Honeywell awarded $101.7M for aircraft power support, raising questions about competition and value

Contract Overview

Contract Amount: $101,748,778 ($101.7M)

Contractor: Honeywell International Inc.

Awarding Agency: Department of Defense

Start Date: 2023-01-01

End Date: 2023-12-31

Contract Duration: 364 days

Daily Burn Rate: $279.5K/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 SUPPLY CHAIN MANAGEMENT SQUADRON.

Place of Performance

Location: PHOENIX, MARICOPA County, ARIZONA, 85034

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $101.7 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 SUPPLY CHAIN MANAGEMENT SQUADRON. Key points: 1. The contract's value of over $100 million warrants scrutiny for cost-effectiveness. 2. A sole-source award limits competitive pressure, potentially impacting pricing. 3. Performance at Hill AFB suggests a focus on established operational needs. 4. The fixed-price with economic price adjustment structure introduces some cost volatility. 5. The duration of 364 days indicates a short-term operational requirement. 6. The absence of small business involvement warrants further investigation.

Value Assessment

Rating: fair

The contract value of $101.7 million for enterprise performance-based logistics support for multiple aircraft types and ground carts appears substantial. Without direct comparable contracts for this specific suite of services and platforms, a precise value-for-money assessment is challenging. However, the fixed-price with economic price adjustment (FPEPA) contract type suggests some flexibility for Honeywell to adjust prices based on economic factors, which could lead to higher costs than a firm fixed-price contract. The benchmark for similar logistics support contracts would typically consider factors like the complexity of the systems supported, the scope of services, and the duration. Given the sole-source nature, it is difficult to benchmark against competitive pricing.

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 can provide the required goods or services, or in situations where competition is deemed not to be in the government's best interest. The lack of competition means that the government did not benefit from the price discovery mechanisms that typically occur in a competitive bidding process. This can sometimes lead to higher prices than might be achieved in a fully competed environment.

Taxpayer Impact: For taxpayers, a sole-source award means that the government may not have secured the most cost-effective solution. The absence of competitive bids prevents a direct comparison of offers, potentially leading to a higher overall expenditure for the services rendered.

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, as well as ground support personnel. The contract delivers essential performance-based logistics support for secondary power systems, ensuring operational readiness and availability of critical aircraft. Performance is concentrated at Hill Air Force Base in Utah, supporting the 419th Supply Chain Management Squadron. The contract supports the maintenance and operational readiness of a significant portion of the Air Force's tactical and strategic aircraft fleet.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
The fixed-price with economic price adjustment (FPEPA) contract type introduces potential for cost increases due to market fluctuations.
Lack of transparency in the sole-source justification makes it difficult to assess if alternatives were adequately considered.
No indication of small business participation or subcontracting opportunities.

Positive Signals

Performance-based logistics (PBL) contracts are designed to improve weapon system readiness and reduce total ownership costs.
Honeywell International Inc. is a large, established defense contractor with significant experience in aerospace support.
The contract supports a wide range of critical Air Force platforms, indicating its importance to national defense.

Sector Analysis

The aerospace and defense sector is characterized by complex supply chains and high-value contracts. Enterprise performance-based logistics (PBL) is a contracting strategy aimed at improving weapon system readiness and reducing total ownership costs by shifting the focus from component sales to system performance. This contract fits within the broader category of aircraft parts and auxiliary equipment manufacturing and maintenance services. Comparable spending benchmarks in this sector are difficult to establish without more specific details on the services provided and the exact systems supported, but multi-million dollar contracts for specialized logistics support are common for major defense platforms.

Small Business Impact

This contract does not appear to have any specific small business set-aside provisions, nor is there any indication of subcontracting goals for small businesses. The award to a large prime contractor like Honeywell International Inc. suggests that the primary focus is on leveraging established capabilities. The absence of small business participation in this significant contract could limit opportunities for smaller firms to contribute to critical defense supply chains and may not fully utilize the innovative capacity of the small business ecosystem.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. The Inspector General (IG) for the Department of Defense would have jurisdiction to investigate any allegations of fraud, waste, or abuse. Transparency is limited due to the sole-source nature of the award; however, contract awards are generally reported in federal procurement databases. Accountability measures would be tied to the performance metrics outlined in the contract's performance-based logistics framework.

