Air Force awards $48.7M for Rolls-Royce engine depot planning, highlighting sole-source procurement for specialized aircraft

Contract Overview

Contract Amount: $48,732,966 ($48.7M)

Contractor: Rolls-Royce Corporation

Awarding Agency: Department of Defense

Start Date: 2013-09-20

End Date: 2016-12-20

Contract Duration: 1,187 days

Daily Burn Rate: $41.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: ROLLS-ROYCE AE3007H ENGINE DEPOT PLANNING AND ACTIVATION

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46225

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $48.7 million to ROLLS-ROYCE CORPORATION for work described as: ROLLS-ROYCE AE3007H ENGINE DEPOT PLANNING AND ACTIVATION Key points: 1. Contract awarded to Rolls-Royce Corporation for specialized engine depot services. 2. The contract was not competed, indicating a sole-source or limited competition scenario. 3. The duration of the contract spans over three years, suggesting a significant operational need. 4. The firm-fixed-price structure aims to control costs for the Department of Defense. 5. This award falls under the Aircraft Engine and Engine Parts Manufacturing sector. 6. The total award value is approximately $48.7 million.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without comparable sole-source awards for depot planning and activation. The firm-fixed-price structure provides some cost certainty for the Air Force. However, the lack of competition means there's no direct market comparison to assess if the pricing is optimal. Further analysis would require understanding the specific scope of 'planning and activation' and comparing it to industry standards for similar specialized services.

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 specific contractor possesses unique capabilities, proprietary technology, or is the sole provider of essential services. The lack of competition limits price discovery and may result in higher costs for the government compared to a fully competed contract.

Taxpayer Impact: Taxpayers may bear a higher cost due to the absence of competitive bidding, as the government could not leverage multiple offers to secure the most economical price.

Public Impact

The primary beneficiary is the Department of the Air Force, ensuring operational readiness of aircraft engines. Services include planning and activation of depot-level maintenance capabilities for Rolls-Royce AE3007H engines. The geographic impact is centered around the location where the depot services will be established, likely within Indiana based on the 'SN' field. Workforce implications include potential job creation or reallocation at the designated depot facility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing advantages for the government.
Lack of competition may obscure true market value and potentially inflate costs.
Contract duration of over three years requires careful monitoring of performance and evolving needs.

Positive Signals

Firm-fixed-price contract provides cost predictability for the Air Force.
Award to the original equipment manufacturer (Rolls-Royce) ensures specialized knowledge and capability.
Focus on depot planning and activation addresses critical sustainment requirements for specific aircraft engines.

Sector Analysis

This contract operates within the aerospace and defense sector, specifically focusing on aircraft engine manufacturing and maintenance services. The market for specialized depot-level support for specific engine models is often concentrated among original equipment manufacturers due to proprietary knowledge and technical requirements. Comparable spending benchmarks would involve analyzing other sole-source or limited-competition contracts for engine sustainment and depot activation across the Department of Defense.

Small Business Impact

This contract does not appear to involve small business set-asides, as indicated by 'sb': false. Given the specialized nature of aircraft engine depot planning and activation, it is unlikely that small businesses would be primary contractors. However, Rolls-Royce Corporation may engage small businesses as subcontractors for specific support services, though this is not explicitly detailed in the provided data.

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 embedded in the firm-fixed-price structure, which obligates the contractor to deliver services within the agreed-upon cost. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Engine Maintenance Contracts
Aerospace Depot Services
Defense Logistics Agency Contracts
Rolls-Royce Defense Contracts

Risk Flags

Sole-source procurement
Lack of competition
Potential for cost overruns without competitive pressure

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $48.7 million to ROLLS-ROYCE CORPORATION. ROLLS-ROYCE AE3007H ENGINE DEPOT PLANNING AND ACTIVATION

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 $48.7 million.

What is the period of performance?

Start: 2013-09-20. End: 2016-12-20.

What is the specific scope of 'depot planning and activation' for the Rolls-Royce AE3007H engine?

The term 'depot planning and activation' typically refers to the comprehensive process of establishing or enhancing a facility capable of performing heavy maintenance, repair, and overhaul (MRO) for specific aircraft engines. This includes activities such as facility design and layout, equipment procurement and installation, development of maintenance procedures and technical orders, workforce training and certification, and initial operational testing. For the Rolls-Royce AE3007H engine, this likely involves setting up the infrastructure and processes necessary for the Air Force to conduct depot-level sustainment, ensuring the engines meet stringent performance and safety standards throughout their operational life. The exact deliverables would be detailed in the contract's Statement of Work (SOW).

How does the $48.7 million award compare to historical spending on similar engine depot services?

Direct comparison of this $48.7 million award to historical spending on similar engine depot services is difficult without more specific data points. This contract is for 'planning and activation,' which is a distinct phase from ongoing depot maintenance. Awards for ongoing depot maintenance are typically larger and recurring. However, the value suggests a significant investment in establishing or upgrading capabilities for the AE3007H engine. To provide a meaningful comparison, one would need to analyze historical contracts for depot activation or major facility upgrades for comparable engine types within the DoD, considering inflation and scope differences. The sole-source nature also complicates direct value benchmarking against competed contracts.

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

The primary risks associated with a sole-source award for critical engine sustainment services like depot planning and activation include: 1. **Higher Costs:** Without competition, the government may pay a premium as there is no market pressure to offer the lowest possible price. 2. **Reduced Innovation:** The lack of competitive pressure can disincentivize the contractor from seeking innovative or more cost-effective solutions. 3. **Dependency and Lock-in:** The government becomes heavily reliant on a single provider, making it difficult and costly to switch suppliers even if performance or pricing becomes unsatisfactory. 4. **Potential for Complacency:** The incumbent contractor may become complacent in performance or responsiveness due to the absence of competitive threats. For this specific contract, the risk is mitigated somewhat by awarding to the original equipment manufacturer (OEM), who possesses unique technical knowledge, but cost and innovation risks remain.

What is the expected impact of this contract on the operational readiness of Air Force aircraft utilizing the AE3007H engine?

This contract is expected to significantly enhance the operational readiness of Air Force aircraft utilizing the AE3007H engine by establishing dedicated, in-house (or contractor-operated facility) depot-level maintenance capabilities. Proper planning and activation of a depot ensure that engines can be efficiently repaired, overhauled, and returned to service, minimizing downtime. This reduces reliance on external, potentially less responsive, maintenance providers and ensures that maintenance procedures align with the specific operational demands of the Air Force. Ultimately, a well-executed depot activation leads to higher engine availability rates, improved aircraft mission capability, and potentially longer engine service life.

How does this contract fit into the broader strategy for aircraft engine sustainment within the Air Force?

This contract likely represents a strategic move by the Air Force to gain greater control and efficiency over the sustainment of the AE3007H engine fleet. By investing in depot planning and activation, the Air Force aims to ensure long-term availability of critical engine components and reduce lifecycle costs. This aligns with broader defense strategies that emphasize readiness, maintainability, and cost-effectiveness. It may also reflect a trend towards bringing specialized maintenance capabilities in-house or securing them through long-term agreements with OEMs to manage supply chain risks and ensure technical expertise remains accessible. The specific engine type suggests it powers a particular class of aircraft critical to Air Force operations.

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

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rolls-Royce Holdings PLC

Address: 2355 S TIBBS AVE, INDIANAPOLIS, IN, 46241

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $48,732,966

Exercised Options: $48,732,966

Current Obligation: $48,732,966

Subaward Activity

Number of Subawards: 43

Total Subaward Amount: $128,596,444

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline