Department of the Navy awards $36M for aircraft engine parts, with Rolls-Royce Corporation as the sole contractor

Contract Overview

Contract Amount: $36,077,738 ($36.1M)

Contractor: Rolls-Royce Corporation

Awarding Agency: Department of Defense

Start Date: 2019-09-19

End Date: 2023-12-03

Contract Duration: 1,536 days

Daily Burn Rate: $23.5K/day

Competition Type: NOT COMPETED

Pricing Type: COST NO FEE

Sector: Defense

Official Description: HPC STATORS VANES PID N61340-18-REFREQ-PMA-273-0317

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46225

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $36.1 million to ROLLS-ROYCE CORPORATION for work described as: HPC STATORS VANES PID N61340-18-REFREQ-PMA-273-0317 Key points: 1. Contract awarded on a sole-source basis, raising questions about potential price overruns and limited value for money. 2. The contract duration of over 4 years suggests a long-term need for these critical engine components. 3. Lack of competition indicates a potential risk of reduced innovation and less favorable pricing for the government. 4. The specific nature of the parts (HPC STATORS VANES PID) points to a specialized, high-tech manufacturing requirement. 5. Performance context is limited due to the sole-source nature, making direct benchmarking difficult. 6. Sector positioning within Aircraft Engine and Engine Parts Manufacturing is significant, highlighting reliance on established suppliers.

Value Assessment

Rating: questionable

Benchmarking the value for this contract is challenging due to its sole-source nature and the specific, proprietary components involved. Without competitive bids, it's difficult to ascertain if the $36 million awarded represents a fair market price. The contract type (COST NO FEE) suggests that the government bears the risk of cost overruns, which further raises concerns about overall value for money. Comparisons to similar sole-source contracts for specialized aerospace parts would be necessary for a more robust assessment, but such data is often not publicly available.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning that the Department of the Navy did not solicit bids from multiple suppliers. This typically occurs when a specific contractor possesses unique capabilities, proprietary technology, or is the sole provider of essential parts. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs for the government compared to a competitively bid contract.

Taxpayer Impact: Taxpayers may be paying a premium for these aircraft engine parts due to the absence of competitive bidding. The government has limited leverage to negotiate lower prices when only one supplier is considered.

Public Impact

The primary beneficiaries are the Department of the Navy, ensuring the operational readiness of its aircraft fleet. Services delivered include the manufacturing and supply of critical High-Pressure Compressor (HPC) stators and vanes for aircraft engines. Geographic impact is primarily within Indiana, where Rolls-Royce Corporation's facility is located, supporting local employment. Workforce implications include the retention of specialized manufacturing jobs in the aerospace sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price negotiation and potentially increases costs for taxpayers.
Cost-plus contract type shifts cost overrun risk to the government.
Lack of competition may stifle innovation and reduce supplier options in the future.
Proprietary nature of parts makes independent cost analysis difficult.

Positive Signals

Ensures supply of critical, specialized components for essential defense assets.
Rolls-Royce Corporation is a known entity with established expertise in aerospace manufacturing.
Contract duration provides supply chain stability for a significant period.

Sector Analysis

The contract falls within the Aircraft Engine and Engine Parts Manufacturing sector, a highly specialized and technologically advanced industry. This sector is characterized by high barriers to entry, significant R&D investment, and stringent quality control requirements. Major players like Rolls-Royce Corporation dominate the market for complex engine components. Spending in this area is critical for maintaining military aviation capabilities, and contracts are often long-term due to the lifecycle of aircraft and engine systems. Benchmarks for comparable specialized parts are difficult to establish publicly due to proprietary information and the unique nature of each component.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the prime contractor, Rolls-Royce Corporation, is a large aerospace manufacturer. There is no explicit information provided regarding subcontracting plans to small businesses. This sole-source award to a large corporation suggests limited direct opportunities for small businesses within this specific contract, though they may be involved further down the supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the contract terms, particularly regarding delivery schedules and quality standards. Transparency is limited due to the sole-source nature and the proprietary aspects of the components. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Engine Manufacturing
Aerospace Parts Supply
Defense Procurement
Naval Aviation Support
Cost-Plus Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competition
Potential for cost overruns

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $36.1 million to ROLLS-ROYCE CORPORATION. HPC STATORS VANES PID N61340-18-REFREQ-PMA-273-0317

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 $36.1 million.

