Rolls-Royce Corporation awarded $30M contract for aircraft engine parts, with a unit price of $824,350

Contract Overview

Contract Amount: $30,006,356 ($30.0M)

Contractor: Rolls-Royce Corporation

Awarding Agency: Department of Defense

Start Date: 2017-05-01

End Date: 2018-04-30

Contract Duration: 364 days

Daily Burn Rate: $82.4K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: USMC ACTIVE IGF::OT::IGF

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46225

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $30.0 million to ROLLS-ROYCE CORPORATION for work described as: USMC ACTIVE IGF::OT::IGF Key points: 1. The contract value of $30M represents a significant investment in critical aircraft engine components. 2. Competition dynamics for this contract were favorable, indicating potential for competitive pricing. 3. The fixed-price contract type suggests a defined cost structure, mitigating some financial risk. 4. Performance is tied to aircraft engine and engine parts manufacturing, a specialized sector. 5. This contract falls within the broader Defense sector, specifically supporting naval aviation. 6. The delivery order structure implies a need for specific, time-bound component provision.

Value Assessment

Rating: good

The awarded amount of $30,001,000 for aircraft engine parts appears reasonable given the specialized nature of the components. The per-unit cost of $824,350 is a key benchmark. Without direct comparisons to identical engine parts from other manufacturers or historical data for this specific part, a definitive value-for-money assessment is challenging. However, the fixed-price nature of the contract provides cost certainty for the government.

Cost Per Unit: $824,350

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple bidders had the opportunity to submit proposals. This level of competition is generally beneficial for price discovery and can lead to more favorable pricing for the government. The specific number of bidders is not provided, but the 'full and open' designation implies a robust competitive process.

Taxpayer Impact: Full and open competition typically results in better pricing for taxpayers by encouraging multiple vendors to offer their best prices to secure the contract.

Public Impact

The U.S. Marine Corps (USMC) is the primary beneficiary, receiving critical aircraft engine parts. Services delivered include the manufacturing and supply of specialized aircraft engine components. The geographic impact is primarily within Indiana, where the contractor is located. Workforce implications include employment in advanced manufacturing and aerospace engineering roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price escalation if market conditions for raw materials change significantly, though mitigated by fixed-price terms.
Dependence on a single contractor for specific, critical engine parts could pose a supply chain risk if not managed proactively.

Positive Signals

Awarded under full and open competition, indicating a competitive bidding process.
Fixed-price contract type provides cost certainty and limits the government's exposure to cost overruns.
Contractor is a known entity in the aerospace industry, suggesting established expertise.

Sector Analysis

This contract operates within the aerospace manufacturing sector, specifically focusing on aircraft engines and their components. This is a highly specialized and capital-intensive industry characterized by stringent quality requirements and long product development cycles. The market size for aircraft engine parts is substantial, driven by military and commercial aviation demand. This contract fits within the broader defense industrial base, supporting the operational readiness of naval aviation assets.

Small Business Impact

The contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. This suggests that the primary awardee is a large business, and the focus is on specialized manufacturing capabilities that may not be readily available from smaller enterprises. The impact on the small business ecosystem is likely minimal for this specific contract.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the contract terms, including delivery schedules and quality specifications. Transparency is generally maintained through contract award databases. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Aircraft Engine Manufacturing
Aerospace Parts Supply
Naval Aviation Support
Defense Procurement

Risk Flags

Potential for supply chain disruption
Dependence on specialized manufacturing capabilities

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.0 million to ROLLS-ROYCE CORPORATION. USMC ACTIVE IGF::OT::IGF

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 $30.0 million.

What is the period of performance?

Start: 2017-05-01. End: 2018-04-30.

What is the track record of Rolls-Royce Corporation in fulfilling defense contracts, particularly for aircraft engine components?

Rolls-Royce Corporation has a long-standing and extensive track record in the defense sector, particularly in the manufacturing of aircraft engines and related components for military aircraft. They are a major global supplier to numerous defense forces worldwide, including the U.S. military. Their experience spans decades, covering a wide range of engine types and platforms. While specific performance metrics for individual contracts are often not publicly detailed, their continued success in securing large, complex defense contracts suggests a generally strong performance history. However, like any large manufacturer, they may have faced specific challenges or contract disputes on occasion, which would be detailed in more specific contract performance reviews or government accountability reports.

How does the per-unit cost of $824,350 compare to similar aircraft engine parts in the market?

The per-unit cost of $824,350 for aircraft engine parts is substantial, reflecting the highly specialized and complex nature of these components. Aircraft engines are sophisticated pieces of machinery requiring advanced materials, precision engineering, and rigorous testing. The cost is influenced by factors such as the specific engine model, the criticality of the part, the materials used, and the manufacturing processes involved. Benchmarking this cost accurately requires detailed knowledge of the specific part number and its function within a particular engine system. Without that specific information, it's difficult to make a direct comparison. However, in the context of high-performance military aircraft engines, such unit costs are not uncommon for critical components like turbine blades, combustors, or complex gearboxes. Comparisons would ideally be made against similar parts for comparable engine platforms, considering both military and high-end commercial aviation markets.

What are the primary risks associated with this contract, and how are they mitigated?

The primary risks associated with this contract include potential supply chain disruptions for critical components, performance issues with the delivered parts, and price volatility for raw materials. Supply chain risks are mitigated by the contractor's established manufacturing capabilities and potentially by maintaining strategic inventory. Performance risks are addressed through stringent quality control measures, adherence to technical specifications, and the fixed-price contract type, which incentivizes the contractor to deliver conforming parts. Price volatility for raw materials is a concern, but the firm fixed-price nature of the contract shifts this risk primarily to the contractor, providing cost certainty for the government. The duration of the contract (364 days) also limits the exposure period to market fluctuations.

How effective is the 'full and open competition' process in ensuring value for money for this type of specialized defense procurement?

The 'full and open competition' process is generally considered highly effective in ensuring value for money for specialized defense procurements, including aircraft engine parts. By allowing all responsible sources to submit bids, it fosters a competitive environment where contractors are incentivized to offer their best pricing and technical solutions to win the contract. This competition drives down prices compared to sole-source or limited competition scenarios. For specialized items like aircraft engine parts, it ensures that the government explores the full range of available suppliers, potentially uncovering innovative solutions or more cost-effective manufacturing methods. The effectiveness is maximized when the solicitation clearly defines requirements and evaluation criteria, allowing for a fair comparison of proposals.

What is the historical spending pattern for aircraft engine parts by the Department of the Navy, and how does this contract fit within that trend?

Historical spending by the Department of the Navy (DoN) on aircraft engine parts is substantial and consistent, driven by the continuous need to maintain and modernize its fleet of naval aircraft. The DoN operates a wide array of aircraft, from fighter jets to helicopters and transport planes, each requiring specialized engine components. Spending in this category typically fluctuates based on fleet readiness requirements, new aircraft procurements, and major maintenance cycles. Contracts for engine parts are often awarded through competitive processes, though sole-source or limited competition may occur for highly specialized or proprietary components. This $30 million contract for aircraft engine parts fits within the expected pattern of ongoing investment in aviation readiness and sustainment. Its value is significant but likely represents a portion of the DoN's overall annual expenditure on such critical supplies.

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: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0001916R0013

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: $30,006,356

Exercised Options: $30,006,356

Current Obligation: $30,006,356

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001917D0090

IDV Type: IDC

Timeline