Department of the Navy awards $163M for aircraft engine support, with limited competition

Contract Overview

Contract Amount: $163,151,193 ($163.2M)

Contractor: Rolls-Royce Corporation

Awarding Agency: Department of Defense

Start Date: 2017-11-30

End Date: 2019-02-28

Contract Duration: 455 days

Daily Burn Rate: $358.6K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MISSIONCARE HOURLY SUPPORT, SITE SUPPORT, PROGRAM MANAGEMENT, AND REPAIR OF LOW POWER ENGINES

Place of Performance

Location: OAKLAND, ALAMEDA County, CALIFORNIA, 94621

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $163.2 million to ROLLS-ROYCE CORPORATION for work described as: MISSIONCARE HOURLY SUPPORT, SITE SUPPORT, PROGRAM MANAGEMENT, AND REPAIR OF LOW POWER ENGINES Key points: 1. Contract focuses on essential aircraft engine maintenance and repair services. 2. The award represents a significant investment in maintaining naval aviation readiness. 3. Limited competition raises questions about potential cost efficiencies. 4. The contract duration of 455 days suggests a need for ongoing support. 5. Rolls-Royce Corporation is the sole awardee, indicating specialized capabilities. 6. The firm fixed-price structure aims to control costs for the government.

Value Assessment

Rating: fair

The contract value of $163 million for a 455-day period is substantial. Benchmarking this against similar engine support contracts is challenging without more detailed service breakdowns. However, the lack of competition suggests that the government may not have achieved the most competitive pricing possible. The firm fixed-price nature provides some cost certainty, but the overall value for money is difficult to assess without comparative data on the specific services rendered and their market rates.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Rolls-Royce Corporation, was solicited. This approach is typically used when a unique capability or proprietary technology is required, or in cases of urgent need where competition is not feasible. The lack of multiple bidders means there was no direct price comparison or negotiation against competing offers, potentially leading to higher costs for the government than if the contract had been competed.

Taxpayer Impact: Sole-source awards limit the government's ability to leverage market competition to secure the best possible prices, potentially resulting in less favorable terms for taxpayers.

Public Impact

Naval aviation units benefit from the continued operational readiness of their aircraft engines. Services include program management, site support, and repair of low-power engines. The contract supports critical defense infrastructure, ensuring mission capability. Workforce implications include the need for specialized technicians and support staff at various naval facilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and potentially increases costs for taxpayers.
Lack of transparency in the selection process due to sole-source nature.
Dependence on a single contractor for critical engine support services.

Positive Signals

Award to a known entity (Rolls-Royce) with presumed expertise in aircraft engines.
Firm fixed-price contract provides cost certainty for the government.
Focus on essential maintenance and repair ensures operational readiness.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft engine components and support. The market for specialized engine maintenance and repair is often dominated by original equipment manufacturers like Rolls-Royce due to proprietary knowledge and technical requirements. Comparable spending in this sector involves significant investments in maintaining complex military hardware, with contracts often being sole-source or limited competition due to the specialized nature of the equipment.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the sole-source nature and the specialized requirements for aircraft engine support, it is unlikely that small businesses would be primary contractors. However, Rolls-Royce Corporation may engage small businesses as subcontractors for specific components or services, though this is not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures are inherent in the firm fixed-price structure, which obligates the contractor to deliver specified services within a set budget. Transparency is limited due to the sole-source award, but contract performance data and payment information are usually available through federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Aircraft Engine Maintenance
Defense Logistics Support
Naval Aviation Readiness Programs
Rolls-Royce Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for higher costs
Dependence on single contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $163.2 million to ROLLS-ROYCE CORPORATION. MISSIONCARE HOURLY SUPPORT, SITE SUPPORT, PROGRAM MANAGEMENT, AND REPAIR OF LOW POWER 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 Navy).

What is the total obligated amount?

The obligated amount is $163.2 million.

What is the period of performance?

