Department of Defense awards $151.9M contract for aircraft engine parts and support to Rolls-Royce Corporation

Contract Overview

Contract Amount: $151,868,209 ($151.9M)

Contractor: Rolls-Royce Corporation

Awarding Agency: Department of Defense

Start Date: 2021-12-01

End Date: 2023-09-30

Contract Duration: 668 days

Daily Burn Rate: $227.3K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROCURE EFHS, REPAIR OF LOW POWER REMOVALS, SITE SUPPORT, MEU SUPPORT, AND PROGRAM MGT

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46225

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $151.9 million to ROLLS-ROYCE CORPORATION for work described as: PROCURE EFHS, REPAIR OF LOW POWER REMOVALS, SITE SUPPORT, MEU SUPPORT, AND PROGRAM MGT Key points: 1. Contract focuses on essential aircraft engine components and site support, indicating a critical need for sustained operational capability. 2. The sole-source nature of this award warrants scrutiny regarding potential price inflation and limited market engagement. 3. A significant contract duration of 668 days suggests a long-term requirement for these specialized services. 4. The award is categorized under Aircraft Engine and Engine Parts Manufacturing, a highly specialized industrial sector. 5. The absence of competition raises questions about whether the government secured the best possible value. 6. The contract's value places it as a substantial investment within its specific defense procurement category.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and specialized components. Without competitive bids, it's difficult to definitively assess if the pricing reflects fair market value or if there's an opportunity for cost savings. The fixed-price structure offers some cost certainty, but the lack of comparison points makes a robust value-for-money assessment difficult.

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 bypasses the standard competitive bidding process, which typically involves multiple vendors vying for the contract. While sole-source awards can be justified in specific circumstances, such as unique capabilities or urgent needs, they limit price discovery and potentially lead to higher costs for the government.

Taxpayer Impact: The lack of competition means taxpayers may not benefit from the cost efficiencies that typically arise from a competitive bidding environment. This could translate to a higher overall expenditure for the required goods and services.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Department of the Navy, ensuring the operational readiness of aircraft engines. Services delivered include the repair of low power removals, site support, and program management related to aircraft engines. The geographic impact is primarily within Indiana, where the contractor is located, but the ultimate impact is on naval aviation readiness nationwide. This contract supports specialized jobs within the aerospace manufacturing and maintenance sector, contributing to the skilled workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness.
Lack of transparency in the procurement process due to no-bid nature.
Reliance on a single supplier for critical engine components could pose supply chain risks.
Potential for cost overruns if pricing is not rigorously scrutinized without market comparison.

Positive Signals

Ensures continued availability of critical aircraft engine parts and support.
Rolls-Royce Corporation is a known entity with established expertise in this specialized field.
Fixed-price contract provides some cost predictability for the government.
Supports ongoing operations and maintenance for essential defense assets.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft engines and related parts. This is a highly specialized and capital-intensive industry dominated by a few major global players. The market size for such components is substantial, driven by military and commercial aviation demands. This contract represents a significant portion of spending for specialized engine maintenance and parts within the naval aviation segment.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'ss': false and 'sb': false. The nature of aircraft engine manufacturing and repair often involves highly specialized capabilities and large-scale operations, which may not be conducive to small business participation. There is no explicit information on subcontracting plans for small businesses, suggesting that the primary focus is on the large prime contractor's capabilities.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and financial management oversight mechanisms. The Inspector General's office may conduct audits or investigations into the contract's execution and pricing, particularly given its sole-source nature. Transparency is limited due to the lack of a competitive process, but contract performance metrics and payment schedules would be subject to standard government oversight.

Related Government Programs

Aircraft Engine Maintenance and Repair
Defense Logistics Agency Procurement
Naval Aviation Support Contracts
Aerospace Component Manufacturing
Sole-Source Defense Contracts

Risk Flags

Sole-source procurement
Lack of competition
Potential for price inflation
Dependency on single supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $151.9 million to ROLLS-ROYCE CORPORATION. PROCURE EFHS, REPAIR OF LOW POWER REMOVALS, SITE SUPPORT, MEU SUPPORT, AND PROGRAM MGT

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 $151.9 million.

What is the period of performance?

Start: 2021-12-01. End: 2023-09-30.

