DoD's $45.8M Contract for Engine Support to Rolls-Royce: Limited Competition Raises Concerns

Contract Overview

Contract Amount: $45,856,252 ($45.9M)

Contractor: Rolls-Royce Corporation

Awarding Agency: Department of Defense

Start Date: 2016-11-30

End Date: 2018-02-28

Contract Duration: 455 days

Daily Burn Rate: $100.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MISSIONCARE HOURLY SUPPORT, SITE SUPPORT, PROGRAM MANAGEMENT, AND REPAIR OF LOW POWER ENGINES

Place of Performance

Location: OAKLAND, ALAMEDA County, CALIFORNIA, 94621

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $45.9 million to ROLLS-ROYCE CORPORATION for work described as: MISSIONCARE HOURLY SUPPORT, SITE SUPPORT, PROGRAM MANAGEMENT, AND REPAIR OF LOW POWER ENGINES Key points: 1. Significant spending on aircraft engine support services. 2. Sole-source award to Rolls-Royce Corporation limits competitive pricing. 3. Potential for higher costs due to lack of open competition. 4. Focus on aircraft engine parts manufacturing sector.

Value Assessment

Rating: questionable

The contract value of $45.8M for engine support and repair appears high, especially given the limited competition. Benchmarking against similar contracts for specialized engine services would be necessary to determine true value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award to Rolls-Royce Corporation. This lack of competition likely prevented price discovery through market forces, potentially leading to a higher price than if multiple vendors had bid.

Taxpayer Impact: Taxpayer funds may have been spent inefficiently due to the absence of competitive bidding, potentially overpaying for the services rendered.

Public Impact

Military readiness could be impacted if engine support is not cost-effective. Specialized aerospace sector jobs may be sustained by this contract. Taxpayers bear the cost of this significant sole-source award.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
High contract value
Sole-source award

Positive Signals

Essential defense service
Established contractor

Sector Analysis

The Department of Defense's spending in the aircraft engine and engine parts manufacturing sector is critical for maintaining military aviation capabilities. This contract with Rolls-Royce Corporation represents a substantial investment in specialized support services.

Small Business Impact

This contract was awarded to Rolls-Royce Corporation and does not indicate any subcontracting opportunities for small businesses. The nature of specialized engine repair and support often involves large, established prime contractors.

Oversight & Accountability

The sole-source nature of this award warrants scrutiny from oversight bodies to ensure the price paid was fair and reasonable, and that future requirements are appropriately competed.

Related Government Programs

Aircraft Engine and Engine Parts Manufacturing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Sole-source award limits price competition.
Potential for inflated costs due to lack of bidding.
High contract value requires thorough justification.
Lack of small business participation noted.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $45.9 million to ROLLS-ROYCE CORPORATION. MISSIONCARE HOURLY SUPPORT, SITE SUPPORT, PROGRAM MANAGEMENT, AND REPAIR OF LOW POWER ENGINES

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 $45.9 million.

What is the period of performance?

Start: 2016-11-30. End: 2018-02-28.

What was the justification for awarding this contract on a sole-source basis instead of seeking competitive bids?

The justification for a sole-source award typically involves unique capabilities, proprietary technology, or urgent needs that only one contractor can meet. Without specific documentation, it's difficult to ascertain the precise reason, but it suggests that the Department of the Navy determined that Rolls-Royce Corporation was the only viable option for this specific requirement at the time of award.

How does the per-unit cost of repairs or support services compare to industry benchmarks for similar aircraft engines?

Benchmarking the per-unit cost is challenging without access to detailed service records and industry-wide pricing data for comparable Rolls-Royce engine models. However, given the sole-source nature, there's a heightened risk that the costs may exceed competitive market rates. Further analysis would require access to the contract's pricing structure and independent market research.

What is the long-term strategy for ensuring cost-effective maintenance and repair of these low-power engines?

The long-term strategy should involve exploring competitive procurement options for future contracts to drive down costs and encourage innovation. Additionally, the DoD could investigate performance-based contracts that incentivize efficiency and cost savings from the contractor, alongside robust performance monitoring to ensure value for taxpayer money.

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

Solicitation ID: N0001914R0039

Pricing Type: FIRM FIXED PRICE (J)

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, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $45,856,252

Exercised Options: $45,856,252

Current Obligation: $45,856,252

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001915D0019

IDV Type: IDC

Timeline