Navy awards $81.9M engineering support contract to Rockwell Collins, raising value-for-money questions

Contract Overview

Contract Amount: $81,907,253 ($81.9M)

Contractor: Rockwell Collins, Inc.

Awarding Agency: Department of Defense

Start Date: 2021-12-01

End Date: 2026-11-30

Contract Duration: 1,825 days

Daily Burn Rate: $44.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: SUSTAINING ENGINEERING SUPPORT

Place of Performance

Location: CEDAR RAPIDS, LINN County, IOWA, 52498

State: Iowa Government Spending

Plain-Language Summary

Department of Defense obligated $81.9 million to ROCKWELL COLLINS, INC. for work described as: SUSTAINING ENGINEERING SUPPORT Key points: 1. Contract awarded on a sole-source basis, limiting price competition and potentially increasing costs. 2. Long duration of 5 years suggests a need for sustained support, but also a risk of cost overruns. 3. Engineering services are critical for defense readiness, but the specific value delivered needs closer examination. 4. The contract's cost-plus-fixed-fee structure incentivizes cost incurrence, requiring robust oversight. 5. Limited competition may hinder innovation and prevent the government from accessing more competitive market rates. 6. The contract's value is significant, warranting scrutiny of performance metrics and deliverables.

Value Assessment

Rating: questionable

The contract's value of $81.9 million over five years for sustaining engineering support requires careful benchmarking. Without competitive bidding, it is difficult to assess if this price represents fair market value. The cost-plus-fixed-fee structure, while common for complex services, can lead to higher costs if not managed tightly. Comparing this to similar engineering support contracts for naval systems, especially those competed openly, would be crucial to determine if the government is receiving good value for its investment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities or when urgency dictates. The lack of competition means the government did not benefit from a bidding process that could have driven down prices and fostered innovation. The decision to sole-source this significant contract warrants justification regarding the unavailability of alternative solutions.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without multiple bids, there's less assurance that the price reflects the most economical option available in the market.

Public Impact

The primary beneficiary is the Department of the Navy, which receives essential engineering support for its systems. Services delivered include sustaining engineering, crucial for maintaining the operational readiness of naval assets. The geographic impact is likely concentrated around naval bases and facilities where Rockwell Collins provides support. Workforce implications include the employment of skilled engineers and technical personnel by Rockwell Collins.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially leads to higher costs for taxpayers.
Cost-plus-fixed-fee contract type can incentivize increased spending if not rigorously monitored.
Long contract duration (5 years) increases the risk of cost escalation and potential for scope creep.
Lack of competition may reduce opportunities for small businesses to participate in this segment of defense spending.

Positive Signals

Rockwell Collins is a known entity with established capabilities in aerospace and defense engineering.
Sustaining engineering is vital for maintaining the effectiveness and longevity of critical naval systems.
The contract specifies a fixed fee, providing some predictability in contractor profit margins.
The contract is a definitive contract, implying a clear scope and commitment from both parties.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex technological requirements, and significant government spending. Sustaining engineering services are a critical component of this sector, ensuring that advanced platforms remain operational and effective throughout their lifecycle. This contract fits within the broader category of engineering and technical services, a substantial market within defense procurement. Comparable spending benchmarks for similar long-term engineering support contracts in the defense industry would typically range in the tens to hundreds of millions of dollars, depending on the complexity and criticality of the systems supported.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, Rockwell Collins is a large defense contractor, suggesting that subcontracting opportunities for small businesses may be limited or dependent on Rockwell's own subcontracting plans. The absence of a specific small business focus in this sole-source award means that the direct impact on the small business defense ecosystem is likely minimal, unless Rockwell actively seeks out small business partners for specific tasks.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Given the cost-plus-fixed-fee structure, rigorous monitoring of costs, performance, and adherence to the Statement of Work is essential. Transparency would be enhanced through regular reporting requirements and potential audits by the Defense Contract Audit Agency (DCAA). The Inspector General of the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

Naval Air Systems Command (NAVAIR) Engineering Support
Defense Engineering Services Contracts
Aerospace Systems Sustainment
Department of Defense Logistics and Maintenance Contracts

Risk Flags

Sole-source award
Cost-plus-fixed-fee contract type
Long contract duration
Lack of explicit small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $81.9 million to ROCKWELL COLLINS, INC.. SUSTAINING ENGINEERING SUPPORT

Who is the contractor on this award?

The obligated recipient is ROCKWELL COLLINS, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $81.9 million.

What is the period of performance?

Start: 2021-12-01. End: 2026-11-30.

