DoD's $162.8M C-130J Propulsion Sustainment Contract Awarded to Rolls-Royce Corporation

Contract Overview

Contract Amount: $162,826,715 ($162.8M)

Contractor: Rolls-Royce Corporation

Awarding Agency: Department of Defense

Start Date: 2018-02-01

End Date: 2020-04-15

Contract Duration: 804 days

Daily Burn Rate: $202.5K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: C-130J PROPULSION LONG TERM SUSTAINMENT

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46225

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $162.8 million to ROLLS-ROYCE CORPORATION for work described as: C-130J PROPULSION LONG TERM SUSTAINMENT Key points: 1. Contract focuses on long-term sustainment for C-130J aircraft engines, critical for military airlift operations. 2. Sole-source award to Rolls-Royce Corporation, the original equipment manufacturer, raises questions about competition and potential cost efficiencies. 3. The contract duration of 804 days suggests a need for continuous support, highlighting the importance of engine reliability. 4. Fixed-price contract type aims to control costs, but the absence of competition may limit price discovery. 5. The contract is managed by the Defense Contract Management Agency, indicating a focus on defense-specific procurement oversight. 6. This award falls under aircraft engine manufacturing, a specialized sector requiring significant technical expertise.

Value Assessment

Rating: fair

The contract value of $162.8 million for approximately 2.6 years of sustainment services for C-130J propulsion systems appears substantial. Without direct comparable contracts for the same scope and duration, a precise value-for-money assessment is challenging. However, sole-source awards often carry a premium due to the lack of competitive pressure. Benchmarking against industry standards for engine maintenance and parts for similar military aircraft would be necessary to determine if the pricing is competitive.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to Rolls-Royce Corporation, the original equipment manufacturer for the C-130J propulsion systems. This approach is often taken when only one source possesses the necessary technical expertise, proprietary data, or is the sole provider of critical components. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices through market forces.

Taxpayer Impact: The absence of competition means taxpayers may not be receiving the most cost-effective solution, as there was no opportunity for other qualified companies to offer their services and potentially lower prices.

Public Impact

The primary beneficiaries are the U.S. Air Force and other branches operating the C-130J Super Hercules aircraft, ensuring the continued operational readiness of their airlift capabilities. Services delivered include long-term sustainment, likely encompassing maintenance, repair, overhaul, and provision of spare parts for the AE2100D3 turboprop engines. The geographic impact is broad, supporting C-130J operations across various global deployments and domestic bases. Workforce implications include the continued employment of specialized technicians and engineers at Rolls-Royce and potentially its subcontractors involved in engine sustainment.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially higher costs for taxpayers.
Dependence on a single supplier for critical sustainment could create long-term strategic risks.
Lack of transparency in pricing due to non-competitive nature.

Positive Signals

Ensures continued operational readiness of vital C-130J aircraft.
Leverages the original equipment manufacturer's specialized knowledge and support infrastructure.
Fixed-price contract type provides some cost predictability.

Sector Analysis

The aerospace and defense sector is characterized by high barriers to entry, complex supply chains, and significant government investment. Aircraft engine manufacturing and sustainment is a highly specialized niche within this sector, dominated by a few key global players like Rolls-Royce. This contract represents a significant portion of spending within the aircraft engine parts manufacturing sub-sector, reflecting the ongoing need to maintain aging but critical military fleets.

Small Business Impact

This contract was not competed and there is no indication of small business set-asides or subcontracting requirements. As a sole-source award to a large corporation, it is unlikely to directly benefit small businesses through set-aside provisions. However, Rolls-Royce may engage small businesses as subcontractors for specific components or services, though this is not explicitly detailed in the provided data.

Oversight & Accountability

The contract is managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance with contract terms. Oversight mechanisms would typically include performance reviews, audits, and quality assurance checks. Transparency is limited due to the sole-source nature, but contract awards are generally reported in federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

C-130J Aircraft Procurement
Military Airlift Command Programs
Aerospace Engine Maintenance Contracts
Defense Logistics Agency Support

Risk Flags

Sole-source award
Potential for cost overruns due to lack of competition
Long-term reliance on a single supplier

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $162.8 million to ROLLS-ROYCE CORPORATION. C-130J PROPULSION LONG TERM SUSTAINMENT

Who is the contractor on this award?

