Department of the Navy awards $22.4M contract for aircraft engines to Rolls-Royce Corporation

Contract Overview

Contract Amount: $22,418,136 ($22.4M)

Contractor: Rolls-Royce Corporation

Awarding Agency: Department of Defense

Start Date: 2019-10-25

End Date: 2022-05-27

Contract Duration: 945 days

Daily Burn Rate: $23.7K/day

Competition Type: NOT COMPETED

Pricing Type: COST NO FEE

Sector: Defense

Official Description: MATERIAL, PMA 273-T-45, N61340-20-NOREQ-PMA-273-0161, AYB-1678

Place of Performance

Location: KINGSVILLE, KLEBERG County, TEXAS, 78363

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $22.4 million to ROLLS-ROYCE CORPORATION for work described as: MATERIAL, PMA 273-T-45, N61340-20-NOREQ-PMA-273-0161, AYB-1678 Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. Limited competition may indicate unique technical requirements or a lack of qualified alternative suppliers. 3. The contract duration of 945 days suggests a significant, ongoing need for these aircraft engine components. 4. Performance is tied to a specific program (PMA 273-T-45), indicating specialized application. 5. The award to a single, established supplier could limit opportunities for emerging businesses in this niche. 6. Oversight will be critical to ensure value for money given the non-competitive nature of the award.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature and the specific technical requirements for aircraft engines. Without competitive bids, it's difficult to definitively assess if the $22.4 million price represents optimal value for money. However, the contract type (COST NO FEE) suggests that the government will reimburse the contractor for allowable costs, plus a fixed fee, which can provide some cost control if managed effectively. Further analysis would require access to detailed cost breakdowns and comparisons with similar sole-source procurements for specialized aerospace components.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning the Department of the Navy did not conduct a competitive bidding process. This typically occurs when only one responsible source is available or when there is a compelling justification for excluding competition. The lack of competition means that price discovery through market forces was absent, potentially leading to higher costs than if multiple bidders had vied for the contract. The justification for this sole-source award would need to be thoroughly reviewed to understand the specific circumstances.

Taxpayer Impact: Taxpayers may face higher costs due to the absence of competitive pressure, as the government did not benefit from multiple offers to drive down the price.

Public Impact

The primary beneficiaries are the Department of the Navy and its aviation operations, ensuring the continued functionality of aircraft requiring these specific engines. Services delivered include the provision of aircraft engines and related parts, crucial for maintaining airworthiness and operational readiness. The geographic impact is primarily within the Department of Defense's operational theaters, though the contractor's facility is located in Texas. Workforce implications include the employment of skilled engineers, technicians, and manufacturing personnel at Rolls-Royce Corporation.

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 justification for sole-sourcing requires scrutiny.
Dependence on a single supplier for critical components can pose supply chain risks.

Positive Signals

Award to an established manufacturer like Rolls-Royce suggests a focus on reliability and proven technology.
The contract's cost-plus-fee structure, if managed well, can incentivize efficient cost management.
The specific program designation indicates a targeted and necessary procurement for defense operations.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex technological requirements, and significant government investment. Aircraft engine manufacturing is a highly specialized segment within this sector, dominated by a few key global players. Rolls-Royce Corporation is a major entity in this market. Spending in this area is driven by the need for advanced, reliable, and safe aircraft for military and commercial applications. This contract fits within the broader category of aircraft equipment procurement, a critical component of defense spending.

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 business. There is no explicit information regarding subcontracting plans for small businesses within this award. This suggests that opportunities for small businesses to participate in this specific contract may be limited, potentially bypassing the small business ecosystem unless the prime contractor voluntarily engages them.

Oversight & Accountability

Oversight for this contract would fall under the Department of the Navy's contracting and program management offices. Given the sole-source nature, rigorous oversight of cost, performance, and delivery is essential to ensure accountability and value. Transparency regarding the justification for sole-sourcing and the contractor's cost reporting will be key. Inspector General jurisdiction would apply if any fraud, waste, or abuse is suspected.

Related Government Programs

Aircraft Engine Manufacturing
Defense Procurement
Aerospace Components
Department of the Navy Contracts
Sole-Source Procurements

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.4 million to ROLLS-ROYCE CORPORATION. MATERIAL, PMA 273-T-45, N61340-20-NOREQ-PMA-273-0161, AYB-1678

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 $22.4 million.

