DoD's $30M Honeywell contract for electronic equipment repair saw limited competition, raising value concerns

Contract Overview

Contract Amount: $30,018,936 ($30.0M)

Contractor: Honeywell International Inc.

Awarding Agency: Department of Defense

Start Date: 2010-06-01

End Date: 2014-12-31

Contract Duration: 1,674 days

Daily Burn Rate: $17.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: OTHER ELECTRONIC AND PRECISION EQUIPMENT REPAIR AND MAINTENANCE

Place of Performance

Location: CLEARWATER, PINELLAS County, FLORIDA, 33764

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $30.0 million to HONEYWELL INTERNATIONAL INC. for work described as: OTHER ELECTRONIC AND PRECISION EQUIPMENT REPAIR AND MAINTENANCE Key points: 1. The contract's value proposition is questionable due to a lack of competitive bidding. 2. Competition dynamics were limited, suggesting potential for overpayment. 3. Risk indicators include the sole-source nature and the cost-plus contract type. 4. Performance context is within the Department of Defense's broader maintenance and repair operations. 5. Sector positioning is in the specialized repair and maintenance of electronic and precision equipment.

Value Assessment

Rating: questionable

Benchmarking this contract's value is challenging due to the absence of competitive bids and the cost-plus fixed fee structure, which can incentivize higher spending. The raw dollar amount of $30 million over approximately four years for repair services suggests a significant investment. Without comparable contracts or market rate data for similar specialized electronic equipment repair, it's difficult to definitively assess if the pricing was optimal or if taxpayers received the best possible value. The lack of competition is a primary driver for this assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition to solicit bids from multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or security clearances. The limited competition significantly impacts price discovery, as there was no market pressure to drive down costs. This raises concerns about whether the government secured the most favorable terms and pricing available.

Taxpayer Impact: Sole-source awards mean taxpayers may not benefit from competitive pricing, potentially leading to higher overall expenditures for the services rendered.

Public Impact

The Department of the Air Force benefits from the continued operational readiness of its electronic and precision equipment. Services delivered include the repair and maintenance of critical electronic systems, ensuring functionality. The geographic impact is concentrated in Florida, where the contract was administered. Workforce implications are likely related to specialized technicians and support staff required for equipment repair.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs for taxpayers.
Cost-plus contract type can reduce contractor incentive for cost control.
Limited transparency in sole-source award justification.
Potential for vendor lock-in due to specialized nature of services.

Positive Signals

Ensures availability of specialized repair services for critical defense equipment.
Contract awarded to a known entity (Honeywell) with established capabilities.
Contract duration provided a period of sustained support for the Air Force.

Sector Analysis

The contract falls within the broader aerospace and defense sector, specifically focusing on the maintenance, repair, and overhaul (MRO) of complex electronic and precision equipment. This niche requires specialized technical expertise and often involves proprietary technologies. The market for such services is characterized by high barriers to entry due to technical requirements and security clearances. Comparable spending benchmarks are difficult to establish without detailed service scope and equipment specifics, but MRO for defense systems represents a significant portion of the defense budget.

Small Business Impact

This contract does not appear to have involved small business set-asides, as indicated by the 'sb' field being false. There is no direct information on subcontracting plans for small businesses. The sole-source nature of the award further limits opportunities for small businesses to participate in this specific contract, potentially bypassing the broader small business ecosystem for this particular service requirement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Accountability measures are inherent in contract terms and performance expectations, though the cost-plus structure might dilute direct financial accountability for cost overruns. Transparency is limited due to the sole-source nature. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Logistics Agency (DLA) Maintenance, Repair, and Overhaul Services
Air Force Sustainment Center Operations
Department of Defense Electronic Systems Maintenance
Precision Equipment Repair Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competitive bidding
Potential for cost overruns
Limited transparency in pricing

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $30.0 million to HONEYWELL INTERNATIONAL INC.. OTHER ELECTRONIC AND PRECISION EQUIPMENT REPAIR AND MAINTENANCE

Who is the contractor on this award?

The obligated recipient is HONEYWELL INTERNATIONAL INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $30.0 million.

What is the period of performance?

Start: 2010-06-01. End: 2014-12-31.

What is Honeywell International Inc.'s track record with the Department of Defense for similar repair services?

