DoD's $192M C-130J Engine Sustainment Contract Awarded to Rolls-Royce Amidst Limited Competition
Contract Overview
Contract Amount: $191,958,825 ($192.0M)
Contractor: Rolls-Royce Corporation
Awarding Agency: Department of Defense
Start Date: 2016-01-27
End Date: 2018-12-31
Contract Duration: 1,069 days
Daily Burn Rate: $179.6K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: C-130J PROPULSION LONG TERM SUSTAINMENT SPARE ENGINES
Place of Performance
Location: INDIANAPOLIS, MARION County, INDIANA, 46225
State: Indiana Government Spending
Plain-Language Summary
Department of Defense obligated $192.0 million to ROLLS-ROYCE CORPORATION for work described as: C-130J PROPULSION LONG TERM SUSTAINMENT SPARE ENGINES Key points: 1. Significant investment in long-term sustainment for a critical aircraft platform. 2. Sole-source award to Rolls-Royce raises questions about price discovery and potential cost savings. 3. Risk of overpayment due to lack of competitive bidding. 4. The aerospace and defense sector relies on such long-term contracts for specialized parts.
Value Assessment
Rating: questionable
The contract value of $192M for spare engines and sustainment is substantial. Without competitive benchmarking, it's difficult to assess if this price is optimal compared to potential alternatives or previous contracts for similar services.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award to Rolls-Royce. This limits price discovery and potentially leads to higher costs for taxpayers as there is no market pressure to offer competitive pricing.
Taxpayer Impact: The lack of competition may result in taxpayers paying a premium for these critical spare engines and sustainment services.
Public Impact
Ensures continued operational readiness of the C-130J Super Hercules fleet, vital for global logistics and support missions. Supports the sustainment of a key military transport aircraft, impacting national security capabilities. Potential for increased costs to taxpayers due to the sole-source nature of the award.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competition
- Potential for inflated pricing
- Long-term sustainment costs can escalate
Positive Signals
- Ensures availability of critical spare parts
- Supports operational readiness of C-130J fleet
Sector Analysis
This contract falls within the aerospace and defense sector, specifically focusing on aircraft engine manufacturing and maintenance. Spending benchmarks in this area are often high due to the specialized nature and long lifecycle of military aircraft.
Small Business Impact
This contract does not appear to involve small businesses directly, as it is a sole-source award to a large corporation. Opportunities for small businesses would likely be through subcontracting, which is not detailed here.
Oversight & Accountability
The sole-source nature of this award warrants close oversight to ensure fair pricing and prevent potential waste, fraud, or abuse. Robust auditing and performance monitoring are crucial.
Related Government Programs
- Aircraft Engine and Engine Parts Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Sole-source award
- Potential for price escalation
- Lack of competitive benchmarking
- Long-term sustainment dependency
Tags
aircraft-engine-and-engine-parts-manufac, department-of-defense, in, delivery-order, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $192.0 million to ROLLS-ROYCE CORPORATION. C-130J PROPULSION LONG TERM SUSTAINMENT SPARE 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 Air Force).
What is the total obligated amount?
The obligated amount is $192.0 million.
What is the period of performance?
Start: 2016-01-27. End: 2018-12-31.
What is the justification for awarding this contract on a sole-source basis, and what steps were taken to ensure fair and reasonable pricing?
The justification for a sole-source award typically involves unique capabilities or proprietary technology held by a single vendor. For this contract, the Air Force likely determined Rolls-Royce as the only source capable of providing the specific C-130J propulsion sustainment. However, steps to ensure fair pricing, such as cost realism analyses and negotiation with the vendor, are critical and should be documented.
What are the long-term financial implications for the DoD and taxpayers given the sole-source nature of this engine sustainment contract?
Sole-source contracts can lead to higher long-term costs due to the absence of competitive pressure. The DoD may face sustained higher prices for spare parts and maintenance over the life of the C-130J fleet. This necessitates rigorous contract management and periodic re-evaluation of pricing to mitigate potential overspending and ensure value for taxpayer money.
How does the lack of competition impact the potential for innovation and technological advancement in C-130J propulsion sustainment?
A sole-source award can stifle innovation as the incumbent contractor may have less incentive to invest in developing more cost-effective or advanced sustainment solutions. Competition often drives innovation by encouraging vendors to differentiate through technology and efficiency. Without it, the DoD might miss out on potential improvements that could reduce lifecycle costs or enhance performance.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Engine and Engine Parts Manufacturing
Product/Service Code: ENGINE ACCESSORIES
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 (UEI: 217127290)
Address: 2355 S TIBBS AVE, INDIANAPOLIS, IN, 46241
Business Categories: Category Business, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $191,958,825
Exercised Options: $191,958,825
Current Obligation: $191,958,825
Contract Characteristics
Commercial Item: COMMERCIAL ITEM
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: FA850407D0001
IDV Type: IDC
Timeline
Start Date: 2016-01-27
Current End Date: 2018-12-31
Potential End Date: 2018-12-31 00:00:00
Last Modified: 2019-01-06
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