The obligated recipient is ROLLS-ROYCE CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $162.8 million.

What is the period of performance?

Start: 2018-02-01. End: 2020-04-15.

What is the historical spending trend for C-130J propulsion sustainment with Rolls-Royce Corporation?

Analyzing historical spending for C-130J propulsion sustainment with Rolls-Royce Corporation requires access to detailed contract databases beyond the single award provided. However, the presence of a significant long-term sustainment contract suggests a consistent need for these services over time. Typically, such sustainment contracts are awarded periodically, reflecting the lifecycle of the aircraft fleet. Without prior contract data, it's difficult to establish a trend, but the $162.8 million awarded for this period indicates a substantial ongoing investment in maintaining the C-130J's critical engine components. Future spending will likely depend on fleet size, operational tempo, and the development of next-generation aircraft or engine technologies.

How does the pricing of this contract compare to similar sustainment contracts for other military aircraft engines?

Directly comparing the pricing of this $162.8 million contract for C-130J propulsion sustainment to similar contracts for other military aircraft engines is challenging without specific details on the scope of work, duration, and the specific engine models involved. However, Rolls-Royce is a major global engine manufacturer, and its pricing is generally considered competitive within the high-end market for complex aerospace systems. The sole-source nature of this award means that a direct price benchmark against competing offers is unavailable. A thorough analysis would require comparing the per-engine sustainment cost, including parts, labor, and overhead, against publicly available data for comparable platforms like the C-17 (Pratt & Whitney F117) or F-35 (Pratt & Whitney F135), adjusted for differences in engine complexity and operational demands.

What are the key performance indicators (KPIs) used to measure the success of this sustainment contract?

While the provided data does not explicitly list the Key Performance Indicators (KPIs) for this specific contract, typical KPIs for long-term aircraft engine sustainment contracts managed by entities like the Defense Contract Management Agency (DCMA) often include: 1. Engine Availability/Readiness Rates: Ensuring a high percentage of engines are operational and available for deployment. 2. Turnaround Time (TAT): Measuring the time taken for engine maintenance, repair, and overhaul. 3. Mean Time Between Failures (MTBF): Tracking the reliability of the engines over time. 4. Cost Performance: Monitoring adherence to budget and identifying cost-saving opportunities. 5. Quality Metrics: Ensuring repairs and maintenance meet stringent aerospace standards. Rolls-Royce would be expected to report on these and other relevant metrics to the DoD.

What is the potential risk associated with relying on a sole-source provider for critical aircraft engine sustainment?

Relying on a sole-source provider like Rolls-Royce for critical C-130J propulsion sustainment carries several potential risks. Firstly, there is a risk of price escalation over time, as the government lacks the leverage of competitive bidding to negotiate favorable rates. Secondly, dependence on a single supplier can create vulnerabilities in the supply chain; any disruption at Rolls-Royce, whether due to production issues, labor disputes, or geopolitical factors, could directly impact the operational readiness of the C-130J fleet. Thirdly, there's a risk of technological stagnation if the sole provider does not proactively invest in upgrades or alternative solutions, potentially leading to the aircraft becoming less capable over time compared to platforms supported by more competitive markets. Lastly, long-term reliance can reduce the government's flexibility in adapting to changing mission requirements or exploring alternative sustainment strategies.

What is the estimated total cost of ownership for the C-130J propulsion system over its expected service life, considering this contract?

Estimating the total cost of ownership (TCO) for the C-130J propulsion system, including this $162.8 million sustainment contract, requires a comprehensive lifecycle cost analysis that extends beyond the current award. This contract covers a specific period (approximately 2.6 years) and focuses on sustainment. The TCO would encompass the initial acquisition cost of the engines, ongoing sustainment costs (like this contract), fuel consumption, unscheduled maintenance, upgrades, and eventual decommissioning. Given the C-130J's long service life, the cumulative sustainment costs over decades could significantly exceed the initial engine purchase price. Without data on the total number of engines requiring sustainment, the frequency of major overhauls, and future contract values, a precise TCO figure cannot be calculated from this single data point.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Engine and Engine Parts Manufacturing

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: FA850415RPROP

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

Financial Breakdown

Contract Ceiling: $162,826,715

Exercised Options: $162,826,715

Current Obligation: $162,826,715

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA850417D0002

IDV Type: IDC

Timeline