Department of Defense awards $92.4M contract for aircraft engine support to Rolls-Royce Corporation

Contract Overview

Contract Amount: $92,441,233 ($92.4M)

Contractor: Rolls-Royce Corporation

Awarding Agency: Department of Defense

Start Date: 2023-11-29

End Date: 2025-02-28

Contract Duration: 457 days

Daily Burn Rate: $202.3K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROCURE PROGRAM MANAGEMENT, SITE SUPPORT, MEU SUPPORT, ENGINE FLIGHT HOURS, AND LOW POWER AND DISCRETIONARY/CONVENIENCE REMOVALS

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46225

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $92.4 million to ROLLS-ROYCE CORPORATION for work described as: PROCURE PROGRAM MANAGEMENT, SITE SUPPORT, MEU SUPPORT, ENGINE FLIGHT HOURS, AND LOW POWER AND DISCRETIONARY/CONVENIENCE REMOVALS Key points: 1. Contract focuses on critical aircraft engine maintenance and support services. 2. Sole-source award raises questions about potential for competitive pricing. 3. Long-term contract duration suggests significant ongoing need for these services. 4. Performance period extends into early 2025, indicating immediate operational reliance. 5. The contract's value is substantial, reflecting the complexity and importance of engine support. 6. Focus on engine flight hours and discretionary removals highlights operational tempo.

Value Assessment

Rating: fair

The contract value of $92.4 million for aircraft engine support is significant. Without specific benchmarks for similar Rolls-Royce engine support contracts or detailed cost breakdowns, a precise value-for-money assessment is challenging. However, the firm-fixed-price structure provides some cost certainty. The benchmark of $202,278 for a similar contract suggests this award is within a comparable range, but further analysis of the scope of work is needed to confirm true value.

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 a specific contractor possesses unique capabilities, intellectual property, or is the sole provider of necessary parts or services. The lack of competition means that the government did not benefit from a bidding process that could have potentially driven down prices through market forces.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to ensure the most economical price is achieved.

Public Impact

The Department of the Navy benefits from sustained readiness of its aircraft fleet. Services include engine flight hours, maintenance, and component removals, ensuring operational capability. The contract supports critical defense operations, indirectly benefiting national security. Workforce implications include specialized technical roles for engine maintenance and support.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing opportunities.
Lack of transparency in pricing due to no-bid nature.
Potential for cost overruns if not closely managed.

Positive Signals

Firm-fixed-price contract provides cost predictability.
Rolls-Royce is a specialized provider with established expertise.
Contract ensures critical operational readiness for naval aviation.

Sector Analysis

This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector, a specialized area of the aerospace industry. The market is dominated by a few key players like Rolls-Royce, General Electric, and Pratt & Whitney, who possess the advanced technology and manufacturing capabilities required. Spending in this sector is driven by defense procurement, commercial aviation needs, and ongoing maintenance and support services for complex engine systems.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the specialized nature of aircraft engine manufacturing and support, it is unlikely that small businesses would be primary contractors for such a large-scale, sole-source award. Subcontracting opportunities for small businesses may exist, but are not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. The firm-fixed-price structure provides a degree of accountability for the contractor to deliver services within the agreed-upon cost. Transparency is limited due to the sole-source nature, but performance metrics and delivery schedules would be monitored. Inspector General jurisdiction would apply in cases of fraud or significant mismanagement.

Related Government Programs

Aircraft Engine Manufacturing
Aerospace Defense Contracts
Military Aircraft Maintenance
Propulsion Systems Support

Risk Flags

Sole-source award
Lack of competitive bidding
Potential for cost overruns
Dependency on single supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $92.4 million to ROLLS-ROYCE CORPORATION. PROCURE PROGRAM MANAGEMENT, SITE SUPPORT, MEU SUPPORT, ENGINE FLIGHT HOURS, AND LOW POWER AND DISCRETIONARY/CONVENIENCE 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 $92.4 million.

What is the period of performance?

Start: 2023-11-29. End: 2025-02-28.

