DoD awards $61.7M for Marine Corps engine repair, with Rolls-Royce as the sole awardee

Contract Overview

Contract Amount: $61,754,517 ($61.8M)

Contractor: Rolls-Royce Corporation

Awarding Agency: Department of Defense

Start Date: 2023-11-07

End Date: 2025-07-31

Contract Duration: 632 days

Daily Burn Rate: $97.7K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: DEPOT LEVEL ENGINE REPAIR CY2 USMC ACTIVE FY24

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46225

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $61.8 million to ROLLS-ROYCE CORPORATION for work described as: DEPOT LEVEL ENGINE REPAIR CY2 USMC ACTIVE FY24 Key points: 1. Value for money is assessed by comparing the per-unit cost to industry benchmarks. 2. Competition dynamics indicate a full and open process, but only one bid was received. 3. Risk indicators include potential single-source reliance and the complexity of depot-level repairs. 4. Performance context is tied to the critical need for operational aircraft engines for the USMC. 5. Sector positioning places this contract within the aerospace and defense manufacturing industry.

Value Assessment

Rating: fair

The contract value of $61.7 million for depot-level engine repair for the USMC is substantial. Benchmarking the per-unit cost against similar engine repair contracts is crucial for assessing value. Given the specialized nature of depot-level repairs for advanced aircraft engines, pricing can be expected to be high. However, without specific per-unit cost data or direct comparisons to identical services, a definitive value assessment is challenging. The firm-fixed-price structure aims to control costs, but the overall value hinges on the efficiency and effectiveness of the repair process.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit bids. Despite this, only one bid was received from Rolls-Royce Corporation. This outcome suggests that while the competition was open, the market for this specific, highly specialized service may be limited, or other potential bidders may have found the requirements or pricing structure unappealing. The lack of multiple bids raises questions about the robustness of the competition and its effectiveness in driving down prices.

Taxpayer Impact: A single bid in a full and open competition may mean taxpayers are not benefiting from the full potential of competitive pricing, potentially leading to higher costs than if multiple firms had vied for the contract.

Public Impact

The primary beneficiaries are the United States Marine Corps, ensuring the operational readiness of their aircraft fleet. Services delivered include critical depot-level repair and maintenance for aircraft engines. The geographic impact is primarily within the United States, supporting military operations. Workforce implications include the employment of skilled technicians and engineers at the repair facility.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition despite full and open solicitation could lead to higher costs.
Reliance on a single contractor for critical engine repairs poses a supply chain risk.
The specialized nature of depot-level repairs may limit the pool of qualified contractors.
Contract duration and potential for follow-on work could create long-term dependency.

Positive Signals

Firm-fixed-price contract type provides cost certainty for the government.
Rolls-Royce is a known entity with established expertise in aircraft engine maintenance.
The contract supports the operational readiness of essential USMC assets.
Full and open competition was advertised, adhering to procurement regulations.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft engine maintenance and repair. This is a highly specialized niche within the broader defense industrial base. The market is characterized by high barriers to entry due to technical expertise, capital investment, and regulatory requirements. Comparable spending benchmarks would involve analyzing other government contracts for similar depot-level maintenance services on complex aviation systems, which are often awarded to original equipment manufacturers or their authorized service centers.

Small Business Impact

The data indicates that small business participation is not a primary focus for this specific contract, as indicated by 'sb': false. There is no explicit small business set-aside. While Rolls-Royce Corporation is a large business, the nature of depot-level engine repair often requires specialized facilities and expertise that may not be readily available or cost-effective for small businesses. Subcontracting opportunities for small businesses may exist for component parts or support services, but this is not detailed in the provided data.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy's contracting and program management offices. Accountability measures are embedded in the firm-fixed-price contract terms, requiring delivery of specified services within agreed-upon timelines and quality standards. Transparency is generally maintained through contract award databases, though specific performance metrics and detailed cost breakdowns may not be publicly disclosed. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Engine Repair and Overhaul Services
USMC Aviation Readiness Programs
Defense Logistics Agency (DLA) Aviation Support
Aerospace Manufacturing and Repair Contracts

Risk Flags

Limited competition despite full and open solicitation.
Potential for sole-source dependency for critical repairs.
High cost associated with specialized depot-level maintenance.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $61.8 million to ROLLS-ROYCE CORPORATION. DEPOT LEVEL ENGINE REPAIR CY2 USMC ACTIVE FY24

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 $61.8 million.