Start: 2017-11-30. End: 2019-02-28.

What is the specific breakdown of services provided under this contract, and how do they align with Rolls-Royce's core competencies?

The contract data indicates services include 'MISSION CARE HOURLY SUPPORT, SITE SUPPORT, PROGRAM MANAGEMENT, AND REPAIR OF LOW POWER ENGINES.' This aligns directly with Rolls-Royce's established expertise in manufacturing, servicing, and supporting a wide range of gas turbine engines, including those used in naval aviation. MissionCare likely refers to a comprehensive support package designed to ensure continuous operational availability. Site support implies personnel and resources deployed at naval bases, while program management covers the overall administration of the contract. The repair of low-power engines specifically addresses maintenance needs for certain types of auxiliary or smaller power units within naval aircraft.

How does the $163 million award compare to historical spending on similar aircraft engine support contracts by the Department of the Navy?

Comparing the $163 million award requires looking at historical spending patterns for similar engine support services within the Department of the Navy. Without specific contract identifiers for comparable services, a direct comparison is difficult. However, major engine manufacturers like Rolls-Royce and GE Aviation often secure multi-year, multi-million dollar contracts for fleet support. The duration of this contract (455 days) suggests a significant, but not exceptionally long-term, commitment. Historical data would need to be analyzed for contracts covering similar engine types (e.g., turboshaft, turboprop) and service scopes (e.g., depot-level maintenance, field support, spare parts) to determine if this award is within the expected range or represents an outlier.

What are the primary risks associated with a sole-source award for critical aircraft engine support?

The primary risks associated with a sole-source award for critical aircraft engine support include: 1) **Lack of Price Competition:** The government cannot leverage multiple bids to negotiate the lowest possible price, potentially leading to higher costs. 2) **Reduced Innovation:** Without competitive pressure, the contractor may have less incentive to innovate or improve service delivery. 3) **Vendor Lock-in:** The government becomes dependent on a single supplier, making it difficult and costly to switch providers in the future, especially if proprietary technology or specialized knowledge is involved. 4) **Potential for Complacency:** The absence of competition could lead to a decline in service quality or responsiveness over time. 5) **Limited Oversight Effectiveness:** While oversight mechanisms exist, the lack of alternative options can reduce the government's leverage in enforcing contract terms.

What is the expected impact of this contract on the operational readiness of the Navy's aircraft fleet?

This contract is expected to have a positive impact on the operational readiness of the Navy's aircraft fleet by ensuring that critical low-power engines are maintained and repaired effectively. Rolls-Royce's specialized support, including program management and site services, aims to minimize downtime and maximize the availability of aircraft. Consistent and timely maintenance prevents minor issues from escalating into major failures, thereby reducing unscheduled maintenance events and increasing the number of aircraft available for missions. This directly contributes to the Navy's ability to meet its operational requirements and maintain air superiority.

Given the firm fixed-price (FFP) contract type, what are the implications for cost overruns and contractor profit?

A Firm Fixed-Price (FFP) contract type means the price is set and not subject to adjustment based on the contractor's cost experience. For the government, this provides the highest level of cost certainty, as the total cost is known upfront. Any cost overruns incurred by Rolls-Royce Corporation in performing the work will directly reduce their profit margin. Conversely, if Rolls-Royce can perform the work more efficiently than anticipated, their profit will increase. This structure places the risk of cost overruns squarely on the contractor, incentivizing them to manage resources effectively and control expenses to maximize their profit within the agreed-upon price.

Industry Classification

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

Product/Service Code: ENGINES AND TURBINES AND COMPONENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: N0001914R0039

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rolls-Royce Holdings PLC (UEI: 217127290)

Address: 450 S MERIDIAN ST, INDIANAPOLIS, IN, 46225

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $163,151,193

Exercised Options: $163,151,193

Current Obligation: $163,151,193

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001915D0019

IDV Type: IDC

Timeline