DoD awards $25.8M for Rolls-Royce Power Section Modules, raising concerns over sole-source procurement

Contract Overview

Contract Amount: $25,814,713 ($25.8M)

Contractor: Rolls-Royce Corporation

Awarding Agency: Department of Defense

Start Date: 2017-03-17

End Date: 2023-05-30

Contract Duration: 2,265 days

Daily Burn Rate: $11.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: T56-A-427A (WHOLE ENGINE 3 IN 1), POWER SECTION MODULES AND REDUCTION GEAR BOX MODULES

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46225

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $25.8 million to ROLLS-ROYCE CORPORATION for work described as: T56-A-427A (WHOLE ENGINE 3 IN 1), POWER SECTION MODULES AND REDUCTION GEAR BOX MODULES Key points: 1. Significant contract value for specialized aircraft engine components. 2. Sole-source award limits competitive pricing and innovation. 3. Potential for higher costs due to lack of competition. 4. Focus on critical defense aviation components.

Value Assessment

Rating: questionable

The contract value of $25.8 million for power section modules and gearboxes is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to similar specialized aerospace components.

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 may lead to less favorable terms for the government.

Taxpayer Impact: The absence of competition could result in taxpayers paying a premium for these critical aircraft engine components.

Public Impact

Impacts readiness of naval aviation assets relying on these specific engine parts. Highlights reliance on a single manufacturer for critical defense systems. Raises questions about long-term sustainment costs for the affected aircraft fleet.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source procurement
Lack of competition
Potential for cost overruns

Positive Signals

Critical defense component
Long-term contract

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically for aircraft engine components. Spending in this area is often characterized by high R&D costs, specialized manufacturing, and long procurement cycles, sometimes leading to sole-source situations.

Small Business Impact

The data indicates no specific set-aside for small businesses. Given the specialized nature of aircraft engine components and the sole-source award to a large corporation, small business participation is likely minimal or non-existent in this specific contract.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny from oversight bodies to ensure the government is not overpaying and that justifications for non-competition are robust and regularly reviewed.

Related Government Programs

Aircraft Manufacturing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for inflated pricing
Limited transparency in pricing
Dependency on a single supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $25.8 million to ROLLS-ROYCE CORPORATION. T56-A-427A (WHOLE ENGINE 3 IN 1), POWER SECTION MODULES AND REDUCTION GEAR BOX MODULES

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 Navy).

What is the total obligated amount?

The obligated amount is $25.8 million.

What is the period of performance?

Start: 2017-03-17. End: 2023-05-30.

What is the justification for the sole-source award, and has it been reviewed for necessity?

The justification for this sole-source award is not provided in the data. Typically, sole-source contracts are justified by factors such as unique capabilities, urgent needs, or lack of viable alternatives. A thorough review by the Department of Defense would be necessary to confirm the necessity and ensure fair pricing, even without competition.

What are the long-term cost implications of relying on a single supplier for these critical engine modules?

Long-term reliance on a single supplier can lead to escalating costs due to a lack of competitive pressure. The government may face higher prices for spare parts, maintenance, and future upgrades. Additionally, it creates a strategic risk if the supplier faces production issues or decides to discontinue the product line.

Are there any alternative components or manufacturers that could be developed or qualified to mitigate sole-source dependency?

Exploring alternative components or manufacturers, even for sole-source items, is crucial for long-term cost control and supply chain resilience. This could involve investing in research and development for competing technologies or qualifying other suppliers through rigorous testing and certification processes to foster future competition.

Industry Classification

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

Product/Service Code: ENGINES AND TURBINES AND COMPONENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001914R4012

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rolls-Royce Holdings PLC (UEI: 217127290)

Address: 450 S MERIDIAN ST, INDIANAPOLIS, IN, 46225

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

Financial Breakdown

Contract Ceiling: $25,814,713

Exercised Options: $25,814,713

Current Obligation: $25,814,713

Actual Outlays: $9,021,540

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: N0001915D0033

IDV Type: IDC

Timeline