What is the period of performance?

Start: 2019-10-25. End: 2022-05-27.

What is the specific justification provided by the Department of the Navy for awarding this contract on a sole-source basis to Rolls-Royce Corporation?

The provided data indicates the contract was awarded as 'NOT COMPETED' and 'ct': 'NOT COMPETED'. While the specific justification is not detailed in the provided data snippet, sole-source awards are typically justified under circumstances such as the existence of only one responsible source capable of providing the required supplies or services, or when a public exigency requires immediate procurement and other sources are not available. For specialized components like aircraft engines, justifications often cite unique technical capabilities, proprietary technology, or extensive prior investment in development by a specific manufacturer. A thorough review of the contract file and associated Justification and Approval (J&A) document would be necessary to ascertain the precise rationale.

How does the pricing structure ('COST NO FEE') for this contract compare to competitive awards for similar aircraft engine components?

The 'COST NO FEE' (CNF) contract type reimburses the contractor for allowable costs incurred and provides a predetermined fixed fee for profit. This structure is often used when the scope of work is not well-defined or when there's uncertainty about the costs involved, such as in research and development or complex manufacturing. In competitive procurements, fixed-price contracts are more common, where the price is set before performance begins, shifting more risk to the contractor and potentially offering better price certainty for the government. Comparing CNF to competitive fixed-price awards is complex; while CNF allows for cost control through oversight, it lacks the upfront price certainty of fixed-price contracts. The effectiveness of CNF hinges on robust government cost monitoring and auditing to ensure costs are reasonable and allowable.

What are the potential risks associated with relying on a single supplier, Rolls-Royce Corporation, for these critical aircraft engine components?

Relying on a single supplier like Rolls-Royce Corporation for critical aircraft engine components presents several risks. Firstly, there's a risk of supply chain disruption; any issues at the contractor's facility, such as labor disputes, natural disasters, or production problems, could halt deliveries and impact the Navy's operational readiness. Secondly, the lack of competition inherent in a sole-source award can reduce the government's leverage in negotiating prices, potentially leading to higher costs over the contract's life. Thirdly, there's a risk of vendor lock-in, where the government becomes heavily dependent on the supplier's technology and support, making it difficult and costly to switch to alternative solutions in the future. Finally, without competitive pressure, there might be less incentive for the supplier to innovate or improve efficiency beyond what is contractually required.

What is the historical spending pattern for aircraft engine components procured by the Department of the Navy from Rolls-Royce Corporation?

The provided data snippet focuses on a single contract award (N61340-20-NOREQ-PMA-273-0161) totaling $22.4 million. To understand historical spending patterns, a broader analysis of past contracts between the Department of the Navy and Rolls-Royce Corporation for similar aircraft engine components would be required. This would involve querying federal procurement databases (like FPDS or USASpending) for all contracts awarded to Rolls-Royce by the Navy within relevant product/service codes (e.g., NAICS 336412) over a defined period (e.g., the last 5-10 years). Analyzing these historical data points would reveal trends in contract values, types, competition levels, and the frequency of sole-source awards, providing context for the current $22.4 million contract.

How does the contract duration (945 days) and end date (May 27, 2022) align with the operational needs of the specific aircraft program (PMA 273-T-45)?

The contract duration of 945 days, approximately 2.6 years, ending in May 2022, suggests a medium-term requirement for the specified aircraft engine components under program PMA 273-T-45. This duration implies that the components are needed for ongoing maintenance, repair, or potentially as part of a production run for a specific fleet of aircraft. The end date indicates that the contract has concluded. To fully assess alignment, one would need to know the typical lifecycle of the aircraft involved, the expected operational tempo, and the planned sustainment strategy for PMA 273-T-45. If the aircraft are still in active service and require these engines, the contract's conclusion might necessitate a follow-on procurement or a transition to a different support strategy.

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

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: $25,564,803

Exercised Options: $25,564,803

Current Obligation: $22,418,136

Subaward Activity

Number of Subawards: 53

Total Subaward Amount: $59,061,759

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6134019D0004

IDV Type: IDC

Timeline