Honeywell awarded $108M for B-1, B-2, E-3, F-15, C-130, F-16, A-10 logistics support at Hill AFB

Contract Overview

Contract Amount: $108,041,731 ($108.0M)

Contractor: Honeywell International Inc.

Awarding Agency: Department of Defense

Start Date: 2020-12-17

End Date: 2024-09-30

Contract Duration: 1,383 days

Daily Burn Rate: $78.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Defense

Official Description: ENTERPRISE PERFORMANCE BASED LOGISTICS 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 $108.0 million to HONEYWELL INTERNATIONAL INC. for work described as: ENTERPRISE PERFORMANCE BASED LOGISTICS 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 enterprise performance-based logistics for secondary power support across multiple aircraft platforms. 2. The award is a delivery order under an existing contract, indicating a continuation of services. 3. Performance is situated at Hill AFB, a key Air Force installation, suggesting strategic importance. 4. The contract type is Fixed Price with Economic Price Adjustment, which can mitigate inflation risks but requires careful monitoring. 5. The duration of the contract extends through September 2024, providing a medium-term service commitment. 6. No small business set-aside was noted, suggesting the primary contractor is a large business.

Value Assessment

Rating: fair

The contract value of approximately $108 million for enterprise performance-based logistics over a period of roughly 3.8 years appears to be within a reasonable range for supporting multiple high-value aircraft platforms. Benchmarking against similar long-term sustainment contracts for complex aerospace systems is challenging due to the specialized nature of secondary power support. However, the fixed-price with economic price adjustment structure aims to balance cost certainty for the government with protection against market volatility for the contractor. Further analysis would require detailed cost breakdowns and comparison with industry standards for similar support services.

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 approach is typically used when a specific contractor possesses unique capabilities, proprietary technology, or when it's deemed more efficient to continue with an existing provider, especially under a delivery order for an established program. The lack of competition means that price discovery through market forces was not utilized, potentially leading to higher costs than if multiple bids were solicited.

Taxpayer Impact: The absence of competition for this significant contract means taxpayers may not have benefited from potential cost savings that could have arisen from a competitive bidding process. The government relied on negotiation and existing contract terms rather than market-driven price reductions.

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 their operational readiness. The contract delivers essential secondary power support services, crucial for the functionality of these aircraft and ground support equipment. Services are performed at Hill Air Force Base in Utah, a major hub for Air Force sustainment and logistics. The contract supports the maintenance and operational readiness of a significant portion of the Air Force's strategic and tactical aviation fleet.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially impacting cost-effectiveness for taxpayers.
Fixed-price with economic price adjustment requires careful oversight to manage potential cost escalations.
Reliance on a single contractor for critical logistics support could pose a risk if performance degrades or if the contractor faces financial instability.

Positive Signals

Performance-based logistics approach can incentivize contractor efficiency and effectiveness.
Awarding a delivery order under an existing contract suggests a streamlined process and established relationship.
Support for multiple critical aircraft platforms indicates a broad and integrated sustainment capability.

Sector Analysis

The aerospace and defense industry is characterized by long-term, high-value contracts for aircraft manufacturing, maintenance, and sustainment. Enterprise Performance-Based Logistics (PBL) is a contracting strategy aimed at improving weapon system readiness and reducing costs by shifting the focus from component-level repair to system-level performance. Honeywell International Inc. is a major player in this sector, providing a wide range of aerospace products and services. This contract fits within the broader defense sustainment market, which is a significant portion of federal spending, ensuring the operational availability of aging but critical aircraft fleets.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, nor does it appear to involve significant subcontracting opportunities for small businesses based on the information provided. The award to a large prime contractor like Honeywell suggests that the primary focus is on leveraging established capabilities for complex sustainment operations. This may limit direct opportunities for small businesses to participate in this specific contract, though they may be involved in the broader supply chain or at other levels of the Air Force's sustainment ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices at Hill AFB. As a delivery order under an existing contract, the foundational oversight mechanisms are already in place. Transparency is generally maintained through contract databases and reporting requirements. The Inspector General's office for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse related to this contract.

