Rolls-Royce Corporation awarded $54.5M for aircraft engine repair, a sole-source contract

Contract Overview

Contract Amount: $54,510,281 ($54.5M)

Contractor: Rolls-Royce Corporation

Awarding Agency: Department of Defense

Start Date: 2017-06-08

End Date: 2018-02-28

Contract Duration: 265 days

Daily Burn Rate: $205.7K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: REPAIR OF LOW POWER REMOVALS

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46241

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $54.5 million to ROLLS-ROYCE CORPORATION for work described as: REPAIR OF LOW POWER REMOVALS Key points: 1. The contract value of $54.5M for aircraft engine repair indicates significant investment in maintaining critical defense assets. 2. As a sole-source award, the absence of competitive bidding raises questions about potential price inflation and value for money. 3. The short duration of 265 days suggests a focus on immediate repair needs rather than long-term fleet support. 4. The contract falls under Aircraft Engine and Engine Parts Manufacturing (NAICS 336412), a specialized sector requiring unique expertise. 5. The firm fixed-price contract type aims to provide cost certainty for the government, though it may limit flexibility for unforeseen issues. 6. The award was made by the Department of the Navy, highlighting its reliance on specific engine maintenance capabilities.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without comparable sole-source repair agreements for similar Rolls-Royce engines. However, the absence of competition inherently limits the government's ability to secure the best possible pricing. The firm fixed-price structure provides cost certainty, but the lack of competitive pressure means the government may not be realizing optimal value for the funds expended on these critical repairs. Further analysis would require access to historical pricing data for similar services and an understanding of the proprietary nature of the repair process.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Rolls-Royce Corporation, was solicited. This approach is typically used when a specific product or service is available only from a single source, often due to proprietary technology, unique capabilities, or urgent needs where competition is not feasible. The lack of multiple bidders means there was no direct price comparison or negotiation driven by market forces, potentially leading to higher costs for the government.

Taxpayer Impact: Sole-source awards can result in taxpayers paying a premium, as the absence of competition removes the incentive for the contractor to offer the lowest possible price. This can lead to less efficient use of public funds compared to competitively awarded contracts.

Public Impact

The primary beneficiaries are the Department of the Navy and its operational readiness, ensuring aircraft engines are maintained and functional. The services delivered include the repair of low power on specific aircraft engines, crucial for flight safety and performance. The geographic impact is primarily within the operational theaters of the Navy, though the repair work itself likely occurs at specialized facilities. Workforce implications include the employment of skilled technicians and engineers at Rolls-Royce Corporation specializing in aircraft engine maintenance.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially increasing costs for taxpayers.
Lack of transparency in pricing due to no competitive bidding.
Reliance on a single contractor for critical repair services creates vendor lock-in.
Short contract duration may indicate a reactive approach rather than proactive maintenance planning.

Positive Signals

Firm fixed-price contract provides cost certainty for the government.
Award to a specialized manufacturer ensures expertise in critical engine repairs.
Contract supports the operational readiness of naval aviation assets.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on the maintenance and repair of aircraft engines. The market for such specialized services is often dominated by original equipment manufacturers (OEMs) like Rolls-Royce due to proprietary knowledge, tooling, and certifications. Comparable spending benchmarks are difficult to establish for sole-source contracts, but the overall defense spending on aircraft maintenance and repair is substantial, reflecting the high cost and complexity of modern military aviation.

Small Business Impact

This contract does not appear to involve small business set-asides, as indicated by 'sb': false. Rolls-Royce Corporation is a large aerospace manufacturer. There is no explicit information regarding subcontracting opportunities for small businesses within this specific award. Therefore, the direct impact on the small business ecosystem from this particular contract is likely minimal, unless Rolls-Royce engages in subcontracting beyond the scope of this data.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver specified repairs at an agreed-upon price. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Engine Maintenance
Defense Logistics Agency (DLA) Support Contracts
Naval Aviation Readiness Programs
Rolls-Royce Defense Services Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for price inflation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $54.5 million to ROLLS-ROYCE CORPORATION. REPAIR OF LOW POWER REMOVALS

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 $54.5 million.

What is the period of performance?

Start: 2017-06-08. End: 2018-02-28.

What is the historical spending pattern for Rolls-Royce Corporation with the Department of the Navy for aircraft engine repair services?

Analyzing historical spending requires access to a broader dataset of federal contracts. However, given Rolls-Royce's position as a major engine manufacturer, it is probable that the Department of the Navy has engaged in multiple contracts with them over the years for various engine types and services. The frequency and value of these contracts would likely correlate with the Navy's fleet size, aircraft types, and operational tempo. Without specific historical data, it's difficult to ascertain if this $54.5M award represents a typical or an outlier expenditure for this specific type of repair service. Past sole-source awards for similar critical repairs might indicate a pattern of reliance on the OEM for specialized maintenance.

How does the $54.5M contract value compare to other aircraft engine repair contracts awarded by the Department of Defense?

Comparing this $54.5M contract value requires a benchmark of similar aircraft engine repair contracts, ideally for comparable engine models and service scopes, awarded across the Department of Defense. Sole-source contracts, by their nature, make direct value comparisons difficult as they bypass competitive pricing dynamics. However, if this contract represents a significant portion of the annual budget for a specific engine type's repair, or if it's substantially higher than previously awarded contracts for similar work (even if also sole-source), it could indicate a concerning trend. Conversely, if it aligns with the expected costs for complex, specialized engine overhauls, it might be considered fair within the context of sole-source procurement.

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

The primary risk of a sole-source award for critical aircraft engine repairs is the potential for inflated pricing due to the lack of competition. Taxpayers may end up paying more than necessary. Another significant risk is vendor lock-in, where the government becomes overly dependent on a single supplier, potentially limiting future negotiation leverage and flexibility. Furthermore, without competitive pressure, there might be less incentive for the sole-source provider to innovate or improve efficiency. Finally, if the sole-source provider experiences financial difficulties or operational disruptions, it could severely impact the availability of critical repair services for the military.

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

Rolls-Royce Corporation has a long-standing and extensive track record of supplying engines and providing maintenance services to various military branches, including the Department of Defense. They are a major global player in the aerospace industry, known for producing sophisticated jet engines for both commercial and military applications. Their defense division specifically caters to military requirements, often involving complex engineering, manufacturing, and sustainment services. While specific performance metrics for individual contracts are not detailed here, their continued presence and significant contract awards suggest a generally reliable performance history in meeting the demanding requirements of defense clients, including engine repair and overhaul.

What is the justification for awarding this contract as sole-source instead of seeking competitive bids?

The justification for a sole-source award typically stems from specific circumstances outlined in federal acquisition regulations, such as the availability of the required supply or service from only one responsible source, or a public exigency requiring immediate contract award. For specialized equipment like aircraft engines, the original equipment manufacturer (OEM) often possesses unique technical data, proprietary processes, and specialized tooling necessary for repairs. In such cases, competition may not be feasible or cost-effective. The Department of the Navy would have had to formally document and justify why Rolls-Royce Corporation was the only viable option for this specific repair work, likely citing proprietary technology or unique expertise.

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: N0001914R0039

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: $54,510,281

Exercised Options: $54,510,281

Current Obligation: $54,510,281

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001915D0019

IDV Type: IDC

Timeline