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
- Long-term contract duration
- Cost Plus Award Fee structure
- Potential for limited future competition
Positive Signals
- Awarded under full and open competition
- Experienced contractor
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
- Facilities Support Services
- Department of Energy Contracting
- Department of Energy Programs
Risk Flags
- High contract value
- Long contract duration
- Cost Plus Award Fee structure
- Potential for limited future competition
- Lack of small business participation data
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 Services › Facilities Support Services › Facilities Support Services
Product/Service Code: OPERATION OF GOVT OWNED FACILITY › OPERATE 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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