DOE's $4.79B Kansas City Plant Contract with Honeywell Faces Scrutiny Over Competition and Value

Contract Overview

Contract Amount: $4,788,192,320 ($4.8B)

Contractor: Honeywell Federal Manufacturing & Technologies, LLC

Awarding Agency: Department of Energy

Start Date: 2001-01-01

End Date: 2010-12-31

Contract Duration: 3,651 days

Daily Burn Rate: $1.3M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Other

Official Description: MANAGEMENT AND OPERATION OF KANSAS CITY PLANT

Place of Performance

Location: KANSAS CITY, JACKSON County, MISSOURI, 64131

State: Missouri Government Spending

Plain-Language Summary

Department of Energy obligated $4.79 billion to HONEYWELL FEDERAL MANUFACTURING & TECHNOLOGIES, LLC for work described as: MANAGEMENT AND OPERATION OF KANSAS CITY PLANT Key points: 1. The contract's large value and long duration raise questions about cost-effectiveness. 2. Limited competition or sole-source awards can inflate prices and reduce innovation. 3. The Cost Plus Award Fee structure may incentivize cost overruns if not managed tightly. 4. Facilities Support Services is a broad category with potential for efficiency gains.

Value Assessment

Rating: questionable

The contract's total value of nearly $4.8 billion over 10 years suggests a significant investment. Benchmarking this against similar large-scale facilities management contracts is crucial to assess if the pricing is competitive and reflects true market value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

While the contract was awarded under full and open competition, the long-term nature and specialized requirements of managing a federal manufacturing plant can limit the pool of truly competitive bidders over time. The effectiveness of the initial competition in securing the best long-term value is a key consideration.

Taxpayer Impact: The substantial taxpayer investment necessitates rigorous oversight to ensure funds are used efficiently and effectively, maximizing the return on investment for public services.

Public Impact

Taxpayers are funding the management and operation of a critical federal manufacturing facility. The contract's duration implies a long-term commitment of public resources. The success of this contract directly impacts national security and technological capabilities managed by the Department of Energy.

Waste & Efficiency Indicators

Waste Risk Score: 75 / 10

Warning Flags

Positive Signals

Sector Analysis

The Facilities Support Services sector encompasses a wide range of operational and management functions for government facilities. Benchmarks for such large, long-term contracts are difficult to establish due to unique government requirements, but efficiency and cost control are paramount.

Small Business Impact

The provided data does not indicate any specific subcontracting goals or achievements for small businesses on this contract. Further investigation is needed to determine the extent of small business participation.

Oversight & Accountability

The Cost Plus Award Fee structure requires robust oversight from the Department of Energy to ensure that award criteria are met without encouraging unnecessary costs. Regular performance reviews and audits are essential for accountability.

Related Government Programs

Risk Flags

Tags

facilities-support-services, department-of-energy, mo, definitive-contract, billion-dollar

Frequently Asked Questions

What is this federal contract paying for?

Department of Energy awarded $4.79 billion to HONEYWELL FEDERAL MANUFACTURING & TECHNOLOGIES, LLC. MANAGEMENT AND OPERATION OF KANSAS CITY PLANT

Who is the contractor on this award?

The obligated recipient is HONEYWELL FEDERAL MANUFACTURING & TECHNOLOGIES, LLC.

Which agency awarded this contract?

Awarding agency: Department of Energy (Department of Energy).

What is the total obligated amount?

The obligated amount is $4.79 billion.

What is the period of performance?

Start: 2001-01-01. End: 2010-12-31.

How effectively did the initial full and open competition secure the best value for the taxpayer, considering the specialized nature of the facility?

The initial full and open competition is a positive indicator for value. However, the long-term nature of the contract and the specialized requirements for managing a federal manufacturing plant may have limited the number of truly capable bidders. A post-award analysis of the bidding process and the final negotiated terms would reveal if the competition effectively drove down costs and ensured optimal performance standards were met.

What are the primary risks associated with the Cost Plus Award Fee (CPAF) structure in this large-scale contract?

The primary risk with CPAF is that the contractor might prioritize achieving award fees, potentially leading to increased costs if not carefully managed. There's a risk that the 'cost' component could escalate if performance targets are pursued without stringent cost controls. Effective oversight by the agency is critical to ensure that award fees are tied to demonstrable value and efficiency, rather than simply cost accumulation.

How does the long-term duration of this contract impact the government's ability to adapt to changing technological needs or market conditions?

A 10-year contract duration, while providing stability, can limit the government's agility. It may hinder the adoption of newer technologies or more efficient operational methods that emerge during the contract period. The government might be locked into existing systems or processes, potentially missing out on cost savings or performance improvements available through updated solutions. Contract flexibility clauses or regular re-competition cycles are important mitigation strategies.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation ServicesFacilities Support ServicesFacilities Support Services

Product/Service Code: OPERATION OF GOVT OWNED FACILITYOPERATE GOVT OWNED BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Contractor Details

Parent Company: Honeywell International Inc (UEI: 139691877)

Address: 2000 E 95TH ST, KANSAS CITY, MO, 64131

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $4,788,328,097

Exercised Options: $4,788,328,097

Current Obligation: $4,788,192,320

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Timeline

Start Date: 2001-01-01

Current End Date: 2010-12-31

Potential End Date: 2010-12-31 00:00:00

Last Modified: 2018-05-23

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