bases and operational theaters. The contract sustains specialized jobs within Rolls-Royce Corporation related to aerospace engineering and maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Long-term sustainment contracts can sometimes lock in pricing that may not reflect market shifts.
Dependence on a single supplier for critical engine parts could pose supply chain risks.

Positive Signals

Firm Fixed Price contract shifts cost overrun risk to the contractor.
Rolls-Royce is a known entity with established expertise in C-130J propulsion.
Long-term agreement provides stability and predictability for sustainment planning.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, specialized technology, and long product lifecycles. Propulsion sustainment is a critical component of maintaining airworthiness for complex aircraft like the C-130J. This contract fits within the broader market for aircraft engine maintenance, repair, and overhaul (MRO) services. Comparable spending benchmarks for similar long-term sustainment contracts for major military aircraft can range from tens to hundreds of millions of dollars, depending on the platform and scope of services.

Small Business Impact

This contract does not appear to include a small business set-aside. As a sole-source award to a large corporation, there are no direct subcontracting implications for small businesses mandated by this specific award. The primary focus is on the prime contractor's capabilities. However, Rolls-Royce may engage small businesses as part of its broader supply chain for parts or services, though this is not explicitly detailed in the award information.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of the Air Force's contracting and program management offices. Accountability measures are embedded within the Firm Fixed Price contract terms, requiring Rolls-Royce to meet specified performance standards. Transparency is generally maintained through contract award databases, though detailed performance metrics and financial reporting may be subject to specific contract clauses and security considerations. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

C-130J Super Hercules Aircraft
Aircraft Engine Maintenance, Repair, and Overhaul (MRO)
Long-Term Sustainment Contracts
Aerospace Propulsion Systems

Risk Flags

Sole-source award
Potential for cost overruns if not properly managed
Dependence on a single supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $83.0 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 $83.0 million.

What is the period of performance?

Start: 2021-09-29. End: 2026-03-25.

What is Rolls-Royce Corporation's track record with the C-130J propulsion system?

Rolls-Royce Corporation is the original equipment manufacturer (OEM) for the AE 2100 turboprop engines that power the C-130J Super Hercules aircraft. They have a long-standing relationship with the U.S. Air Force and other global operators of the C-130J, providing initial production, spare parts, and sustainment services throughout the aircraft's operational life. Their expertise is deeply rooted in the design and maintenance of these specific engines, making them a primary, often sole, source for specialized support, diagnostics, and repair.

How does the $83 million value compare to similar long-term sustainment contracts for military aircraft engines?

The $83 million value for a five-year sustainment contract for C-130J propulsion is within the expected range for major military aircraft components. For instance, sustainment contracts for engines on larger platforms like the C-17 or fighter jets can easily run into hundreds of millions or even billions of dollars over their lifecycle. However, direct comparisons are difficult without knowing the exact scope of services (e.g., number of engines covered, level of support, inclusion of spare parts, depot-level maintenance). The C-130J's role as a tactical airlifter might place its sustainment costs at a different tier than strategic or combat aircraft.

What are the primary risks associated with a sole-source award for critical aircraft sustainment?

The primary risk of a sole-source award for critical aircraft sustainment is the potential for inflated costs due to a lack of competitive pressure. Without competing bids, the government may not achieve the best possible pricing. Additionally, sole-source contracts can reduce leverage in negotiations and potentially lead to complacency from the contractor regarding service quality or innovation. There's also a strategic risk if the sole-source provider faces financial difficulties or decides to exit the market, leaving the government with limited alternatives for essential support.

How effective is a Firm Fixed Price (FFP) contract in managing costs for long-term sustainment?

A Firm Fixed Price (FFP) contract is generally considered effective in managing costs for long-term sustainment because it places the primary cost risk on the contractor. The contractor agrees to a set price for the defined scope of work, and any cost overruns are absorbed by them, while savings benefit the contractor. This incentivizes the contractor to be efficient and control costs. For the government, FFP provides budget certainty. However, for complex, long-term sustainment where unforeseen technical issues or market fluctuations can occur, the contractor may build in a higher contingency into the price, potentially making it more expensive upfront than other contract types.

What is the historical spending pattern for C-130J propulsion sustainment by the Department of the Air Force?

Historical spending data for C-130J propulsion sustainment by the Department of the Air Force would likely show consistent, significant investment over the years, reflecting the long operational life of the aircraft. Prior to this specific long-term contract, spending would have been distributed across various delivery orders, individual repair actions, and potentially shorter-term sustainment agreements. The total annual spend would fluctuate based on fleet readiness needs, major maintenance cycles, and the availability of spare parts. This $83 million award represents a consolidation and long-term planning of that historical expenditure.

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

Solicitation ID: FA850421R0011

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: $82,950,980

Exercised Options: $82,950,980

Current Obligation: $82,950,980

Subaward Activity

Number of Subawards: 21

Total Subaward Amount: $20,083,495

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA850417D0002

IDV Type: IDC

Timeline