DoD's $178M C-130J Propulsion Sustainment Contract Awarded to Rolls-Royce Corporation
Contract Overview
Contract Amount: $177,955,046 ($178.0M)
Contractor: Rolls-Royce Corporation
Awarding Agency: Department of Defense
Start Date: 2020-02-01
End Date: 2021-01-31
Contract Duration: 365 days
Daily Burn Rate: $487.5K/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 $178.0 million to ROLLS-ROYCE CORPORATION for work described as: C-130J PROPULSION LONG TERM SUSTAINMENT Key points: 1. The contract focuses on long-term sustainment for C-130J Super Hercules aircraft engines. 2. Rolls-Royce Corporation is the sole provider for this specific engine type, limiting competition. 3. Potential risks include reliance on a single supplier for critical aircraft components. 4. The spending falls within the Defense sector, specifically aircraft engine manufacturing.
Value Assessment
Rating: fair
The contract value of $177.9M over one year appears high for sustainment services. Benchmarking against similar long-term engine support contracts is difficult due to the specific nature of the C-130J propulsion system and the sole-source award.
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 limits price discovery and potentially leads to higher costs for the government.
Taxpayer Impact: Taxpayers may bear a higher cost due to the absence of competitive bidding for this critical aircraft sustainment.
Public Impact
Ensures continued operational readiness of the Air Force's C-130J fleet. Supports critical logistics and transport missions reliant on these aircraft. Potential for increased costs due to lack of competition impacts defense budget allocation.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competition and price negotiation.
- High contract value for a single year of sustainment.
- Reliance on a single supplier for critical engine parts.
Positive Signals
- Ensures availability of essential sustainment for a key military aircraft.
- Rolls-Royce has established expertise in this propulsion system.
Sector Analysis
This contract falls under the Defense sector, specifically focusing on aircraft engine and engine parts manufacturing. Spending on aircraft sustainment is a significant portion of the DoD budget, with benchmarks varying widely based on aircraft type and service life.
Small Business Impact
This contract was awarded directly to Rolls-Royce Corporation and does not appear to involve significant subcontracting opportunities for small businesses. The nature of specialized engine sustainment often favors large, established manufacturers.
Oversight & Accountability
The sole-source nature of this award warrants close oversight to ensure fair pricing and performance. The Air Force should monitor contract execution and explore competitive strategies for future sustainment needs.
Related Government Programs
- Aircraft Engine and Engine Parts Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Sole-source award
- Lack of competition
- Potential for cost overruns
- Reliance on a single supplier
- Limited transparency in pricing
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 $178.0 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 (Department of the Air Force).
What is the total obligated amount?
The obligated amount is $178.0 million.
What is the period of performance?
Start: 2020-02-01. End: 2021-01-31.
What is the justification for the sole-source award, and were alternative competitive strategies considered?
The justification for a sole-source award typically stems from unique capabilities, proprietary technology, or the absence of viable alternatives. For the C-130J propulsion system, Rolls-Royce is the original equipment manufacturer and likely holds the necessary technical data and expertise. While alternatives might be explored, the complexity and safety-critical nature of aircraft engines often favor the OEM. Further investigation into the specific justification and any market research conducted would clarify the necessity of this approach.
How does the per-unit cost of sustainment compare to industry benchmarks for similar engine types?
Determining a precise per-unit cost benchmark is challenging without detailed cost breakdowns and knowledge of the specific services included (e.g., parts, labor, overhauls). However, given the sole-source nature and the high overall contract value, it is plausible that the per-unit cost may be higher than if the contract were competed. A thorough cost analysis by the DoD, comparing historical data and available market intelligence, would be necessary to assess this.
What is the long-term strategy for ensuring competitive pricing for C-130J propulsion sustainment beyond this contract?
The long-term strategy should focus on fostering competition where feasible. This could involve encouraging other MRO (Maintenance, Repair, and Overhaul) providers to gain certification for C-130J engines, exploring options for second-sourcing critical parts, or negotiating longer-term agreements with performance incentives and price reduction clauses. The DoD should actively seek opportunities to introduce competition to mitigate the risks associated with sole-source reliance.
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
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: $177,955,046
Exercised Options: $177,955,046
Current Obligation: $177,955,046
Actual Outlays: $23,847,866
Subaward Activity
Number of Subawards: 11
Total Subaward Amount: $26,119,887
Contract Characteristics
Commercial Item: COMMERCIAL ITEM
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: FA850417D0002
IDV Type: IDC
Timeline
Start Date: 2020-02-01
Current End Date: 2021-01-31
Potential End Date: 2021-01-31 00:00:00
Last Modified: 2022-09-26
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