What is the period of performance?

Start: 2019-09-19. End: 2023-12-03.

What is the specific technical function of the HPC STATORS VANES PID components?

HPC STATORS VANES PID refers to components within the High-Pressure Compressor (HPC) section of an aircraft engine. Stators are stationary blades that guide airflow into the rotating compressor blades (rotors). Vanes are often used interchangeably with stators in this context, referring to the fixed airfoil structures. The 'PID' likely denotes a specific part number or designation within Rolls-Royce's product line for these critical components. These parts are essential for the engine's ability to compress air efficiently, which is fundamental to generating thrust. Their precise design and material composition are crucial for engine performance, durability, and fuel efficiency, especially under the extreme conditions within a jet engine.

How does the 'COST NO FEE' contract type impact government oversight and contractor incentives?

The 'COST NO FEE' (Cost Plus Fixed Fee - CPFF, but with no fee) contract type means the government reimburses the contractor for all allowable costs incurred in performing the contract, but the contractor does not receive any additional profit or fee. This structure places the entire cost risk on the government. While it can incentivize contractors to perform the work, it removes the profit motive for cost control. The government must therefore implement robust oversight to monitor costs, ensure efficiency, and prevent overspending. Contractor incentives are primarily driven by fulfilling the contract requirements and maintaining a good relationship for future work, rather than maximizing profit on this specific engagement.

What are the risks associated with a sole-source award for critical defense components?

Sole-source awards for critical defense components carry several risks. Firstly, the absence of competition can lead to higher prices than might be achieved through a competitive bidding process, as the government lacks leverage to negotiate. Secondly, it can reduce the incentive for the sole supplier to innovate or improve efficiency, as there is no competitive pressure. Thirdly, it creates a dependency on a single supplier, making the supply chain vulnerable to disruptions if that supplier faces production issues, financial difficulties, or geopolitical challenges. Finally, it limits the government's options if the current supplier's performance is unsatisfactory.

Can the government benchmark the pricing of these components against other similar contracts?

Benchmarking the pricing of these specific HPC STATORS VANES PID components against other similar contracts is likely very difficult. The 'PID' designation suggests a highly specific part number, potentially proprietary to Rolls-Royce. Aircraft engine components are complex, custom-engineered parts with unique material requirements and manufacturing processes. While other contracts might exist for similar engine parts or even components for the same engine model, direct price comparisons are often not feasible due to variations in specifications, quantities, contract terms (like duration and delivery schedules), and the specific competitive landscape at the time of each award. Publicly available data on such specialized parts is scarce.

What is Rolls-Royce Corporation's track record with the Department of Defense?

Rolls-Royce Corporation has a long-standing and significant track record as a supplier to the Department of Defense, particularly in the realm of aircraft engines and related components. They are a major provider of engines for various military aircraft platforms, including fighters, bombers, and transport planes. Their history with the DoD involves numerous contracts, both competitive and sole-source, for engine manufacturing, maintenance, repair, and overhaul services. While specific performance metrics across all contracts are not detailed here, Rolls-Royce is generally recognized as a key player in the defense aerospace industry, known for its technological capabilities in engine design and production.

What is the historical spending pattern for this type of component or contract with the Department of the Navy?

Analyzing historical spending patterns for this specific component (HPC STATORS VANES PID) with the Department of the Navy is challenging without more granular data. However, it is known that the Navy operates a large fleet of aircraft that rely on sophisticated jet engines. Sustaining these engines requires a continuous supply of critical parts like stators and vanes. Spending in this category is likely consistent over time, reflecting the ongoing maintenance and operational needs of the fleet. Sole-source awards for such specialized, long-lifecycle components are not uncommon in defense procurement, suggesting a historical reliance on established manufacturers like Rolls-Royce for these critical systems.

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: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N6134018R0005

Pricing Type: COST NO FEE (S)

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: $36,077,738

Exercised Options: $36,077,738

Current Obligation: $36,077,738

Subaward Activity

Number of Subawards: 55

Total Subaward Amount: $59,812,258

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6134019D0004

IDV Type: IDC

Timeline