Air Force awards $14.9M for aircraft engine parts, with limited competition impacting price discovery

Contract Overview

Contract Amount: $14,924,565 ($14.9M)

Contractor: Rolls-Royce Corporation

Awarding Agency: Department of Defense

Start Date: 2024-05-06

End Date: 2026-05-31

Contract Duration: 755 days

Daily Burn Rate: $19.8K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: NEW ZEALAND MISSIONCARE

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46225

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $14.9 million to ROLLS-ROYCE CORPORATION for work described as: NEW ZEALAND MISSIONCARE Key points: 1. The contract value of $14.9M for aircraft engine parts suggests a significant investment in maintaining critical Air Force assets. 2. The 'NOT AVAILABLE FOR COMPETITION' status raises questions about potential price inflation and the absence of market-driven cost efficiencies. 3. The fixed-price contract type aims to control costs, but the lack of competition limits the government's ability to negotiate the best possible terms. 4. The duration of 755 days indicates a medium-term need for these specialized parts, requiring sustained supply chain management. 5. The contract is managed by the Department of the Air Force, highlighting its importance for aviation readiness. 6. The specific NAICS code 336412 points to the manufacturing of aircraft engines and engine parts, a highly specialized industrial sector.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without more specific details on the exact parts and quantities. However, the $14.9 million award for aircraft engine and engine parts suggests a substantial procurement. The lack of competition is a significant concern, as it prevents a thorough assessment of whether the price reflects fair market value. Without competitive bids, it's difficult to determine if the government is receiving optimal value for its investment, potentially leading to higher costs than if the contract had been openly competed.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a sole-source justification, meaning it was not openly competed. This typically occurs when only one responsible source can provide the required goods or services. The lack of competition means that multiple bidders were not considered, which can limit the government's ability to leverage market forces to achieve the lowest possible price and best terms.

Taxpayer Impact: For taxpayers, a sole-source award means there is a reduced likelihood of benefiting from competitive pricing. The government may end up paying more than it would in a competitive environment, as the contractor faces less pressure to offer the most cost-effective solution.

Public Impact

The primary beneficiaries are the Department of the Air Force, ensuring the operational readiness of its aircraft fleet. The services delivered involve the supply of critical aircraft engine and engine parts, essential for maintenance and repair operations. The geographic impact is primarily within the United States, supporting Air Force bases and operations. Workforce implications include supporting jobs within the aerospace manufacturing sector, specifically in engine parts production and supply chain management.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated pricing and reduced value for taxpayer dollars.
Sole-source awards can create a dependency on a single supplier, increasing long-term risk.
Limited transparency in the pricing negotiation process due to the absence of multiple bids.

Positive Signals

The contract ensures the availability of critical parts for Air Force aircraft, supporting national defense readiness.
The firm fixed-price contract type provides cost certainty for the government once awarded.
The award is to a known entity, Rolls-Royce Corporation, which may imply a level of established performance and expertise.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant R&D investment. Aircraft engine manufacturing and parts supply is a specialized niche within this sector, dominated by a few major global players. Spending in this area is critical for maintaining military aviation capabilities. Comparable spending benchmarks would typically involve analyzing historical awards for similar engine components or maintenance services across different military branches or allied nations.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the specialized nature of aircraft engine parts and the award to Rolls-Royce Corporation, it is unlikely that significant subcontracting opportunities for small businesses will be mandated or readily available within the primary scope of this award. However, Rolls-Royce may engage small businesses for general support services or less specialized components.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and financial management offices. Accountability measures are inherent in the contract terms, particularly the firm fixed-price structure. Transparency is limited due to the sole-source nature of the award, making public scrutiny of pricing and negotiation difficult. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Engine Maintenance and Repair
Aerospace Parts Manufacturing
Defense Logistics and Supply Chain Management
Air Force Aviation Readiness Programs

Risk Flags

Sole-source award limits price competition.
Lack of detailed itemization hinders value assessment.
Potential for supply chain disruption due to single supplier reliance.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.9 million to ROLLS-ROYCE CORPORATION. NEW ZEALAND MISSIONCARE

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 $14.9 million.

What is the period of performance?

Start: 2024-05-06. End: 2026-05-31.

What is the specific type and quantity of aircraft engine parts being procured under this contract?

The provided data does not specify the exact type or quantity of aircraft engine parts. The contract is categorized under NAICS code 336412, which covers 'Aircraft Engine and Engine Parts Manufacturing.' Rolls-Royce Corporation is a known manufacturer of aircraft engines and their components. Without further details, it is impossible to ascertain the specific items, their technical specifications, or the quantities ordered. This lack of specificity is common in high-level contract award notices but hinders detailed value analysis.

How does the $14.9 million award compare to historical spending on similar aircraft engine parts by the Department of the Air Force?

Comparing this $14.9 million award to historical spending requires access to detailed historical contract data for specific engine parts or categories. The provided data does not offer this comparative context. However, Rolls-Royce is a major global supplier for many Air Force platforms, including the C-130J Super Hercules and the B-52 bomber. Awards of this magnitude are not uncommon for major engine component procurements or overhauls within the defense sector, especially for high-performance military aircraft. A comprehensive analysis would involve tracking spending trends for similar parts over several fiscal years and across different Air Force commands.

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

The primary risks associated with a sole-source award for critical aircraft engine parts include potential price inflation due to the lack of competitive bidding, reduced incentive for the contractor to innovate or improve efficiency, and a heightened dependency on a single supplier. This dependency can create vulnerabilities in the supply chain, especially if the sole source faces production issues, financial instability, or geopolitical disruptions. Furthermore, the government has less leverage in negotiating terms and conditions, potentially leading to less favorable contract clauses regarding warranties, delivery schedules, or intellectual property rights.

What is the track record of Rolls-Royce Corporation with the Department of Defense, particularly in supplying aircraft engine parts?

Rolls-Royce Corporation has a long-standing and significant track record of supplying aircraft engines and parts to the Department of Defense (DoD) and other global militaries. They are a major original equipment manufacturer (OEM) for numerous military aircraft platforms. Their history with the DoD includes supplying engines for transport aircraft, trainers, and some combat platforms. While specific performance metrics for this particular contract are not available, Rolls-Royce is generally considered a reputable and capable supplier within the aerospace industry. However, like any large defense contractor, they have faced scrutiny and challenges related to contract performance, pricing, and supply chain management on various programs over the years.

What are the potential implications of the 'IN' state code for this contract's performance or oversight?

The 'IN' state code indicates that the contract's performance or administration is associated with Indiana. This could mean that the contractor has a facility in Indiana where the parts are manufactured, delivered, or where administrative functions are handled. For oversight, it might imply that certain state-level regulations or economic development initiatives could be relevant, although federal contracts are primarily governed by federal law and regulations. It could also influence logistical considerations for delivery and inspection. The specific impact depends on the nature of the work performed in Indiana.

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 AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA855323R0004

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: $47,691,938

Exercised Options: $14,924,565

Current Obligation: $14,924,565

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $3,432,182

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA855320D0003

IDV Type: IDC

Timeline