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

Analyzing historical spending data for Rolls-Royce Corporation with the Department of Defense for similar aircraft engine services is crucial for understanding the context of this $151.9 million award. While specific historical figures for this exact service category are not provided in the given data, Rolls-Royce is a well-established global company with a long-standing relationship with various military branches, including the U.S. Navy. Past contracts often involve engine overhauls, spare parts, and long-term support agreements. A review of publicly available contract databases (like FPDS or USAspending) would likely reveal a consistent pattern of significant awards to Rolls-Royce for its specialized engine technologies. Understanding the volume, frequency, and value of these past awards can help benchmark the current contract's scale and identify any trends in pricing or scope. It also helps assess the government's historical reliance on Rolls-Royce for these critical capabilities.

How does the per-unit cost of 'low power removals' or other specific services compare to industry benchmarks or previous government contracts?

Determining the per-unit cost for specific services like 'low power removals' within this $151.9 million contract is challenging without detailed line-item breakdowns and access to competitive bid data. Since this was a sole-source award, direct comparison to market rates or previous competitive bids for identical services is difficult. However, an analysis could involve estimating typical costs for engine component repairs or specialized maintenance tasks based on industry reports, independent aerospace consulting firms, or data from similar, albeit not identical, contracts. The government might have internal cost estimation tools or historical data points for comparable tasks performed by other entities or under different contract types. The absence of competitive pricing makes it imperative for the contracting officer and auditors to rigorously validate the reasonableness of each cost element within the fixed-price structure to ensure fair value is being obtained for the taxpayer.

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

A sole-source award for critical aircraft engine components and support, such as this $151.9 million contract to Rolls-Royce Corporation, presents several inherent risks. Firstly, the lack of competition can lead to inflated pricing, as the contractor faces less pressure to offer the most cost-effective solution. Taxpayers may end up paying more than necessary. Secondly, there's a potential for reduced innovation and service quality, as the contractor may not feel compelled to invest in improving processes or offering superior support when there are no competitors vying for the business. Thirdly, it creates a dependency on a single supplier, which can pose supply chain risks. If Rolls-Royce experiences production issues, labor disputes, or geopolitical challenges, the Department of the Navy's operational readiness could be significantly impacted. Finally, the absence of a competitive process limits transparency and makes it harder to independently verify the 'best value' determination for the government.

What performance metrics are being used to evaluate Rolls-Royce Corporation's delivery of services under this contract?

The provided data does not specify the exact performance metrics (Key Performance Indicators - KPIs) that are being used to evaluate Rolls-Royce Corporation's delivery of services under this $151.9 million contract. However, for defense contracts of this nature, common performance metrics typically include factors such as on-time delivery of parts and services, quality of repairs (e.g., defect rates, rework required), adherence to technical specifications, response times for support requests, and overall program management effectiveness. The contract likely includes clauses outlining acceptable performance levels and potential remedies for deficiencies. The Department of the Navy's contracting officers and technical representatives would be responsible for monitoring these metrics throughout the contract's duration and ensuring that Rolls-Royce meets the required standards to maintain aircraft readiness and operational capability.

How does this contract align with the Department of the Navy's broader strategy for maintaining its aircraft engine fleet?

This $151.9 million contract for aircraft engine parts and support aligns with the Department of the Navy's broader strategy by ensuring the continued operational readiness and sustainment of its critical aircraft engine fleet. The Navy relies on a diverse range of aircraft for various missions, and maintaining the engines that power these platforms is paramount. Awarding this contract, even on a sole-source basis, to a key original equipment manufacturer like Rolls-Royce Corporation suggests a strategic decision to leverage their specialized expertise and proprietary technology for essential maintenance and component supply. This approach likely aims to guarantee access to genuine parts, specialized repair techniques, and potentially integrated support solutions that are vital for maximizing engine lifespan, ensuring flight safety, and minimizing downtime, thereby supporting the Navy's overall force projection and mission accomplishment capabilities.

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

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: $151,868,209

Exercised Options: $151,868,209

Current Obligation: $151,868,209

Subaward Activity

Number of Subawards: 5

Total Subaward Amount: $21,851,056

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001920D0004

IDV Type: IDC

Timeline