Honeywell awarded $107.7M for aircraft power logistics, performance at Hill AFB

Contract Overview

Contract Amount: $107,666,386 ($107.7M)

Contractor: Honeywell International Inc.

Awarding Agency: Department of Defense

Start Date: 2022-01-01

End Date: 2022-12-31

Contract Duration: 364 days

Daily Burn Rate: $295.8K/day

Competition Type: NOT COMPETED

Pricing Type: FIXED PRICE INCENTIVE

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 $107.7 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 essential power support for multiple aircraft types, ensuring operational readiness. 2. Sole-source award raises questions about potential price overruns and lack of competitive pressure. 3. Performance-based logistics model aims to improve efficiency and reduce long-term sustainment costs. 4. Significant contract value indicates a critical role in Air Force's sustainment strategy. 5. Geographic concentration of performance at Hill AFB suggests a localized but vital support function. 6. Fixed-price incentive contract structure attempts to balance cost control with contractor performance.

Value Assessment

Rating: fair

The contract value of $107.7 million for enterprise performance-based logistics for secondary power support appears substantial. Benchmarking this against similar sole-source contracts for aircraft sustainment is challenging due to the specific nature of the services and the platforms supported. However, the lack of competition inherently limits the ability to assess true value-for-money. The fixed-price incentive structure suggests an attempt to manage costs, but without competitive bids, it's difficult to determine if the pricing is optimal or if it reflects a premium due to the sole-source nature.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or when urgency dictates a rapid award. The lack of competition means that the government did not benefit from a bidding process that could have driven down prices and fostered innovation. It also limits the opportunity for other qualified companies to secure this business.

Taxpayer Impact: Taxpayers may be paying a premium for this contract due to the absence of competitive bidding. Without competing offers, there is less pressure on the contractor to offer the most cost-effective solution, potentially leading to higher overall expenditures.

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 continued operational capability. The contract delivers essential secondary power support services, crucial for aircraft maintenance, ground operations, and mission readiness. Performance is concentrated at Hill Air Force Base in Arizona, indicating a significant impact on local operations and potentially the local workforce supporting these functions. The sustainment of critical aircraft platforms supports the broader national defense mission and the readiness of air combat capabilities.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price discovery and potentially increases costs for taxpayers.
Dependence on a single contractor for critical power support creates a potential single point of failure.
Lack of competition may reduce incentives for the contractor to innovate or improve service delivery beyond contract minimums.

Positive Signals

Performance-based logistics model can lead to improved efficiency and reduced long-term sustainment costs if executed effectively.
Fixed-price incentive contract structure aligns contractor incentives with performance goals.
Focus on critical aircraft platforms ensures support for essential military assets.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft sustainment and support services. The market for performance-based logistics (PBL) in defense is significant, aiming to shift from transactional parts sales to integrated support solutions. Companies like Honeywell are major players in this space, offering comprehensive sustainment packages. Comparable spending benchmarks are difficult to establish precisely due to the unique combination of aircraft and the sole-source nature, but overall defense sustainment spending runs into billions annually.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. Furthermore, the 'ss' flag is also false, suggesting it's not a small business prime award. This means that large business prime contractors are likely managing the entirety of this contract. While subcontracting opportunities for small businesses may exist within Honeywell's execution of this contract, there is no explicit mandate or focus on small business participation at the prime level. The impact on the small business ecosystem is therefore indirect, relying on the prime contractor's procurement practices.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. As a performance-based contract, key performance indicators (KPIs) and service level agreements (SLAs) would be central to monitoring contractor performance. Transparency is facilitated through contract award databases, but detailed operational performance metrics are often considered sensitive. The Inspector General's office for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse.

Related Government Programs

Aircraft Component Manufacturing
Aircraft Engine Repair and Maintenance
Aerospace Logistics Services
Defense Logistics Agency (DLA) Support Contracts
Air Force Sustainment Center Operations

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Critical system support dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $107.7 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 $107.7 million.

