Department of Defense awards $154.6M contract for aircraft engine support to Rolls-Royce Corporation

Contract Overview

Contract Amount: $154,583,624 ($154.6M)

Contractor: Rolls-Royce Corporation

Awarding Agency: Department of Defense

Start Date: 2020-12-01

End Date: 2022-02-28

Contract Duration: 454 days

Daily Burn Rate: $340.5K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROCURE PM, SITE SUPPORT, FLIGHT HOURS, AND REPAIR OF LOW POWER REMOVALS

Place of Performance

Location: INDIANAPOLIS, MARION County, INDIANA, 46225

State: Indiana Government Spending

Plain-Language Summary

Department of Defense obligated $154.6 million to ROLLS-ROYCE CORPORATION for work described as: PROCURE PM, SITE SUPPORT, FLIGHT HOURS, AND REPAIR OF LOW POWER REMOVALS Key points: 1. Contract value represents a significant investment in maintaining critical aircraft engine capabilities. 2. Sole-source award raises questions about potential cost efficiencies and market competition. 3. Contract duration of 454 days suggests a need for sustained, specialized support. 4. Focus on repair and site support indicates a requirement for ongoing operational readiness. 5. The specific nature of 'low power removals' points to specialized technical requirements.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without specific performance metrics or comparable sole-source awards. The firm-fixed-price structure provides some cost certainty, but the absence of competition limits the ability to assess if the pricing reflects market value. Further analysis would require understanding the specific services rendered and the typical costs associated with such specialized engine support.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, proprietary technology, or when urgency dictates. The lack of competition means that price discovery through market forces was not leveraged, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may not have received the benefit of competitive pricing, as the government could not solicit bids from multiple qualified suppliers. This can result in a higher overall expenditure for the services provided.

Public Impact

The Department of the Navy benefits from the continued operational readiness of its aircraft engines. Services include site support, flight hours, and repair, ensuring aircraft are mission-capable. The contract supports critical defense infrastructure and national security objectives. Workforce implications include the need for specialized technicians and engineers familiar with Rolls-Royce engines.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing opportunities.
Lack of detailed performance metrics makes value assessment difficult.
Potential for cost overruns if not closely managed due to lack of competition.

Positive Signals

Firm-fixed-price contract provides cost certainty for the defined scope.
Rolls-Royce is a known entity with established expertise in aircraft engines.
Contract addresses critical operational needs for the Department of the Navy.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft engine maintenance and support. The market for specialized engine repair and support is often dominated by original equipment manufacturers like Rolls-Royce due to proprietary knowledge and technology. Comparable spending in this sector involves significant investments in sustainment and readiness for military aviation fleets.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the specialized nature of aircraft engine repair and support, it is unlikely that small businesses would be primary contractors for such a large-scale requirement. Subcontracting opportunities for small businesses may exist, but would depend on the prime contractor's strategy and the specific needs of the services rendered.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Navy's contracting and program management offices. Accountability measures would be defined in the contract terms, including performance standards and reporting requirements. Transparency may be limited due to the sole-source nature, but contract awards are generally publicly reported.

Related Government Programs

Aircraft Engine Maintenance
Defense Logistics Support
Aerospace Manufacturing Services
Military Aircraft Readiness Programs

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Limited transparency in pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $154.6 million to ROLLS-ROYCE CORPORATION. PROCURE PM, SITE SUPPORT, FLIGHT HOURS, AND REPAIR OF LOW POWER REMOVALS

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 $154.6 million.

What is the period of performance?

Start: 2020-12-01. End: 2022-02-28.

What is the historical spending pattern for aircraft engine support services by the Department of the Navy with Rolls-Royce Corporation?

Analyzing historical spending requires access to detailed contract databases. However, it is common for the Department of the Navy to engage in long-term sustainment contracts with major engine manufacturers like Rolls-Royce due to the specialized nature of the equipment. These contracts often cover a range of services including routine maintenance, unscheduled repairs, spare parts, and technical support. The total expenditure over time can be substantial, reflecting the high cost of maintaining advanced military aviation assets. Without specific historical data for this particular contract or similar ones, it's difficult to provide precise figures, but such support is a consistent and significant part of the defense budget.

How does the pricing of this contract compare to similar sole-source awards for aircraft engine support?

Direct comparison of pricing for sole-source contracts is inherently difficult without access to detailed cost breakdowns and performance metrics of comparable agreements. Sole-source awards are often justified by unique capabilities or proprietary technology, which can influence pricing. To assess value, one would need to benchmark the unit costs of specific services (e.g., per flight hour, per repair) against industry standards or previous contracts with the same vendor, adjusted for inflation and scope changes. The firm-fixed-price nature provides some predictability, but the absence of competition means there's no direct market validation of the price.

What are the key performance indicators (KPIs) used to measure the success of this contract?

Key performance indicators for aircraft engine support contracts typically focus on operational readiness and reliability. These might include metrics such as engine availability rates, mean time between failures (MTBF), turnaround time for repairs, and adherence to scheduled maintenance. For flight hour services, utilization rates and fuel efficiency could also be tracked. The contract documents would specify these KPIs, and performance against them would dictate contractor payment and future contract decisions. The effectiveness of the 'PROCURE PM, SITE SUPPORT, FLIGHT HOURS, AND REPAIR OF LOW POWER REMOVALS' will be measured against these defined metrics.

What is the track record of Rolls-Royce Corporation in fulfilling similar defense contracts?

Rolls-Royce Corporation has a long-standing and extensive track record as a major supplier of engines and support services to military and commercial aviation sectors globally, including significant contracts with the U.S. Department of Defense. They are known for their advanced engine technology and comprehensive sustainment programs. Historically, their performance on large defense contracts has generally been robust, though like any major contractor, they may encounter specific challenges on individual programs. Their ability to secure and maintain such contracts suggests a consistent level of performance and technical capability that meets the stringent requirements of defense agencies.

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

The primary risk associated with a sole-source award is the potential for inflated costs due to the lack of competitive pressure. Without competing bids, the government may pay a premium for the services. Another risk is vendor lock-in, where the government becomes heavily reliant on a single provider, making it difficult and costly to switch suppliers in the future. There's also a risk that innovation may be stifled, as the sole provider may have less incentive to improve efficiency or offer cost-saving solutions compared to a competitive environment. Effective contract management and oversight are crucial to mitigate these risks.

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: N0001920R0004

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: $154,583,624

Exercised Options: $154,583,624

Current Obligation: $154,583,624

Subaward Activity

Number of Subawards: 25

Total Subaward Amount: $5,795,665

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001920D0004

IDV Type: IDC

Timeline