What is the period of performance?

Start: 2023-11-07. End: 2025-07-31.

What is the historical spending trend for depot-level engine repair for the USMC, and how does this award compare?

Analyzing historical spending for depot-level engine repair for the USMC requires access to historical contract data. Typically, such services are procured on an as-needed basis or through multi-year contracts. If this $61.7 million award represents a significant increase or decrease compared to previous years' spending on similar services, it could indicate changes in operational tempo, fleet readiness requirements, or the pricing of repair services. Without specific historical figures, it's difficult to provide a precise comparison. However, sustained or increasing spending in this area often reflects the aging of the aircraft fleet or increased operational demands placed upon it, necessitating more frequent and extensive maintenance.

What specific types of aircraft engines are covered under this contract, and what is their operational status?

The contract specifies 'DEPOT LEVEL ENGINE REPAIR CY2 USMC ACTIVE FY24'. While the exact aircraft models and engine types are not detailed in the provided summary, 'CY2' likely refers to a specific engine model or series used by the US Marine Corps. Depot-level repair implies comprehensive overhauls, component replacements, and testing required to bring engines back to full operational specifications. The 'USMC ACTIVE' designation confirms these engines are part of the active fleet. Understanding the specific engine types (e.g., turboshaft, turbofan) and the number of engines requiring repair would provide better context on the scope and criticality of the services being procured.

What are the key performance indicators (KPIs) and service level agreements (SLAs) associated with this contract?

Key performance indicators and service level agreements for depot-level engine repair contracts typically focus on turnaround time (TAT) for repairs, quality of workmanship (e.g., defect rates post-repair), and adherence to technical specifications. For a firm-fixed-price contract like this, the government expects the contractor to meet all specified performance standards. While specific KPIs are not detailed in the provided data, common metrics include the percentage of engines returned to service within a target timeframe, the number of repeat defects found after repair, and compliance with all required testing and certification procedures. Failure to meet these KPIs could result in contractually defined penalties or remedies.

What is the track record of Rolls-Royce Corporation in performing similar depot-level engine repair services for the DoD?

Rolls-Royce Corporation has a long-standing and extensive track record in providing engine maintenance, repair, and overhaul (MRO) services for military and commercial aviation globally. They are a primary original equipment manufacturer (OEM) for many aircraft engines, including those used by the U.S. military. Their experience typically encompasses depot-level services, component repair, and full engine overhauls. Past performance evaluations and contract histories within government databases would provide specific details on their performance on similar contracts, including on-time delivery, quality metrics, and cost control. Generally, OEMs like Rolls-Royce are considered highly capable due to their intimate knowledge of their engine designs.

How does the firm-fixed-price (FFP) contract type mitigate risks for the government in this context?

The firm-fixed-price (FFP) contract type is generally considered advantageous for the government when the scope of work is well-defined and the risks of cost overruns are manageable. In this case, for depot-level engine repair, the FFP structure shifts the primary cost risk to the contractor, Rolls-Royce Corporation. The government agrees to pay a set price for the specified repair services, regardless of the contractor's actual costs. This provides budget certainty for the Department of the Navy. However, it also means that if the contractor encounters unforeseen difficulties or inefficiencies, they bear the financial burden. The effectiveness of FFP relies heavily on the accuracy of the initial cost estimates and the contractor's ability to manage their operations efficiently.

What is the potential impact of this contract on the broader aerospace and defense MRO market?

This contract, awarded to Rolls-Royce, reinforces their position as a key provider of depot-level engine MRO services for the USMC. For the broader market, it highlights the continued demand for specialized aviation maintenance within the defense sector. The fact that only one bid was received in a full and open competition could suggest consolidation or limited competition within specific engine maintenance niches. It also underscores the importance of OEMs in maintaining complex military hardware. The contract's value and duration can influence market dynamics by signaling demand and potentially impacting the capacity and pricing strategies of other MRO providers, both large and small.

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: N0001921R0014

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: $61,754,517

Exercised Options: $61,754,517

Current Obligation: $61,754,517

Subaward Activity

Number of Subawards: 3

Total Subaward Amount: $17,072,964

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001922D0011

IDV Type: IDC

Timeline