What is Rockwell Collins' track record with similar sole-source engineering contracts awarded by the Department of Defense?

Rockwell Collins, now part of Collins Aerospace, has a history of securing significant contracts with the Department of Defense, including those for engineering and sustainment services. While many of these contracts are competed, sole-source awards are not uncommon, particularly for specialized systems or upgrades where they possess unique capabilities or are the incumbent provider. Analyzing past sole-source awards to Rockwell Collins for similar services would reveal patterns in pricing, contract duration, and performance outcomes. A review of publicly available contract data suggests that sole-source awards, while less frequent than competed ones, do occur for established prime contractors like Rockwell Collins, often justified by proprietary technology, existing system integration, or long-term support requirements. Understanding the specific justifications and performance history on those prior sole-source engagements is key to assessing the current contract's risk profile.

How does the $81.9 million contract value compare to industry benchmarks for sustaining engineering services over a five-year period?

Benchmarking the $81.9 million contract value requires comparing it against similar sustaining engineering support contracts within the defense aerospace sector. Factors influencing this value include the complexity of the systems supported, the level of technical expertise required, and the scope of services (e.g., hardware, software, diagnostics, training). For a five-year period, this equates to approximately $16.4 million annually. Industry benchmarks for sustaining engineering can vary widely, but for complex military platforms, annual costs can range from 5% to 15% of the platform's acquisition cost. Without knowing the specific systems Rockwell Collins is supporting, a precise benchmark is difficult. However, if this contract supports high-value, technologically advanced naval assets, the annual cost might be considered within a reasonable range, provided the scope of work is comprehensive and the performance is critical. A more definitive comparison would involve analyzing the contract's specific deliverables against the costs of comparable contracts awarded through competitive processes.

What are the primary risks associated with a sole-source, cost-plus-fixed-fee contract of this magnitude and duration?

The primary risks associated with this sole-source, cost-plus-fixed-fee (CPFF) contract are multifaceted. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to inflated pricing and reduced incentive for the contractor to optimize costs. The government may not be achieving the best possible value. Secondly, the CPFF structure, while providing a guaranteed profit margin (the fixed fee), can incentivize the contractor to incur costs, as their fee is based on a percentage of those costs. This necessitates robust government oversight to ensure costs are reasonable and allocable. The five-year duration amplifies these risks; any inefficiencies or cost overruns incurred early in the contract term will compound over time. Furthermore, the lack of competition might stifle innovation, as the contractor may have less incentive to develop more cost-effective or efficient engineering solutions. Effective risk mitigation requires stringent performance monitoring, detailed cost audits, and clear communication channels.

What performance metrics or deliverables are typically included in such sustaining engineering contracts to ensure program effectiveness?

Sustaining engineering contracts typically include a range of performance metrics and deliverables designed to ensure program effectiveness and maintain the operational readiness of the supported systems. Key performance indicators (KPIs) often focus on response times for engineering support requests, resolution rates for reported issues, system availability or uptime percentages, and the successful implementation of engineering changes or upgrades. Deliverables can include regular technical reports, updated system documentation, design change proposals, root cause analyses for failures, and recommendations for system improvements. For this specific contract, the Department of the Navy would likely have established specific metrics related to the reliability, maintainability, and availability of the naval systems in question. The effectiveness of the program hinges on the contractor's ability to meet or exceed these defined metrics, which are crucial for ensuring the long-term viability and performance of critical defense assets.

How does historical spending on sustaining engineering services by the Department of the Navy compare to this contract's value?

The Department of the Navy consistently allocates substantial funds towards sustaining engineering services across its vast array of platforms and systems. Historical spending data reveals that billions of dollars are expended annually on maintenance, repair, overhaul, and engineering support to ensure fleet readiness. This $81.9 million contract, while significant, represents a portion of the Navy's overall sustainment budget. To provide context, one would need to examine the Navy's total obligations for engineering services (NAICS code 541330) over the past several fiscal years. Comparing this single contract's value against the total annual spend for similar services provides insight into its relative scale. For instance, if the Navy spends upwards of $5-10 billion annually on engineering services, this $81.9 million contract would represent a smaller, albeit important, segment focused on specific systems or platforms.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001921R0013

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: RTX Corp

Address: 400 COLLINS RD NE, CEDAR RAPIDS, IA, 52498

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

Financial Breakdown

Contract Ceiling: $88,301,755

Exercised Options: $88,301,755

Current Obligation: $81,907,253

Subaward Activity

Number of Subawards: 17

Total Subaward Amount: $1,688,115

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline