DoD awards $120M contract for 68 Eitan Protected Personal Carriers to Rolls-Royce Solutions America Inc

Contract Overview

Contract Amount: $119,780,051 ($119.8M)

Contractor: Rolls-Royce Solutions America Inc

Awarding Agency: Department of Defense

Start Date: 2023-08-10

End Date: 2027-12-31

Contract Duration: 1,604 days

Daily Burn Rate: $74.7K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: FY22 FMS FUNDS, ISRAEL CASE NO. IS-B-ZMU LINES 001 AND 002, SS TO RRSA. FFP PROCUREMENT FOR 68 EA EITAN PPKS, CTA & NRE, WITH A BASE OPTION FOR 17 EA PPKS. FOUR ADDITIONAL UNEXERCISED OPTION PERIODS TO INCLUDE AN ADDITIONAL 208 PPKS, CTA, AND NRE.

Place of Performance

Location: NOVI, OAKLAND County, MICHIGAN, 48377

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $119.8 million to ROLLS-ROYCE SOLUTIONS AMERICA INC for work described as: FY22 FMS FUNDS, ISRAEL CASE NO. IS-B-ZMU LINES 001 AND 002, SS TO RRSA. FFP PROCUREMENT FOR 68 EA EITAN PPKS, CTA & NRE, WITH A BASE OPTION FOR 17 EA PPKS. FOUR ADDITIONAL UNEXERCISED OPTION PERIODS TO INCLUDE AN ADDITIONAL 208 PPKS, CTA, AND NRE. Key points: 1. Contract awarded on a sole-source basis, raising questions about potential price overruns. 2. Significant portion of the contract value allocated to Contract Line Item Numbers (CLINs) for Contract Technical Assistance (CTA) and Non-Recurring Engineering (NRE). 3. The contract includes a base award for 68 units with options for an additional 208 units, indicating potential for substantial future spending. 4. The contract's duration extends to December 2027, suggesting a long-term commitment to this platform. 5. The procurement is for specialized Protected Personal Carriers (PPKs), likely for high-threat environments. 6. The award to Rolls-Royce Solutions America Inc. suggests a reliance on established defense contractors for critical equipment.

Value Assessment

Rating: questionable

The contract's value of $119.8 million for 68 units, plus significant allocations for CTA and NRE, warrants scrutiny. Without comparable contract data for similar protected vehicles, it is difficult to benchmark the value for money. The sole-source nature of the award also limits the ability to assess competitive pricing. Further analysis is needed to determine if the per-unit cost is aligned with market rates for comparable defense equipment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis to Rolls-Royce Solutions America Inc. The justification for this limited competition is not provided in the available data. Sole-source awards can lead to higher prices due to the absence of competitive pressure. The lack of multiple bidders means there was no opportunity for price discovery through a competitive bidding process.

Taxpayer Impact: Taxpayers may be paying a premium for this equipment due to the lack of competition. Without a competitive bidding process, there is less assurance that the government is securing the best possible price for these specialized vehicles.

Public Impact

The primary beneficiaries are the U.S. Army personnel who will operate the Eitan Protected Personal Carriers in potentially hazardous environments. The contract will deliver 68 Eitan PPKs, along with associated Contract Technical Assistance and Non-Recurring Engineering. The geographic impact is primarily within the Department of Defense's operational theaters, with potential implications for global deployments. The contract supports specialized manufacturing and engineering roles within the defense industrial base, likely benefiting skilled labor in those sectors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and may result in higher costs for taxpayers.
Significant portion of the contract value allocated to CTA and NRE, requiring further justification for cost-effectiveness.
Long contract duration (through 2027) with options for substantial additional units could lead to significant future spending.
Lack of detailed performance metrics in the provided data makes it difficult to assess the effectiveness of the procured equipment.
The specific nature of 'Other Engine Equipment Manufacturing' (NAICS code 336318) is broad and may not fully capture the specialized nature of the Eitan PPK.

Positive Signals

Procurement of Eitan PPKs addresses a critical need for protected mobility in demanding operational environments.
The award to a known entity like Rolls-Royce Solutions America Inc. suggests a degree of reliability and established supply chain.
The contract includes options for additional units, allowing for scalability of the program based on evolving requirements.
Firm Fixed Price (FFP) contract type provides cost certainty for the base award, assuming no significant scope changes.

Sector Analysis

The defense sector is characterized by long procurement cycles, high R&D costs, and a reliance on specialized manufacturers. Contracts for protected vehicles like the Eitan PPK are crucial for maintaining troop safety and operational effectiveness. The market for such equipment is often dominated by a few key players due to stringent technical requirements and security clearances. Comparable spending benchmarks are difficult to ascertain without specific details on the Eitan PPK's capabilities and the competitive landscape for similar platforms.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (SB is false) and there is no indication of a small business subcontracting plan (SMB is false). This suggests that the primary contractor, Rolls-Royce Solutions America Inc., is a large business, and the contract is unlikely to directly benefit the small business ecosystem through set-asides. Subcontracting opportunities for small businesses may exist but are not explicitly detailed in this award notice.

Oversight & Accountability

Oversight for this contract will likely fall under the Department of the Army's contracting and program management offices. Accountability measures are typically embedded within the contract terms, including delivery schedules, quality standards, and payment milestones. Transparency is facilitated through contract award notices published on federal procurement databases. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Armored Personnel Carriers
Military Ground Vehicles
Tactical Wheeled Vehicles
Foreign Military Sales (FMS) - Israel Case
Protected Mobility Vehicles

Risk Flags

Sole-source award
High proportion of CTA/NRE costs
Long contract duration with significant option potential
Lack of detailed cost breakdown

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $119.8 million to ROLLS-ROYCE SOLUTIONS AMERICA INC. FY22 FMS FUNDS, ISRAEL CASE NO. IS-B-ZMU LINES 001 AND 002, SS TO RRSA. FFP PROCUREMENT FOR 68 EA EITAN PPKS, CTA & NRE, WITH A BASE OPTION FOR 17 EA PPKS. FOUR ADDITIONAL UNEXERCISED OPTION PERIODS TO INCLUDE AN ADDITIONAL 208 PPKS, CTA, AND NRE.

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 Army).

What is the total obligated amount?

The obligated amount is $119.8 million.

What is the period of performance?

Start: 2023-08-10. End: 2027-12-31.

What is the specific justification for awarding this contract on a sole-source basis?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source procurements are justified under circumstances such as unique capabilities, urgent needs, or the unavailability of other sources. Without this justification, it is difficult to assess whether the sole-source designation was appropriate and if it led to a fair and reasonable price. Further investigation into the Federal Acquisition Regulation (FAR) exceptions for sole-source awards would be necessary to understand the rationale behind this decision.

How does the cost of the Eitan PPK compare to similar protected vehicles in the market?

Benchmarking the cost of the Eitan PPK is challenging without specific details on its capabilities and comparable market offerings. The contract value of approximately $1.76 million per unit ($119.8M / 68 units) for the base award, excluding CTA and NRE, provides a starting point. However, the complexity, protection levels, and mission roles of different protected vehicles vary significantly. A comprehensive comparison would require analyzing the technical specifications, threat environments these vehicles are designed for, and procurement data for similar platforms from other nations or U.S. military branches.

What is the breakdown of costs between the Eitan PPKs, CTA, and NRE?

The provided data does not offer a detailed cost breakdown between the Eitan PPKs, Contract Technical Assistance (CTA), and Non-Recurring Engineering (NRE). These components are listed as Contract Line Item Numbers (CLINs). CTA often covers support services, training, and maintenance, while NRE includes the initial design, development, and testing costs. A significant allocation to CTA and NRE suggests substantial upfront investment and ongoing support requirements, which could inflate the overall contract value. Understanding the proportion of each CLIN is crucial for assessing the true cost of the hardware versus the associated services and development.

What are the performance expectations and track record of Rolls-Royce Solutions America Inc. for similar defense contracts?

Rolls-Royce Solutions America Inc. is a known entity in the defense sector, often associated with propulsion systems and power solutions. Their track record with similar defense contracts would need to be evaluated based on past performance reviews, delivery history, and adherence to contract terms. While the company has a global presence and significant experience, the specific performance related to the Eitan PPK platform and its associated technical assistance requires a deeper dive into their project execution history within the U.S. Department of Defense or allied forces.

What is the historical spending trend for Eitan PPKs or similar protected vehicles by the Department of the Army?

Historical spending data for Eitan PPKs specifically by the Department of the Army is not readily available in this contract notice. However, the Army has consistently invested in protected mobility platforms to enhance soldier survivability. Past procurements of vehicles like the Stryker family, MRAPs (Mine-Resistant Ambush Protected vehicles), and other armored personnel carriers represent significant historical spending categories. Analyzing these broader trends can provide context for the current investment in the Eitan PPK, suggesting a continued focus on equipping forces with advanced protection capabilities.

What are the implications of the four additional unexercised option periods for future spending?

The presence of four additional unexercised option periods, which could include an additional 208 PPKs, CTA, and NRE, signifies a substantial potential for future spending beyond the base award. If all options are exercised, the total number of PPKs could increase significantly, leading to a multi-fold increase in the contract's total value. This structure allows the Army flexibility to scale its procurement based on evolving needs and budget availability, but it also presents a long-term financial commitment that requires careful management and oversight to control costs.

Industry Classification

NAICS: Manufacturing › Engine, Turbine, and Power Transmission Equipment Manufacturing › Other Engine Equipment Manufacturing

Product/Service Code: MOTOR VEHICLES, CYCLES, TRAILERS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W56HZV22R0108

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Rolls-Royce Holdings PLC

Address: 39525 MACKENZIE DR, NOVI, MI, 48377

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: $160,306,717

Exercised Options: $119,780,051

Current Obligation: $119,780,051

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline