Honeywell International Inc. awarded $26M contract for navigation systems, raising questions about competition and value

Contract Overview

Contract Amount: $25,957,120 ($26.0M)

Contractor: Honeywell International Inc.

Awarding Agency: Department of Defense

Start Date: 2019-09-27

End Date: 2021-09-05

Contract Duration: 709 days

Daily Burn Rate: $36.6K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: EGI NSN:6605-01-513-8888 PART NUMBER:HG9873N02-001

Place of Performance

Location: CLEARWATER, PINELLAS County, FLORIDA, 33764

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $26.0 million to HONEYWELL INTERNATIONAL INC. for work described as: EGI NSN:6605-01-513-8888 PART NUMBER:HG9873N02-001 Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. The firm fixed-price contract type offers some cost certainty but doesn't guarantee optimal value. 3. Performance period of 709 days suggests a moderate-term need for these navigation systems. 4. The Defense Logistics Agency's award to Honeywell places it within the defense logistics sector. 5. Lack of competition is a key risk indicator for potential overpayment or suboptimal service. 6. The contract's value of $25.9M warrants scrutiny against comparable procurements for similar systems.

Value Assessment

Rating: fair

The contract value of $25.9 million for navigation systems appears significant. Without direct comparable contract data for this specific NSN and part number, it's challenging to definitively benchmark the pricing. However, the absence of competition suggests that the government may not have achieved the most favorable pricing possible. Further analysis would require comparing this award to similar systems procured through competitive means or examining historical pricing trends for Honeywell's navigation equipment.

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. This approach is typically used when only one source is capable of meeting the requirement, or in urgent situations. The lack of competition means that multiple bidders were not evaluated, which can limit price negotiation and potentially lead to higher costs for the government. It also means that the government did not benefit from the innovation and efficiency that can arise from a competitive bidding process.

Taxpayer Impact: For taxpayers, a sole-source award means there is a higher risk of paying more than necessary for goods or services, as the competitive pressure to offer the lowest price is absent.

Public Impact

The Department of Defense benefits from the acquisition of critical navigation systems for its operations. These systems are essential for the functioning of aircraft and potentially other defense assets. The contract supports the operational readiness and technological capabilities of the U.S. military. The geographic impact is primarily within the operational theaters where these defense assets are deployed. Workforce implications may include specialized technicians for installation, maintenance, and operation of the systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pricing and value for money.
Lack of transparency in the procurement process due to no-bid award.
Potential for higher costs compared to a competitively bid contract.
Limited opportunity for small businesses to participate in this specific award.

Positive Signals

Contract awarded to a known entity (Honeywell) with established capabilities in defense systems.
Firm fixed-price contract provides cost certainty for the awarded amount.
Contract addresses a specific need for navigation systems within the Department of Defense.

Sector Analysis

The contract falls within the aerospace and defense manufacturing sector, specifically focusing on navigation, guidance, and control systems. This is a highly specialized and technologically advanced segment of the industry. The market is characterized by high barriers to entry due to research and development costs, stringent quality requirements, and long product lifecycles. Spending in this area is driven by defense modernization efforts and the need for advanced avionics. Comparable spending benchmarks would involve analyzing other procurements of similar navigation systems by defense agencies.

Small Business Impact

This contract was not awarded as a small business set-aside, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The sole-source nature of the award further limits opportunities for small businesses to participate directly. This means that the potential economic benefits for the small business ecosystem from this particular contract are likely minimal, unless Honeywell proactively engages small businesses in its supply chain for this project.

Oversight & Accountability

Oversight for this contract would typically fall under the Defense Contract Management Agency (DCMA) and the Defense Logistics Agency's internal oversight mechanisms. Accountability measures are inherent in the firm fixed-price contract type, which obligates the contractor to deliver the specified goods at the agreed-upon price. Transparency is limited due to the sole-source nature of the award. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Defense Logistics Agency Procurement
Department of Defense Avionics Systems
Navigation and Guidance Systems Manufacturing
Sole-Source Defense Contracts
Honeywell International Inc. Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for non-competitive pricing
Limited transparency in procurement

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.0 million to HONEYWELL INTERNATIONAL INC.. EGI NSN:6605-01-513-8888 PART NUMBER:HG9873N02-001

Who is the contractor on this award?

The obligated recipient is HONEYWELL INTERNATIONAL INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $26.0 million.

What is the period of performance?

Start: 2019-09-27. End: 2021-09-05.

What is the track record of Honeywell International Inc. in delivering similar navigation systems to the Department of Defense?

Honeywell International Inc. has a long-standing and extensive track record of providing advanced systems, including navigation, guidance, and control technologies, to the Department of Defense and other government agencies. They are a major contractor in the aerospace and defense sector, known for producing a wide range of avionics, engines, and other critical components. Their experience spans decades, and they have consistently been awarded significant contracts for complex systems. Specific to navigation systems, Honeywell's portfolio includes inertial navigation systems, GPS receivers, flight management systems, and related software. Their ability to deliver on such contracts is generally considered robust, supported by their significant R&D investments and established manufacturing capabilities. However, the specific performance on this particular contract (NSN 6605-01-513-8888) would require a deeper dive into delivery schedules, quality reports, and any past performance evaluations associated with this award.

How does the $25.9 million contract value compare to similar navigation system procurements?

Benchmarking the $25.9 million contract value for EGI NSN 6605-01-513-8888 against similar procurements is challenging without access to a comprehensive database of comparable contracts, especially for sole-source awards. However, the value suggests a significant procurement, likely for a substantial quantity of units or a highly complex system. Typically, navigation systems for military applications can range widely in price depending on their sophistication, features (e.g., GPS integration, inertial capabilities, environmental hardening), and quantity. A sole-source award, by its nature, may not reflect the lowest possible price achievable through competition. To provide a meaningful comparison, one would need to identify other contracts for similar EGI (Embedded GPS/INS) units or advanced navigation systems procured competitively by the DoD or other agencies, looking at price per unit and total contract value over similar performance periods.

What are the primary risks associated with a sole-source award for critical defense systems like navigation equipment?

The primary risks associated with a sole-source award for critical defense systems like navigation equipment are multifaceted. Firstly, the lack of competition significantly reduces the government's leverage in price negotiation, potentially leading to inflated costs and a lower overall value for money. Secondly, it limits the government's access to a broader range of technological solutions or innovations that might be offered by other qualified vendors. Thirdly, there's a risk of vendor lock-in, where the government becomes overly reliant on a single supplier, potentially facing supply chain vulnerabilities or future price increases. Lastly, without competitive pressure, there might be less incentive for the sole-source provider to optimize efficiency or proactively address potential performance issues, although established relationships and quality standards can mitigate this to some extent. The absence of competition necessitates robust internal government oversight to ensure the price is fair and reasonable.

What is the expected effectiveness and impact of these navigation systems on military operations?

The expected effectiveness and impact of these navigation systems (EGI NSN 6605-01-513-8888) on military operations are likely substantial, given their critical role in modern warfare and logistics. Embedded GPS/INS (Inertial Navigation Systems) provide highly accurate and reliable positioning, navigation, and timing (PNT) data, which is fundamental for a wide array of military functions. This includes enabling precise targeting for munitions, guiding aircraft and vehicles, supporting troop movements and reconnaissance, and facilitating coordinated operations. The reliability and accuracy of these systems directly impact mission success, reduce fratricide risk, and enhance overall operational tempo and situational awareness. For the Department of Defense, maintaining a robust and technologically advanced navigation capability is essential for maintaining strategic advantage and ensuring the safety and effectiveness of its personnel and assets across diverse operational environments.

How has spending on navigation and guidance systems by the Defense Logistics Agency trended over the past five years?

Analyzing the precise spending trends for navigation and guidance systems by the Defense Logistics Agency (DLA) over the past five years requires access to detailed historical procurement data beyond the scope of this single contract. However, it is generally understood that spending in this category remains consistently high due to the ongoing need for advanced avionics and navigation solutions across all branches of the military. The DLA plays a crucial role in procuring and distributing such equipment, ensuring that military platforms are equipped with reliable PNT capabilities. Factors influencing spending include modernization programs, the retirement of older systems, the development of new threats requiring enhanced navigation, and the integration of new technologies like improved GPS anti-jamming capabilities. While this specific $25.9 million award is a single data point, it reflects the continuous investment required in this critical technology area.

What are the implications of this contract being a 'Delivery Order' under a larger contract vehicle?

The data indicates this award is a 'Delivery Order' (aw: DELIVERY ORDER). This implies that the $25.9 million contract is not a standalone, new procurement but rather a specific order placed against an existing, potentially larger, indefinite-delivery indefinite-quantity (IDIQ) contract or a basic ordering agreement (BOA). Delivery orders allow agencies to procure specific quantities of goods or services as needed over a period, often without needing to re-compete each individual purchase. This can streamline the procurement process for recurring needs. The implications include that the competition level and terms of the original IDIQ/BOA would govern the overall framework, and this delivery order represents a specific tasking within that structure. The 'NOT COMPETED' status for this specific delivery order suggests it was likely placed under a pre-existing contract that may have had different competition rules or was awarded sole-source initially.

Industry Classification

NAICS: Manufacturing › Navigational, Measuring, Electromedical, and Control Instruments Manufacturing › Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing

Product/Service Code: INSTRUMENTS AND LABORATORY EQPT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Honeywell International Inc (UEI: 139691877)

Address: 13350 US HIGHWAY 19 NORTH, CLEARWATER, FL, 33764

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

Financial Breakdown

Contract Ceiling: $25,957,120

Exercised Options: $25,957,120

Current Obligation: $25,957,120

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: FA854013D0002

IDV Type: IDC

Timeline