What is Rolls-Royce Corporation's track record with the Department of Defense for similar engine support contracts?

Rolls-Royce Corporation has a long-standing relationship with the Department of Defense, particularly the Department of the Navy, providing engines and support for various aircraft platforms. Their track record typically involves complex, high-value contracts for maintenance, repair, and overhaul (MRO) services, as well as spare parts. Historically, these contracts are often sole-source or awarded through limited competition due to the proprietary nature of their engine technology and the specialized expertise required. While generally considered a reliable provider of critical aviation components and services, like any large defense contractor, they have faced scrutiny regarding contract costs and performance on specific programs. Detailed historical data on past performance metrics, cost variances, and any disputes would be necessary for a comprehensive assessment.

How does the value of this contract compare to other aircraft engine support contracts awarded by the DoD?

The $92.4 million value for this contract is substantial, reflecting the complexity and ongoing nature of supporting advanced aircraft engines. Comparing it directly requires access to a database of similar contracts. However, large sole-source or limited-competition contracts for engine support, particularly for high-performance military aircraft, often run into tens or hundreds of millions of dollars over their performance periods. For instance, contracts for engine spare parts, depot-level maintenance, or comprehensive fleet support can easily reach these figures. The benchmark of $202,278 provided for a similar contract suggests this award is significantly larger, likely due to a broader scope of services (e.g., including flight hours and discretionary removals) and a longer duration (457 days).

What are the primary risks associated with this sole-source contract?

The primary risk associated with this sole-source contract is the potential for inflated pricing due to the lack of competitive bidding. Without competing offers, the government may not be securing the most cost-effective solution. Another risk is contractor performance; while Rolls-Royce is a reputable company, any sole-source provider faces less market pressure to maintain optimal performance and efficiency. Dependency on a single supplier also poses a risk if the contractor experiences production issues, supply chain disruptions, or financial instability, which could impact the operational readiness of the Navy's aircraft. Finally, the long-term nature of such contracts can sometimes lead to scope creep or cost overruns if not meticulously managed and overseen.

What is the expected program effectiveness and impact on naval aviation readiness?

The expected program effectiveness hinges on Rolls-Royce Corporation's ability to deliver the specified services—PROCURE PROGRAM MANAGEMENT, SITE SUPPORT, MEU SUPPORT, ENGINE FLIGHT HOURS, AND LOW POWER AND DISCRETIONARY/CONVENIENCE REMOVALS—within the agreed-upon terms and schedule. Successful execution of this contract is critical for maintaining the operational readiness of the Navy's aircraft fleet that utilizes these engines. By ensuring engine availability through flight hour support and timely maintenance/removals, the contract directly contributes to the Navy's ability to conduct its missions. The firm-fixed-price nature aims to ensure cost predictability, supporting effective budget management for readiness sustainment. Ultimately, the program's effectiveness will be measured by the sustained operational availability and reliability of the supported aircraft.

How has historical spending on aircraft engine support by the Department of the Navy trended?

Historical spending by the Department of the Navy on aircraft engine support has generally been substantial and consistent, reflecting the high cost of advanced aerospace technology and the critical need for fleet readiness. Spending trends are influenced by factors such as the introduction of new aircraft platforms, the retirement of older ones, evolving maintenance philosophies (e.g., shifting towards performance-based logistics), and geopolitical demands. Contracts for engine support, including spare parts, overhaul, and sustainment services, often represent a significant portion of the overall aircraft procurement and sustainment budgets. While specific year-over-year trends require detailed analysis of historical contract awards, it's evident that the Navy consistently allocates significant resources to ensure the airworthiness and operational availability of its diverse aircraft inventory, often relying on major engine manufacturers like Rolls-Royce.

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: $92,441,233

Exercised Options: $92,441,233

Current Obligation: $92,441,233

Actual Outlays: $1,336,185

Subaward Activity

Number of Subawards: 16

Total Subaward Amount: $40,039,588

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001920D0004

IDV Type: IDC

Timeline