DoD's $189M C-130J Propulsion Sustainment Contract Awarded to Rolls-Royce Corporation

Contract Overview

Contract Amount: $189,473,156 ($189.5M)

Contractor: Rolls-Royce Corporation

Awarding Agency: Department of Defense

Start Date: 2021-02-01

End Date: 2022-08-18

Contract Duration: 563 days

Daily Burn Rate: $336.5K/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 $189.5 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 Super Hercules aircraft engines. 2. Sole-source award raises questions about competition and potential cost efficiencies. 3. Long contract duration (563 days) suggests a need for sustained support. 4. Firm Fixed Price contract type aims to provide cost certainty. 5. The contract is managed by the Defense Contract Management Agency. 6. This award falls under the Aircraft Engine and Engine Parts Manufacturing sector.

Value Assessment

Rating: fair

Benchmarking the value of this sole-source contract is challenging without competitive bids. The firm fixed-price structure provides some cost predictability for the government. However, the absence of competition means there's no direct market comparison to assess if the pricing represents optimal value for money. Further analysis would require understanding the specific services included and comparing them to industry standards for engine sustainment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Rolls-Royce Corporation, was solicited. This approach is typically used when a specific capability or proprietary technology is required, or when only one responsible source exists. The lack of competition limits the government's ability to leverage market forces to drive down prices and potentially explore innovative solutions from multiple vendors.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to ensure the lowest possible price. It also reduces the opportunity for other businesses to compete for this significant contract.

Public Impact

The U.S. Air Force and its allies operating C-130J aircraft are the primary beneficiaries, ensuring the operational readiness of their transport fleets. Services include long-term sustainment for the AE2100D3 turboprop engines powering the C-130J. The geographic impact is broad, supporting C-130J operations globally. This contract supports specialized technical expertise and potentially a dedicated workforce within Rolls-Royce for C-130J engine maintenance and support.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potential cost savings.
Long-term sustainment contracts can sometimes lock in higher costs if not carefully managed.
Dependence on a single supplier for critical engine parts and services poses a supply chain risk.

Positive Signals

Firm Fixed Price contract provides cost certainty for the duration of the order.
Rolls-Royce is a known entity with established expertise in C-130J propulsion.
Sustained support ensures the continued operational capability of a vital military transport aircraft.

Sector Analysis

The aerospace and defense sector, specifically focusing on aircraft engine manufacturing and maintenance, is a critical component of national security. This contract for the sustainment of C-130J propulsion systems fits within the broader market for military aircraft support services, which is characterized by long-term relationships and specialized technical requirements. Comparable spending benchmarks are difficult to establish precisely due to the sole-source nature, but the overall market for aerospace MRO (Maintenance, Repair, and Overhaul) is substantial.

Small Business Impact

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

Oversight & Accountability

The contract is managed by the Defense Contract Management Agency (DCMA), which provides contract administration services to the Department of Defense. Oversight would involve monitoring performance, ensuring compliance with contract terms, and verifying delivery of services. Transparency is limited due to the sole-source nature, and specific Inspector General (IG) jurisdiction would depend on the nature of any potential issues arising from the contract.

Related Government Programs

C-130J Super Hercules Aircraft
Turboprop Engine Maintenance
Long-Term Service Agreements
Aerospace Propulsion Systems
Defense Logistics Agency Support

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns without competitive benchmarking

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $189.5 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 $189.5 million.

What is the period of performance?

Start: 2021-02-01. End: 2022-08-18.

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

Historical spending data for C-130J propulsion sustainment with Rolls-Royce would provide crucial context for evaluating the current $189 million award. Analyzing past contract values, durations, and the scope of services rendered over previous years can reveal trends in cost escalation, the frequency of support needs, and the overall investment in maintaining the AE2100D3 engines. Without this historical perspective, it is difficult to ascertain if the current award represents a significant increase or decrease in spending, or if it aligns with established budgetary patterns for this critical sustainment function. Understanding past performance and costs associated with previous sustainment efforts is key to assessing the value and necessity of the current long-term contract.

What specific sustainment services are included under this $189 million contract?

The provided data indicates the contract is for 'C-130J PROPULSION LONG TERM SUSTAINMENT' but does not detail the specific services encompassed within the $189 million value. Comprehensive sustainment typically includes a range of activities such as scheduled and unscheduled maintenance, repair and overhaul (MRO) of engines and components, spare parts provisioning, technical support, engineering services, and potentially engine upgrades or modifications. Understanding the precise mix of these services is critical for a thorough value assessment. Without this breakdown, it's challenging to benchmark the cost against industry standards or compare it to similar support contracts for other aircraft types, making it difficult to determine if the pricing is competitive or represents good value for the taxpayer.

Are there any performance metrics or key performance indicators (KPIs) associated with this contract?

The provided data does not specify any performance metrics or Key Performance Indicators (KPIs) tied to this $189 million C-130J propulsion sustainment contract. In long-term sustainment contracts, especially those awarded sole-source, clearly defined KPIs are essential for ensuring accountability and measuring the contractor's effectiveness. These metrics typically relate to engine availability, turnaround times for repairs, spare parts fill rates, adherence to maintenance schedules, and overall fleet readiness. The absence of explicit KPIs in the available information makes it difficult to objectively assess Rolls-Royce's performance and the contract's contribution to maintaining the operational readiness of the C-130J fleet. Robust oversight would necessitate the establishment and monitoring of such performance indicators.

What is the rationale behind awarding this contract on a sole-source basis?

The contract was awarded on a sole-source basis ('NOT COMPETED'), indicating that the Department of Defense determined that Rolls-Royce Corporation was the only responsible source capable of providing the required long-term sustainment for the C-130J propulsion systems. Common justifications for sole-source awards include proprietary technology, unique capabilities, urgent needs where competition is impractical, or when a specific contractor has established an indispensable role in supporting a particular system. For Rolls-Royce, this likely stems from their role as the original equipment manufacturer (OEM) of the AE2100D3 engines, possessing the specialized knowledge, tooling, and proprietary data necessary for their sustainment. While this ensures specialized support, it bypasses the competitive process, potentially impacting cost efficiency.

What is the potential risk associated with relying solely on Rolls-Royce for C-130J engine sustainment?

The primary risk associated with this sole-source contract is the lack of competitive pressure, which can lead to suboptimal pricing and reduced incentives for innovation or enhanced efficiency from the contractor. Furthermore, dependence on a single supplier for critical engine sustainment creates a potential vulnerability in the supply chain. Any disruptions at Rolls-Royce, whether due to production issues, labor disputes, geopolitical factors, or financial instability, could directly impact the operational readiness of the C-130J fleet. This concentration of risk necessitates robust government oversight and contingency planning to mitigate potential negative impacts on military operations.

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, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $189,473,157

Exercised Options: $189,473,157

Current Obligation: $189,473,156

Subaward Activity

Number of Subawards: 25

Total Subaward Amount: $9,980,585

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA850417D0002

IDV Type: IDC

Timeline