Related Government Programs

Aircraft sustainment programs
Aerospace logistics support
Performance-based logistics contracts
Air Force weapon system maintenance
Secondary power systems support

Risk Flags

Sole-source award
Potential for cost overruns due to economic price adjustment
Contractor dependency risk

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $108.0 million to HONEYWELL INTERNATIONAL INC.. ENTERPRISE PERFORMANCE BASED LOGISTICS 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 $108.0 million.

What is the period of performance?

Start: 2020-12-17. End: 2024-09-30.

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

Honeywell has a significant history of providing performance-based logistics (PBL) solutions to the U.S. Air Force and other military branches. They are known for managing complex supply chains and sustainment operations for various aircraft platforms. Their experience often includes managing spare parts, repairs, and technical support to ensure high levels of weapon system readiness. For example, Honeywell has previously been awarded contracts for PBL support on other aircraft types, demonstrating their capability in this contracting approach. The success of these contracts is typically measured by key performance indicators (KPIs) related to availability, reliability, and cost-effectiveness, which are crucial for maintaining the operational readiness of the Air Force's fleet.

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

The Fixed Price with Economic Price Adjustment (FPEPA) contract type is common in long-term sustainment contracts where material costs and labor rates are subject to market fluctuations. This structure provides the government with a degree of cost certainty by fixing the base price, while allowing for adjustments based on pre-defined economic indices. Compared to pure Fixed Price contracts, FPEPA offers more protection to the contractor against unforeseen inflation, which can encourage more competitive bidding or prevent cost overruns due to external economic factors. Conversely, it offers less cost predictability for the government than a firm Fixed Price contract. Many sustainment contracts utilize variations of FPEPA or Cost Plus Incentive Fee (CPIF) to balance risk and reward between the government and contractor.

What are the primary risks associated with a sole-source award for critical aircraft logistics support?

The primary risks associated with a sole-source award for critical aircraft logistics support include a lack of competitive pressure, which can lead to higher prices than might be achieved through competition. There's also a potential for reduced innovation if the sole provider becomes complacent. Furthermore, the government becomes heavily reliant on the performance and stability of a single contractor. If the contractor experiences financial difficulties, operational issues, or decides to exit the market, it could severely disrupt the support for critical weapon systems, leading to significant readiness impacts and potentially costly transitions to a new provider. Ensuring robust contract management and performance monitoring is crucial to mitigate these risks.

How effective is performance-based logistics in improving weapon system readiness for aging aircraft fleets?

Performance-based logistics (PBL) is generally considered highly effective in improving weapon system readiness, particularly for aging aircraft fleets. By shifting the focus from transactional services (like parts and repairs) to achieving specific performance outcomes (like aircraft availability rates), PBL incentivizes contractors to proactively manage the entire support chain. This includes optimizing inventory, improving maintenance processes, and even redesigning components for greater reliability. For aging fleets, where parts availability and obsolescence can be major challenges, PBL can lead to more predictable operational availability and potentially lower total ownership costs by leveraging the contractor's expertise in sustainment. The success hinges on well-defined performance metrics and strong government oversight.

What is the historical spending trend for secondary power support for these specific aircraft platforms?

Historical spending data for secondary power support for the B-1, B-2, E-3, F-15, C-130, F-16, and A-10 aircraft platforms would likely show a consistent and significant investment over many years. These aircraft are long-serving and form the backbone of the Air Force's capabilities, requiring continuous sustainment. Spending would have likely increased over time due to factors such as aging components, increased operational tempo, and inflation, especially if contracts were not structured with robust economic price adjustments. The shift towards performance-based logistics (PBL) in recent decades aims to manage and potentially reduce these long-term sustainment costs by focusing on outcomes rather than inputs, but the overall expenditure remains substantial due to the critical nature and longevity of these platforms.

Industry Classification

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

Product/Service Code: ENGINES AND TURBINES AND COMPONENT

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: $108,041,731

Exercised Options: $108,041,731

Current Obligation: $108,041,731

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