DoD's $798M Honeywell Contract for Secondary Power Logistics: A Decade of Sole-Source Spending
Contract Overview
Contract Amount: $798,717,276 ($798.7M)
Contractor: Honeywell International Inc.
Awarding Agency: Department of Defense
Start Date: 2007-12-01
End Date: 2021-12-31
Contract Duration: 5,144 days
Daily Burn Rate: $155.3K/day
Competition Type: NOT COMPETED
Number of Offers Received: 1
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Defense
Official Description: NON-PERSONAL SERVICES - SECONDARY POWER LOGISTICS SOLUTION (SPLS)
Place of Performance
Location: TEMPE, MARICOPA County, ARIZONA, 85284
State: Arizona Government Spending
Plain-Language Summary
Department of Defense obligated $798.7 million to HONEYWELL INTERNATIONAL INC. for work described as: NON-PERSONAL SERVICES - SECONDARY POWER LOGISTICS SOLUTION (SPLS) Key points: 1. Significant long-term investment in aircraft parts manufacturing. 2. Sole-source award raises questions about price discovery and competition. 3. High contract value indicates critical, ongoing need for the service. 4. Potential for cost savings through competitive bidding if applicable.
Value Assessment
Rating: questionable
The contract's total value of $798.7M over 14 years suggests a substantial investment. Without competitive benchmarks, it's difficult to assess if this pricing is optimal compared to similar logistics solutions.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was not competed, indicating a sole-source award. This limits price discovery and potentially leads to higher costs for taxpayers as there was no market pressure to offer the best price.
Taxpayer Impact: The lack of competition on this large contract likely resulted in higher costs than a competed procurement, impacting taxpayer funds.
Public Impact
Ensures operational readiness for critical Air Force aircraft. Supports a significant portion of the aerospace manufacturing sector. Long-term nature of the contract provides stability for the contractor. Potential for taxpayer savings if future contracts are competed.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Lack of competition
- Long contract duration
- Economic price adjustment clause
Positive Signals
- Consistent support for critical defense needs
- Established relationship with a known supplier
Sector Analysis
This contract falls within the Other Aircraft Parts and Auxiliary Equipment Manufacturing sector. Spending in this area is crucial for maintaining military aviation capabilities. Benchmarks for similar sole-source contracts are difficult to establish due to their nature.
Small Business Impact
The contract was awarded to Honeywell International Inc., a large business. There is no indication of small business participation in this specific award, suggesting missed opportunities for small business engagement.
Oversight & Accountability
The sole-source nature of this contract warrants scrutiny from oversight bodies to ensure the government is receiving fair value. Regular reviews of contract performance and pricing are essential.
Related Government Programs
- Other Aircraft Parts and Auxiliary Equipment Manufacturing
- Department of Defense Contracting
- Department of the Air Force Programs
Risk Flags
- Sole-source award limits price competition.
- Long contract duration (14 years) increases exposure to cost escalation.
- Economic Price Adjustment (EPA) clause can inflate costs.
- Lack of small business participation noted.
- No clear indication of market research for competitive alternatives.
Tags
other-aircraft-parts-and-auxiliary-equip, department-of-defense, az, definitive-contract, 100m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $798.7 million to HONEYWELL INTERNATIONAL INC.. NON-PERSONAL SERVICES - SECONDARY POWER LOGISTICS SOLUTION (SPLS)
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 $798.7 million.
What is the period of performance?
Start: 2007-12-01. End: 2021-12-31.
What was the justification for awarding this contract as sole-source, and were alternatives explored?
The justification for a sole-source award typically involves unique capabilities, urgent needs, or lack of viable alternatives. Without specific documentation, it's presumed the Air Force determined Honeywell possessed the sole capability to meet the SPLS requirements. Exploring alternatives, even if ultimately deemed unsuitable, is a standard part of procurement processes to ensure best value.
How does the economic price adjustment clause impact the overall cost and risk to taxpayers?
The economic price adjustment (EPA) clause allows for contract price changes based on fluctuations in economic factors like labor and material costs. While intended to protect contractors from unforeseen cost increases and ensure supply, it shifts some cost risk to the government. Over the long duration of this contract, EPAs could significantly increase the total expenditure beyond initial projections.
What is the potential for cost savings if this contract were to be competed in the future?
If this contract were to be competed, there is a significant potential for cost savings. Competition introduces market forces that drive down prices as multiple vendors vie for the contract. Savings could be realized through more efficient service delivery, innovative solutions, and aggressive pricing strategies from potential bidders.
Industry Classification
NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing
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: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)
Evaluated Preference: NONE
Contractor Details
Parent Company: Resideo Technologies, Inc.
Address: 1944 E SKY HARBOR CIR, PHOENIX, AZ, 85034
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business
Financial Breakdown
Contract Ceiling: $798,717,276
Exercised Options: $798,717,276
Current Obligation: $798,717,276
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Timeline
Start Date: 2007-12-01
Current End Date: 2021-12-31
Potential End Date: 2023-06-20 00:00:00
Last Modified: 2023-06-26
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