What is the period of performance?

Start: 2022-01-01. End: 2022-12-31.

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

Honeywell has a significant history of providing sustainment and logistics support to the U.S. military, including performance-based logistics (PBL) arrangements. They are known for their work on various aircraft systems and components. While specific details on all their PBL contracts are not publicly itemized, their long-standing presence in the defense sector suggests considerable experience. Evaluating their track record would involve examining past performance reviews, contract modifications, and any reported issues or successes on similar PBL contracts. The Air Force often relies on established contractors like Honeywell for critical support due to their existing infrastructure and expertise, but this also necessitates rigorous oversight to ensure continued value and performance.

How does the pricing of this sole-source contract compare to potentially competed alternatives?

Direct comparison of pricing for this sole-source contract to a potentially competed alternative is inherently difficult without access to hypothetical competitive bids. Sole-source awards often carry a risk of higher pricing because the government lacks the leverage of multiple competing offers. The fixed-price incentive (FPI) structure aims to control costs by setting target prices and sharing savings or cost overruns, but the initial target price is negotiated without competitive pressure. To assess value, one would typically benchmark against similar sole-source contracts for comparable services or, ideally, analyze historical data from when similar requirements were competed. Without such data, it's presumed that taxpayers may be paying a premium compared to what a competitive environment might yield.

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

The primary risks associated with a sole-source award for critical aircraft power support include elevated costs due to the lack of competition, potentially leading to reduced value for taxpayer money. There's also a risk of vendor lock-in, where the government becomes overly dependent on a single provider, limiting future flexibility and negotiation power. Furthermore, without competitive pressure, the contractor may have less incentive to innovate or proactively improve service efficiency beyond contractual minimums. Finally, a sole-source award can limit opportunities for other capable small and large businesses to enter or expand their presence in this segment of the defense market.

How effective is the performance-based logistics (PBL) model in ensuring value for money in this context?

The performance-based logistics (PBL) model is designed to ensure value for money by shifting the focus from transactional parts provision to integrated system support and outcomes. In this context, it aims to improve the availability and reliability of secondary power systems for multiple aircraft platforms while potentially reducing overall sustainment costs through optimized inventory, maintenance, and logistics. The effectiveness hinges on well-defined performance metrics (Key Performance Parameters - KPPs) and robust government oversight. If the KPIs accurately reflect mission needs and the contractor is incentivized appropriately through the FPI structure, PBL can yield significant cost savings and readiness improvements compared to traditional contracting methods. However, the sole-source nature here tempers the potential for optimal value discovery.

What are the historical spending patterns for secondary power support for these aircraft platforms?

Historical spending data for secondary power support across the specific platforms (B-1, B-2, E-3, F-15, C-130, F-16, A-10) is not readily available in a consolidated public format. Such data is typically embedded within broader aircraft sustainment budgets and individual contract line items over many years. Spending patterns would likely fluctuate based on aircraft fleet size, operational tempo, modernization programs, and previous support contracts. This $107.7 million award represents a specific period's (2022) expenditure for these services. Analyzing historical trends would require deep dives into specific program offices' budgets and contract histories, often involving proprietary or classified information, making a general public comparison challenging.

What is the significance of the fixed-price incentive (FPI) contract type for this award?

The Fixed-Price Incentive (FPI) contract type is significant because it attempts to balance cost control with performance by establishing a target cost, target profit, and a price ceiling. The government and contractor share in any cost savings below the target cost or cost overruns above the target cost, up to the ceiling. This structure incentivizes the contractor to manage costs effectively while meeting performance requirements. For this sole-source award, the FPI type is crucial as it provides a mechanism to negotiate cost targets and share risks, offering more cost certainty than a cost-plus contract. However, the effectiveness of the FPI is highly dependent on the accuracy of the initial cost estimates and the clarity of performance metrics.

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 INCENTIVE (L)

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: $107,666,386

Exercised Options: $107,666,386

Current Obligation: $107,666,386

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