DoD's $16M Propulsion Systems Contract with Rolls-Royce Raises Concerns Over Competition and Value

Contract Overview

Contract Amount: $16,050,032 ($16.1M)

Contractor: Rolls-Royce Solutions America Inc

Awarding Agency: Department of Defense

Start Date: 2006-05-11

End Date: 2008-12-31

Contract Duration: 965 days

Daily Burn Rate: $16.6K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: PROPULSION SYSTEMS

Place of Performance

Location: REDFORD, WAYNE County, MICHIGAN, 48239

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $16.1 million to ROLLS-ROYCE SOLUTIONS AMERICA INC for work described as: PROPULSION SYSTEMS Key points: 1. Significant spending on propulsion systems for the Navy. 2. Sole-source award to Rolls-Royce Solutions America Inc. limits competitive pricing. 3. Contract duration of 965 days suggests a substantial, long-term need. 4. Lack of competition may lead to inflated costs for taxpayers.

Value Assessment

Rating: questionable

The contract value of $16,050,031.94 for propulsion systems is substantial. Without competitive bidding, it's difficult to assess if this price represents fair market value compared to similar contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

The contract was awarded on a sole-source basis, indicating a lack of competition. This method bypasses the typical price discovery mechanisms inherent in competitive procurement, potentially impacting the final price paid.

Taxpayer Impact: The absence of competition in this $16M contract means taxpayers may not be receiving the best possible price for these critical propulsion systems.

Public Impact

Naval readiness relies on these propulsion systems. Taxpayer funds are allocated for defense procurement. The sole-source nature of the award warrants scrutiny of the procurement process.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award
Lack of competition
Limited transparency on pricing

Positive Signals

Essential defense procurement
Specific vendor expertise may be required

Sector Analysis

This contract falls within the Defense sector, specifically related to shipbuilding and repairing. Spending benchmarks in this area are highly variable, but large sole-source contracts often warrant closer examination due to potential cost inefficiencies.

Small Business Impact

The data does not indicate any specific involvement or benefit to small businesses in this contract award. The focus appears to be on a large, established prime contractor.

Oversight & Accountability

The sole-source nature of this award suggests a need for robust oversight to ensure the government is obtaining fair value and that competition was appropriately considered or justified.

Related Government Programs

Ship Building and Repairing
Department of Defense Contracting
Department of the Navy Programs

Risk Flags

Sole-source award limits competition.
Potential for inflated pricing due to lack of competition.
Limited transparency on cost justification.
Long-term reliance on a single vendor.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $16.1 million to ROLLS-ROYCE SOLUTIONS AMERICA INC. PROPULSION SYSTEMS

Who is the contractor on this award?

The obligated recipient is ROLLS-ROYCE SOLUTIONS AMERICA INC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $16.1 million.

What is the period of performance?

Start: 2006-05-11. End: 2008-12-31.

What is the justification for the sole-source award, and were alternative competitive strategies explored?

The justification for a sole-source award is critical. Agencies must demonstrate why full and open competition is not feasible or not in the government's best interest. This often involves unique capabilities, urgent needs, or lack of viable alternatives. Without this justification, the award raises questions about potential missed opportunities for cost savings through competition.

How does the per-unit cost of these propulsion systems compare to industry benchmarks or previous contracts?

Benchmarking the per-unit cost is essential for assessing value. Given this is a sole-source contract, direct comparison is challenging. However, internal agency cost estimates, historical data from similar (even if not identical) procurements, or industry standard pricing for comparable systems should be used to evaluate if the $16 million expenditure is reasonable.

What are the long-term implications of relying on a single supplier for critical propulsion systems?

Long-term reliance on a single supplier can create strategic risks, including supply chain vulnerabilities, potential price escalation over time, and reduced innovation. While sometimes necessary for specialized equipment, it necessitates careful contract management and contingency planning to mitigate these risks and ensure sustained operational capability.

Industry Classification

NAICS: Manufacturing › Ship and Boat Building › Ship Building and Repairing

Product/Service Code: SHIP AND MARINE EQUIPMENT

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 13400 W OUTER DR, DETROIT, MI, 90

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $16,050,032

Exercised Options: $16,050,032

Current Obligation: $16,050,032

Contract Characteristics

Cost or Pricing Data: NO

Timeline