DoD awards $615M firm-fixed-price contract to Rolls-Royce for aircraft engines and parts

Contract Overview

Contract Amount: $615,229,911 ($615.2M)

Contractor: Rolls-Royce Corporation

Awarding Agency: Department of Defense

Start Date: 2009-11-30

End Date: 2015-02-28

Contract Duration: 1,916 days

Daily Burn Rate: $321.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PBTH CONTRACT

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46225

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $615.2 million to ROLLS-ROYCE CORPORATION for work described as: PBTH CONTRACT Key points: 1. Significant contract value of over $615 million awarded to a single large business. 2. Sole-source award raises questions about competition and potential price discovery. 3. Long contract duration (1916 days) suggests a substantial, ongoing need. 4. Aircraft Engine and Engine Parts Manufacturing sector is critical for defense operations.

Value Assessment

Rating: questionable

The contract value is substantial, but without competitive bidding, it's difficult to assess if the pricing is optimal. Benchmarking against similar sole-source contracts would be necessary.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was not competed, indicating a sole-source award. This limits price discovery and may result in higher costs for taxpayers compared to a competitive process.

Taxpayer Impact: The lack of competition for a contract of this magnitude could lead to suboptimal pricing, potentially increasing the financial burden on taxpayers.

Public Impact

Taxpayers may be paying a premium due to the absence of competitive bidding. The long-term nature of the contract impacts long-term defense budget planning. Reliance on a single supplier for critical aircraft engine components could pose supply chain risks.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition
High contract value
Long contract duration

Positive Signals

Firm fixed price contract type
Established supplier

Sector Analysis

This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector, a vital component of the aerospace and defense industry. Spending in this sector is often characterized by high R&D costs and specialized manufacturing capabilities.

Small Business Impact

The contract was awarded to Rolls-Royce Corporation, a large business. There is no indication that small businesses were involved as subcontractors or partners in this specific award.

Oversight & Accountability

The contract was managed by the Defense Contract Management Agency. Oversight would focus on ensuring delivery of quality parts and adherence to contract terms, especially given the sole-source nature.

Related Government Programs

Aircraft Engine and Engine Parts Manufacturing
Department of Defense Contracting
Defense Contract Management Agency Programs

Risk Flags

Sole-source award
High contract value
Long contract duration
Potential for price inflation
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $615.2 million to ROLLS-ROYCE CORPORATION. PBTH CONTRACT

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 $615.2 million.

What is the period of performance?

Start: 2009-11-30. End: 2015-02-28.

What was the justification for the sole-source award, and how was the price determined to be fair and reasonable?

The justification for a sole-source award typically involves factors like unique capabilities, urgent need, or lack of viable alternatives. The price is usually determined through negotiation and comparison with historical data or industry benchmarks, though without competition, the assurance of 'fairness' is diminished.

What are the potential risks associated with a sole-source contract of this value and duration?

The primary risks include inflated pricing due to lack of competition, potential for vendor complacency, and supply chain vulnerability if the sole provider faces disruptions. There's also a reduced incentive for innovation or cost reduction by the contractor.

How does this contract contribute to the overall effectiveness of the Department of Defense's aircraft operations?

This contract is crucial for maintaining the operational readiness of DoD aircraft by ensuring a steady supply of necessary engines and parts. Its effectiveness hinges on the reliability and quality of the supplied components and the contractor's ability to meet delivery schedules.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

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, Corporate Entity Not Tax Exempt, Foreign-Owned and U.S.-Incorporated Business, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $726,356,639

Exercised Options: $615,230,537

Current Obligation: $615,229,911

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline