Honeywell awarded $114.7M contract for enterprise performance-based logistics support for multiple aircraft platforms

Contract Overview

Contract Amount: $114,721,359 ($114.7M)

Contractor: Honeywell International Inc.

Awarding Agency: Department of Defense

Start Date: 2025-01-01

End Date: 2025-12-31

Contract Duration: 364 days

Daily Burn Rate: $315.2K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: ENTERPRISE PERFORMANCE BASED LOGISTICS CONTRACT FOR SECONDARY POWER SUPPORT FOR B-1, B-2, E-3, F-15, C-130, F-16, A-10, AND GROUND CARTS. PERFORMANCE AT HILL AFB IN SUPPORT OF 419 SCMS

Place of Performance

Location: PHOENIX, MARICOPA County, ARIZONA, 85034

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $114.7 million to HONEYWELL INTERNATIONAL INC. for work described as: ENTERPRISE PERFORMANCE BASED LOGISTICS CONTRACT FOR SECONDARY POWER SUPPORT FOR B-1, B-2, E-3, F-15, C-130, F-16, A-10, AND GROUND CARTS. PERFORMANCE AT HILL AFB IN SUPPORT OF 419 SCMS Key points: 1. Contract focuses on performance-based logistics, aiming for improved readiness and reduced costs through contractor-managed inventory and maintenance. 2. The scope covers a wide range of critical Air Force aircraft, including B-1, B-2, E-3, F-15, C-130, F-16, and A-10, indicating broad operational reliance. 3. Performance is centered at Hill AFB, a key logistics hub, suggesting a strategic location for support operations. 4. The contract type, Fixed Price with Economic Price Adjustment, aims to balance cost certainty with protection against market fluctuations. 5. This is a delivery order under an existing contract, implying a continuation of established support services. 6. The absence of small business set-aside indicates the primary contractor is not a small business, and subcontracting opportunities for small businesses are not explicitly mandated by this award.

Value Assessment

Rating: fair

The total value of $114.7 million for a one-year period of performance (2025) for enterprise performance-based logistics (PBL) support for multiple aircraft platforms appears substantial. Benchmarking this against similar PBL contracts for aircraft component support is challenging without more specific details on the scope of services and the exact components covered. However, PBL contracts are generally intended to provide better value through performance incentives and reduced government oversight compared to traditional sustainment models. The fixed-price with economic price adjustment structure suggests an attempt to manage cost volatility, but the effectiveness of this in achieving true value-for-money will depend on the specific adjustment clauses and market conditions.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source action, meaning it was not competed. This typically occurs when a specific contractor possesses unique capabilities, intellectual property, or is the only source capable of meeting the requirement. The lack of competition means that the government did not receive multiple offers, which can limit price discovery and potentially lead to higher costs than if the contract had been competed. The justification for this sole-source award would need to be thoroughly reviewed to understand why full and open competition was not feasible.

Taxpayer Impact: For taxpayers, a sole-source award means there is a reduced likelihood of achieving the lowest possible price through competitive bidding. The government must rely on negotiation and oversight to ensure a fair price, which can be more resource-intensive.

Public Impact

The primary beneficiaries are the U.S. Air Force units operating the B-1, B-2, E-3, F-15, C-130, F-16, and A-10 aircraft, ensuring the availability and readiness of these critical assets. The contract delivers essential sustainment services, including maintenance, repair, and overhaul of secondary power support systems, crucial for aircraft operational capability. Performance is concentrated at Hill Air Force Base in Utah, a major Air Force installation, impacting the local workforce and economy through contractor employment and operations. The broad range of aircraft supported suggests a significant impact on the overall operational readiness and mission capability of the Air Force's tactical and strategic bomber and fighter fleets.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost efficiency for taxpayers.
Fixed Price with Economic Price Adjustment introduces potential for cost increases due to market fluctuations.
Lack of explicit small business set-aside may limit subcontracting opportunities for smaller enterprises.
Performance-based logistics can be complex to manage and may require significant government oversight to ensure contractor performance meets expectations.

Positive Signals

Performance-based logistics (PBL) approach is designed to improve system readiness and reduce total ownership costs.
Contract covers a wide array of essential aircraft platforms, indicating a critical need for sustainment.
Focus on secondary power support addresses a vital component for aircraft functionality.
Consolidation of support under a single PBL contract can streamline management and potentially improve efficiency.

Sector Analysis

The aerospace and defense industry is characterized by high technological complexity, long product lifecycles, and significant government procurement. Performance-based logistics (PBL) is a contracting strategy increasingly adopted by the Department of Defense to improve weapon system readiness and reduce sustainment costs by shifting responsibility to contractors. This contract fits within the broader defense sustainment sector, which represents a substantial portion of the DoD's annual spending. Comparable spending benchmarks for PBL contracts can vary widely based on the specific weapon system, scope of services, and duration, but multi-million dollar awards for comprehensive sustainment are common for major aircraft platforms.

Small Business Impact

This contract does not appear to include a specific small business set-aside. Honeywell International Inc., the awardee, is a large business. While the contract itself is not set aside for small businesses, there may be opportunities for small businesses to participate as subcontractors to Honeywell. The extent of subcontracting to small businesses will depend on Honeywell's procurement strategy and the specific requirements of the PBL contract. Without explicit subcontracting goals or reporting requirements detailed in the award, the direct impact on the small business ecosystem is uncertain.

Oversight & Accountability

Oversight for this contract will likely be managed by the Air Force Sustainment Center (AFSC) and the contracting activity at Hill AFB. Performance-based contracts typically involve metrics and key performance indicators (KPIs) that the contractor must meet to receive full payment and incentives. The effectiveness of oversight will depend on the clarity of these KPIs, the rigor of performance monitoring, and the government's ability to hold the contractor accountable for meeting or exceeding performance standards. Transparency is generally maintained through contract reporting requirements, but specific details of performance and cost may be considered sensitive.

Related Government Programs

Air Force PBL Contracts
Aircraft Component Sustainment
Logistics Support Services
Defense Contractor Performance Management
Fixed-Price with Economic Price Adjustment Contracts

Risk Flags

Sole-source award
Potential for cost overruns due to economic price adjustment
Complexity of managing performance-based logistics across multiple platforms

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $114.7 million to HONEYWELL INTERNATIONAL INC.. ENTERPRISE PERFORMANCE BASED LOGISTICS CONTRACT FOR SECONDARY POWER SUPPORT FOR B-1, B-2, E-3, F-15, C-130, F-16, A-10, AND GROUND CARTS. PERFORMANCE AT HILL AFB IN SUPPORT OF 419 SCMS

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 $114.7 million.

What is the period of performance?

Start: 2025-01-01. End: 2025-12-31.

What is the historical spending trend for enterprise performance-based logistics support for these specific aircraft platforms?

Analyzing historical spending for enterprise performance-based logistics (PBL) support for the B-1, B-2, E-3, F-15, C-130, F-16, and A-10 aircraft requires access to detailed contract databases and historical procurement data. Typically, PBL contracts are awarded for multi-year periods, and spending can fluctuate based on operational tempo, system upgrades, and sustainment needs. A review of past awards to Honeywell or other contractors for similar support would reveal trends in contract values, duration, and the evolution of PBL strategies. For instance, if previous contracts were structured differently (e.g., cost-plus or time-and-materials) and this is a transition to PBL, the current $114.7 million for one year might represent a shift towards a more outcome-oriented, potentially cost-effective model, assuming performance targets are met. Without specific historical data, it's difficult to establish a precise trend, but the significant value suggests a sustained, critical need for these support services.

How does the pricing structure (Fixed Price with Economic Price Adjustment) compare to other PBL contracts for similar services?

The Fixed Price with Economic Price Adjustment (FPEPA) pricing structure is a common approach in long-term government contracts, especially in industries with volatile material or labor costs, such as aerospace. For Performance-Based Logistics (PBL), FPEPA aims to provide the government with a degree of cost predictability while allowing the contractor to mitigate risks associated with inflation or market shifts. Compared to pure Fixed Price (FP) contracts, FPEPA offers more flexibility for the contractor, potentially leading to slightly higher initial pricing to account for the risk of price increases. Conversely, compared to cost-reimbursement contracts, FPEPA generally offers better cost control for the government. The 'economic price adjustment' typically ties to specific indices (e.g., labor, materials, energy) outlined in the contract. The effectiveness and fairness of this structure depend heavily on the specific indices used, the frequency of adjustments, and the caps or floors on those adjustments. Benchmarking requires comparing the specific adjustment clauses and their historical impact on similar PBL contracts.

What are the key performance indicators (KPIs) for this contract, and how are they measured?

Key Performance Indicators (KPIs) are fundamental to Performance-Based Logistics (PBL) contracts, as they define the success criteria for the contractor and dictate payment and incentives. While the specific KPIs for this Honeywell contract are not detailed in the provided data, typical KPIs for aircraft sustainment PBLs include metrics related to: 1) System Readiness Rates (e.g., aircraft availability, mission capable rates), 2) Turnaround Time (e.g., time to repair components, time to deliver spares), 3) Inventory Management (e.g., fill rates for spare parts, inventory accuracy), and 4) Cost Efficiency (e.g., reduction in sustainment costs over time). Measurement methods usually involve data shared by the government (e.g., aircraft status logs) and contractor-generated reports, often validated through audits or joint reviews. The contract would specify the baseline performance levels, targets, and the consequences of failing to meet them, which could include reduced payments or loss of incentive fees.

What is Honeywell's track record with similar performance-based logistics contracts for the U.S. Air Force?

Honeywell International Inc. has a significant and established track record of providing sustainment and logistics support, including performance-based logistics (PBL), to the U.S. Air Force and other military branches. They are a major player in the aerospace industry, known for their work on various aircraft systems, including engines, avionics, and support equipment. Their experience often spans decades and includes managing complex supply chains and maintenance operations for platforms similar to those covered in this contract. Publicly available contract awards and performance reports (e.g., from the Government Accountability Office or Inspector General) can provide insights into their past performance, including successes in meeting readiness goals and managing costs. However, like any large contractor, there may have been instances of performance challenges or disputes on specific contracts, which would require a deeper dive into contract history and oversight reports.

What is the potential risk associated with the sole-source nature of this award?

The primary risk associated with a sole-source award, like this $114.7 million contract to Honeywell, is the potential for reduced cost efficiency and innovation compared to a competitively procured contract. When only one source is considered, the government lacks the leverage that multiple bidders provide to negotiate the lowest possible price. This can lead to higher costs for taxpayers if the contractor's pricing is not rigorously scrutinized or if there are no strong incentives for cost reduction. Furthermore, the absence of competition can sometimes stifle innovation, as the contractor may face less pressure to develop more efficient processes or technologies. The government must rely heavily on robust contract management, negotiation skills, and potentially independent cost analyses to mitigate these risks and ensure fair value is obtained. The justification for the sole-source award is critical in understanding the specific circumstances and whether alternatives were truly unavailable.

How does this contract contribute to the overall readiness and sustainment of the specified Air Force fleets?

This contract is crucial for the overall readiness and sustainment of the B-1, B-2, E-3, F-15, C-130, F-16, and A-10 fleets by ensuring the continuous availability and performance of their secondary power support systems. These systems are vital for aircraft operation, powering everything from flight controls to avionics. By outsourcing the performance-based logistics (PBL) for these components to Honeywell, the Air Force aims to achieve higher system reliability, reduced downtime, and potentially lower total ownership costs compared to traditional in-house sustainment. The contractor's responsibility for managing inventory, maintenance, and repair under performance incentives is designed to keep these critical systems operational and minimize mission-impacting failures, thereby directly supporting the Air Force's ability to execute its diverse missions.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

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

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: Honeywell Safety Products USA, Inc.

Address: 111 S 34TH ST, PHOENIX, AZ, 85034

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $114,721,359

Exercised Options: $114,721,359

Current Obligation: $114,721,359

Contract Characteristics

Multi-Year Contract: Yes

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: SPRPA118D001U

IDV Type: IDC

Timeline