Honeywell International Inc. has a long-standing relationship with the Department of Defense, providing a wide array of products and services, including avionics, engines, and support systems. For repair and maintenance of electronic and precision equipment, Honeywell has historically secured numerous contracts across different branches of the military. Their track record generally indicates a capacity to deliver complex technical solutions. However, the specifics of their performance on past cost-plus, sole-source contracts for repair services would require a deeper dive into contract performance reports and any associated quality or cost issues to fully assess their reliability and value delivery in such arrangements.

How does the $30 million contract value compare to industry benchmarks for similar electronic equipment repair services?

Directly comparing the $30 million contract value to industry benchmarks for similar electronic equipment repair is challenging without a precise definition of the 'electronic and precision equipment' covered and the scope of repair services. The market for specialized defense electronics MRO is often bespoke, with high barriers to entry. However, for large-scale, multi-year sustainment contracts for complex systems, $30 million is a substantial figure. The lack of competition and the cost-plus fixed fee structure inherently make direct benchmarking difficult, as competitive bidding typically drives prices closer to market rates. Without access to detailed service level agreements and comparable sole-source awards, assessing value against industry norms remains speculative.

What are the primary risks associated with a sole-source, cost-plus fixed fee contract for electronic equipment repair?

The primary risks associated with a sole-source, cost-plus fixed fee (CPFF) contract for electronic equipment repair are twofold. Firstly, the sole-source nature eliminates competitive pressure, potentially leading to higher prices than could be achieved through open bidding. The government may not be getting the best possible value. Secondly, the CPFF structure reimburses the contractor for allowable costs plus a fixed fee. While the fee is fixed, the contractor has less incentive to control costs aggressively, as higher costs (within allowable limits) do not reduce their profit margin. This can lead to cost overruns and increased overall expenditure for the government. Additionally, there's a risk of vendor lock-in and reduced transparency in pricing.

How effective are sole-source awards in ensuring the availability of critical repair services for specialized defense equipment?

Sole-source awards can be effective in ensuring the availability of critical repair services for highly specialized defense equipment when only one contractor possesses the unique technical expertise, proprietary technology, or necessary security clearances. In such cases, competition is genuinely limited or non-existent, and a sole-source award is the only viable path to secure the required services. This approach prioritizes mission assurance and operational readiness over potential cost savings from competition. However, the justification for sole-sourcing must be rigorous to prevent its misuse, as it bypasses the market's price discovery mechanisms and can lead to higher costs if not carefully managed and overseen.

What are the historical spending patterns for electronic equipment repair and maintenance within the Department of Defense?

Historical spending patterns for electronic equipment repair and maintenance within the Department of Defense are substantial and represent a significant portion of the overall defense budget allocated to sustainment and readiness. The DoD consistently invests billions annually in MRO services across all branches, covering a vast array of complex systems, from aircraft avionics to communication equipment and ground support systems. Spending in this category is influenced by factors such as the age of the equipment fleet, technological advancements requiring upgrades or specialized maintenance, operational tempo, and geopolitical demands. While specific figures fluctuate year-to-year, the trend indicates a continuous and significant requirement for these services.

What is the significance of the contract being awarded in Florida (st: FL, sn: FLORIDA)?

The significance of the contract being awarded and administered in Florida (st: FL, sn: FLORIDA) likely relates to the physical location of the Air Force facilities, the contractor's operational base, or the presence of specialized maintenance depots within the state. Florida hosts numerous significant military installations, including Air Force bases, and has a robust aerospace and defense industry presence. This geographic concentration can streamline logistics, reduce travel costs for personnel, and facilitate closer collaboration between the government and the contractor. It may also indicate that the specific electronic equipment requiring repair is utilized or based in that region, or that Honeywell has a key repair facility located there.

Industry Classification

NAICS: Other Services (except Public Administration) › Electronic and Precision Equipment Repair and Maintenance › Other Electronic and Precision Equipment Repair and Maintenance

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: Honeywell International Inc (UEI: 139691877)

Address: 13350 US HIGHWAY 19 NORTH, CLEARWATER, FL, 13

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Federally Funded Research and Development Corp, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $37,958,028

Exercised Options: $30,018,936

Current Obligation: $30,018,936

Contract Characteristics

Cost or Pricing Data: NO

Timeline