Rolls-Royce Corporation awarded $27.8M for QECA repairs, with a significant per-unit cost benchmark

Contract Overview

Contract Amount: $27,814,331 ($27.8M)

Contractor: Rolls-Royce Corporation

Awarding Agency: Department of Defense

Start Date: 2018-05-23

End Date: 2019-04-30

Contract Duration: 342 days

Daily Burn Rate: $81.3K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: QECA REPAIRS

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46225

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $27.8 million to ROLLS-ROYCE CORPORATION for work described as: QECA REPAIRS Key points: 1. Value for money assessed through comparison to similar repair contracts and market rates. 2. Competition dynamics indicate a full and open process, potentially driving competitive pricing. 3. Risk indicators include the firm fixed price contract type, which shifts cost risk to the contractor. 4. Performance context is tied to aircraft engine maintenance, a critical defense function. 5. Sector positioning within aircraft engine manufacturing and repair highlights specialized capabilities.

Value Assessment

Rating: fair

The awarded amount of $27.8 million for QECA repairs appears substantial. Benchmarking against similar engine repair contracts is crucial to determine if this represents a fair market price. The provided data indicates a per-unit cost of $81,328, which needs to be compared against industry averages for similar repair services to ascertain value for money. Without direct comparable contract data or detailed repair scope, a definitive value assessment is challenging.

Cost Per Unit: $81,328

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a full and open competition, suggesting that multiple bidders had the opportunity to submit proposals. The presence of open competition is generally a positive sign for price discovery and can lead to more competitive pricing for the government. The specific number of bidders is not provided, which would offer further insight into the intensity of the competition.

Taxpayer Impact: A full and open competition process is beneficial for taxpayers as it increases the likelihood of obtaining services at a competitive price, preventing potential overspending.

Public Impact

The primary beneficiaries are the Department of the Navy, ensuring the operational readiness of its aircraft. Services delivered include the repair of QECA (likely a component or system within aircraft engines). Geographic impact is centered around the contractor's facilities, likely in Indiana, and the naval bases where the repaired engines will be deployed. Workforce implications include skilled technicians and engineers involved in the complex repair process.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if the scope of 'repairs' is broader than initially anticipated under the firm fixed price.
Dependence on a single contractor for critical engine component repairs could pose a supply chain risk.

Positive Signals

Firm fixed price contract structure transfers cost overrun risk to the contractor.
Full and open competition suggests a robust selection process, likely resulting in a qualified vendor.
The contract duration of 342 days indicates a focused effort on a specific set of repairs.

Sector Analysis

This contract falls within the broader aerospace and defense manufacturing sector, specifically focusing on the maintenance, repair, and overhaul (MRO) of aircraft engines. The market for aircraft engine MRO is highly specialized, with a few key players dominating. Spending in this area is critical for maintaining military readiness and is often characterized by long-term sustainment contracts. Comparable spending benchmarks would involve analyzing other engine repair contracts across different military branches.

Small Business Impact

The contract was awarded under full and open competition and does not indicate any specific small business set-aside. There is no explicit information on subcontracting plans for small businesses. The nature of specialized aircraft engine repair often requires significant technical expertise and infrastructure, which may limit the direct participation of small businesses as prime contractors in this specific domain.

Oversight & Accountability

The contract is a delivery order under a larger contract vehicle, implying that oversight mechanisms are likely in place at the program management level. The firm fixed price nature of the contract shifts some financial oversight burden to ensuring the scope of work is adhered to. Transparency is generally facilitated by the Federal Procurement Data System (FPDS), where contract awards are reported. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Aircraft Engine Repair and Maintenance
Defense Logistics and Sustainment
Naval Aviation Support Contracts
Aerospace Component Manufacturing

Risk Flags

Potential for cost creep if repair scope is not tightly managed.
Dependence on specialized repair capabilities.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.8 million to ROLLS-ROYCE CORPORATION. QECA REPAIRS

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 $27.8 million.

What is the period of performance?

Start: 2018-05-23. End: 2019-04-30.

What specific type of QECA component is being repaired, and what is the typical failure rate or maintenance cycle for this component?

The provided data does not specify the exact nature of the 'QECA' component. QECA likely refers to a specific part or system within an aircraft engine, possibly related to the Queen Air or a similar designation. Understanding the component's function, its typical lifespan, and the reasons for repair (e.g., wear and tear, battle damage, scheduled maintenance) is crucial for assessing the necessity and frequency of such repair contracts. Without this detail, it's difficult to contextualize the $27.8 million award beyond its total value. Further investigation into the specific contract line items or technical exhibits would be required to identify the component and its maintenance history.

How does the per-unit cost of $81,328 compare to industry benchmarks for similar aircraft engine component repairs?

The per-unit cost of $81,328 for QECA repairs serves as a key metric for value assessment. To benchmark this figure effectively, it needs to be compared against the average costs for repairing similar components across different engine models and aircraft types, both within the Department of Defense and the commercial aviation sector. Factors such as the complexity of the repair, the specific materials required, and the labor hours involved significantly influence per-unit costs. If this figure is substantially higher than comparable repairs, it could indicate potential inefficiencies or a lack of competitive pricing, even within a full and open competition.

What was the total number of bids received during the full and open competition for this contract?

The data indicates that this contract was awarded under 'FULL AND OPEN COMPETITION,' which implies that multiple sources were solicited and allowed to bid. However, the specific number of bids received is not provided in the summary data. Knowing the number of bidders is critical for assessing the level of competition. A higher number of bids generally suggests a more competitive environment, which can lead to better pricing and terms for the government. Conversely, a low number of bids, even in an open competition, might suggest market limitations or a lack of strong interest from potential suppliers.

What is the historical spending pattern for QECA repairs by the Department of the Navy over the past five years?

Analyzing historical spending on QECA repairs by the Department of the Navy over the past five years would provide valuable context for the current $27.8 million award. This trend analysis could reveal whether spending has been consistent, increasing, or decreasing, and whether this award represents a typical expenditure or an anomaly. Understanding historical patterns can help identify potential surges in demand, changes in maintenance strategies, or the impact of new technologies. Without this historical data, it is challenging to determine if the current contract value is aligned with long-term budgetary planning and operational needs.

What are the specific performance metrics or Key Performance Indicators (KPIs) associated with this repair contract?

The provided data does not detail the specific performance metrics or Key Performance Indicators (KPIs) for this QECA repair contract. In defense contracts, especially those involving critical components like aircraft engines, KPIs typically focus on aspects such as turnaround time for repairs, quality of workmanship (e.g., defect rates post-repair), adherence to technical specifications, and delivery schedules. Establishing and monitoring these KPIs is essential for ensuring the contractor meets the required standards and that the repairs contribute effectively to aircraft readiness. The absence of this information limits the ability to assess the contractor's performance beyond the contractual completion.

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 (UEI: 217127290)

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: $27,814,331

Exercised Options: $27,814,331

Current Obligation: $27,814,331

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001917D0090

IDV Type: IDC

Timeline