DoD's $167M Rolls-Royce Contract for Aircraft Engine Maintenance Raises Questions on Competition and Value
Contract Overview
Contract Amount: $167,427,222 ($167.4M)
Contractor: Rolls-Royce Corporation
Awarding Agency: Department of Defense
Start Date: 2020-10-01
End Date: 2021-09-30
Contract Duration: 364 days
Daily Burn Rate: $460.0K/day
Competition Type: NOT COMPETED
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: MAINTENANCE AND RELATED SERVICES AT CNATRA SITES
Place of Performance
Location: INDIANAPOLIS, MARION County, INDIANA, 46225
State: Indiana Government Spending
Plain-Language Summary
Department of Defense obligated $167.4 million to ROLLS-ROYCE CORPORATION for work described as: MAINTENANCE AND RELATED SERVICES AT CNATRA SITES Key points: 1. Significant contract value for maintenance services. 2. Sole-source award to Rolls-Royce Corporation limits competitive pricing. 3. Potential for higher costs due to lack of competition. 4. Focus on critical aircraft engine parts manufacturing sector.
Value Assessment
Rating: questionable
The contract value of $167.4M for maintenance services is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to similar contracts for aircraft engine maintenance.
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 considered. This significantly limits price discovery and potentially leads to higher costs for the government.
Taxpayer Impact: The lack of competition in this sole-source award may result in taxpayers paying a premium for these essential maintenance services.
Public Impact
Taxpayers may be overpaying due to the absence of competitive bidding. Dependence on a single supplier for critical aircraft engine maintenance. Potential impact on readiness if maintenance costs escalate significantly.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award
- Lack of competition
- Potential for overpricing
- Limited transparency on pricing justification
Positive Signals
- Essential maintenance for critical defense assets
- Contract awarded to a known manufacturer
Sector Analysis
This contract falls within the Defense sector, specifically related to aircraft engine maintenance. Spending benchmarks for such specialized services can vary widely, but sole-source awards often deviate from competitive norms.
Small Business Impact
This contract does not appear to involve small businesses, as it is a sole-source award to a large corporation, Rolls-Royce. There is no indication of subcontracting opportunities for small businesses.
Oversight & Accountability
Oversight is crucial for sole-source contracts to ensure fair pricing and prevent waste. The Department of the Navy awarded this contract, and further review would be needed to confirm adequate oversight mechanisms were in place.
Related Government Programs
- Aircraft Engine and Engine Parts Manufacturing
- Department of Defense Contracting
- Department of the Navy Programs
Risk Flags
- Sole-source award lacks competition.
- Potential for inflated pricing.
- Limited transparency on cost justification.
- Risk of vendor lock-in.
- No small business participation evident.
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 $167.4 million to ROLLS-ROYCE CORPORATION. MAINTENANCE AND RELATED SERVICES AT CNATRA SITES
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 $167.4 million.
What is the period of performance?
Start: 2020-10-01. End: 2021-09-30.
What was the justification for awarding this contract on a sole-source basis?
The justification for a sole-source award typically involves circumstances where only one responsible source can provide the required supplies or services. This could be due to unique capabilities, proprietary technology, or urgent and compelling needs. Without specific documentation, it's impossible to confirm the exact reason, but it warrants scrutiny to ensure it was a valid exception to full and open competition.
How does the per-unit cost of this maintenance compare to industry benchmarks for similar services?
Benchmarking the per-unit cost is challenging without access to detailed cost breakdowns and specific service metrics. However, given the sole-source nature, it is probable that the costs are higher than what might be achieved through competitive bidding. A thorough cost analysis by the agency would be necessary to determine if the pricing is reasonable.
What is the long-term risk associated with relying on a sole-source provider for critical aircraft engine maintenance?
The primary long-term risk is the potential for escalating costs and reduced service quality due to the lack of competitive pressure. It also creates a dependency that could be problematic if the sole provider faces financial difficulties or changes its business strategy. This could impact military readiness and operational capabilities.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Engine and Engine Parts Manufacturing
Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Solicitation ID: N6134018R0005
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: $167,427,222
Exercised Options: $167,427,222
Current Obligation: $167,427,222
Subaward Activity
Number of Subawards: 46
Total Subaward Amount: $125,227,147
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: N6134019D0004
IDV Type: IDC
Timeline
Start Date: 2020-10-01
Current End Date: 2021-09-30
Potential End Date: 2021-09-30 00:00:00
Last Modified: 2022-03-28
More Contracts from Rolls-Royce Corporation
- This Contract IS for the Procurement of AE1107C Turboshaft Engines (installs and Spares) — $847.1M (Department of Defense)
- Pbth Contract — $615.2M (Department of Defense)
- AE1107C Turboshaft Engines (installs) — $527.0M (Department of Defense)
- AE1107C Turboshaft Engines — $520.7M (Department of Defense)
- Federal Contract — $340.6M (Department of Defense)
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)