Related Government Programs

Aircraft Manufacturing
Aircraft Parts and Auxiliary Equipment Manufacturing
Supply Chain Management Services
Aerospace Logistics Support
Defense Logistics Agency Contracts

Risk Flags

Sole-source award
Lack of competition
Economic price adjustment clause
No small business participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $101.7 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 SUPPLY CHAIN MANAGEMENT SQUADRON.

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 $101.7 million.

What is the period of performance?

Start: 2023-01-01. End: 2023-12-31.

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

Honeywell International Inc. has a long history of providing support services and components for various U.S. Air Force platforms. Their experience with performance-based logistics (PBL) contracts is extensive, often focusing on improving readiness and reducing costs for complex systems. For instance, they have been involved in PBL initiatives for other aircraft systems and components. However, the specific details of their performance on similar sole-source PBL contracts, especially concerning cost savings achieved and readiness improvements, would require a deeper dive into historical contract performance data and any associated reviews or audits. Their established presence in the defense sector suggests a capacity to manage such contracts, but the effectiveness and value derived from specific PBL arrangements can vary.

How does the $101.7 million contract value compare to similar enterprise performance-based logistics contracts for secondary power support?

Directly comparing the $101.7 million contract value for enterprise performance-based logistics (PBL) support of secondary power for a diverse fleet (B-1, B-2, E-3, F-15, C-130, F-16, A-10, and ground carts) is challenging without access to a comprehensive database of similar sole-source PBL contracts. However, contracts of this magnitude are not uncommon for supporting major weapon systems within the Department of Defense, especially when encompassing a broad range of platforms and comprehensive logistics services. The value is influenced by the complexity of the systems, the scope of services (e.g., maintenance, repair, overhaul, spare parts management), and the contract duration. Given the sole-source nature, it's difficult to benchmark against competitive pricing, but the amount suggests a significant and ongoing requirement for critical support.

What are the primary risks associated with a sole-source award for this type of critical support contract?

The primary risk associated with a sole-source award for this critical support contract is the potential for inflated pricing due to the lack of competitive pressure. Without competing bids, the government may not be securing the most cost-effective solution available in the market. Another risk is reduced innovation, as a sole-source provider may have less incentive to develop and implement cost-saving efficiencies or advanced technological solutions compared to a competitive environment. Furthermore, there's a risk of vendor lock-in, making it difficult and potentially costly to transition to a different provider in the future. The government also loses the opportunity to discover potentially better or more innovative solutions that might have emerged from a competitive process.

How effective are performance-based logistics contracts in ensuring the readiness of aircraft like the B-1, B-2, and F-15?

Performance-based logistics (PBL) contracts are generally considered an effective strategy for ensuring the readiness of complex weapon systems like the B-1, B-2, and F-15. The core principle of PBL is to incentivize contractors to achieve specific performance outcomes (e.g., aircraft availability, mission capable rates) rather than simply selling parts or services. This shifts the focus from transactional exchanges to long-term partnerships aimed at improving system reliability and reducing total ownership costs. By outsourcing the management of specific supply chains or support functions to PBL providers, the Air Force can leverage industry expertise and potentially achieve higher readiness levels and greater operational availability for its aircraft fleets. However, the success of PBL hinges on well-defined performance metrics, robust oversight, and appropriate contract structures.

What are the historical spending patterns for secondary power support for these aircraft platforms within the Department of the Air Force?

Historical spending patterns for secondary power support for these aircraft platforms within the Department of the Air Force are likely substantial and have evolved over time. These systems are critical for aircraft operation, and their maintenance and sustainment represent a significant portion of the Air Force's aviation logistics budget. Historically, such support may have been managed through various contract types, including traditional supply contracts and more recent shifts towards performance-based logistics (PBL). The total expenditure would fluctuate based on fleet size, operational tempo, modernization programs, and the specific contracting strategies employed. Without access to detailed historical procurement data for each platform's secondary power systems, pinpointing exact spending trends is difficult, but it is reasonable to assume consistent, multi-million dollar annual investments across the fleet.

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: $101,748,778

Exercised Options: $101,748,778

Current Obligation: $101,748,778

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