Department of Defense awards $105M contract for 1500 aircraft engines to Honeywell International Inc

Contract Overview

Contract Amount: $104,978,941 ($105.0M)

Contractor: Honeywell International Inc.

Awarding Agency: Department of Defense

Start Date: 2012-08-30

End Date: 2015-10-30

Contract Duration: 1,156 days

Daily Burn Rate: $90.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: EGYPT INCREMENT 11 AGT 1500 ENGINES

Place of Performance

Location: PHOENIX, MARICOPA County, ARIZONA, 85034

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $105.0 million to HONEYWELL INTERNATIONAL INC. for work described as: EGYPT INCREMENT 11 AGT 1500 ENGINES Key points: 1. Contract awarded on a sole-source basis, raising questions about potential price overruns and lack of competitive pressure. 2. The contract duration of 1156 days suggests a significant, long-term need for these aircraft engines. 3. The firm-fixed-price structure aims to control costs, but the absence of competition limits benchmarking opportunities. 4. The procurement falls under Aircraft Engine and Engine Parts Manufacturing, a critical sector for defense readiness. 5. No small business set-aside was utilized, indicating potential missed opportunities for smaller enterprises in this segment.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to its sole-source nature. Without competitive bids, it's difficult to ascertain if the $105 million price reflects optimal market value. The firm-fixed-price contract type offers some cost certainty, but the lack of competition means taxpayers may not have benefited from the most economical pricing achievable through a competitive process. Further analysis would require access to historical pricing data for similar engine procurements or internal cost breakdowns from the contractor.

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 typically occurs when only one responsible source can provide the required supplies or services. The lack of competition means that multiple bidders were not considered, which can limit price discovery and potentially lead to higher costs for the government compared to a fully competed procurement. The justification for a sole-source award would need to be thoroughly reviewed to ensure it was appropriate.

Taxpayer Impact: The absence of competition means taxpayers may not have received the best possible price for these aircraft engines. Without competing offers, there is less incentive for the contractor to offer the lowest price, potentially resulting in a less efficient use of public funds.

Public Impact

The primary beneficiaries are the Department of Defense, ensuring the operational readiness of aircraft requiring these specific engines. The contract delivers 1500 aircraft engines, crucial components for military aviation operations. The geographic impact is primarily within the United States, supporting defense logistics and maintenance operations. This contract supports jobs within the aerospace manufacturing sector, specifically in engine production and related supply chains.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potentially increases costs for taxpayers.
Lack of transparency in the sole-source justification could obscure potential alternatives or cost savings.
Long contract duration without clear performance metrics could pose risks if engine performance degrades over time.

Positive Signals

Firm-fixed-price contract provides cost certainty for the government.
Award to an established manufacturer like Honeywell suggests a focus on reliability and proven technology.
The contract addresses a critical need for operational aircraft, supporting national security objectives.

Sector Analysis

This contract falls within the Aircraft Engine and Engine Parts Manufacturing sector, a specialized and high-value segment of the aerospace industry. The market is characterized by high barriers to entry due to complex technology, significant R&D investment, and stringent quality control requirements. Major players like Honeywell dominate this space. Government spending in this sector is crucial for maintaining military readiness and supporting the defense industrial base. Comparable spending benchmarks would typically involve analyzing other sole-source or competitively awarded contracts for similar engine types and quantities within the Department of Defense or allied nations.

Small Business Impact

This contract did not include a small business set-aside. Given the specialized nature of aircraft engine manufacturing, it is likely that large, established companies are the primary providers. This means that opportunities for small businesses to directly participate in this specific engine production are limited. However, small businesses may still be involved as subcontractors to Honeywell, supplying components or services, though the extent of this subcontracting is not detailed in the provided data.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Defense's contracting and procurement regulations. The Defense Contract Management Agency (DCMA) would likely be responsible for contract administration and ensuring compliance with terms and conditions. Inspector General (IG) offices within the DoD can investigate allegations of fraud, waste, or abuse. Transparency is limited by the sole-source nature of the award, but contract award data is generally made public through systems like FPDS.

Related Government Programs

Aircraft Engine Procurement
Defense Logistics Agency Contracts
Aerospace Manufacturing Contracts
Department of the Army Major Procurements

Risk Flags

Sole-source award lacks competitive pricing pressure.
Potential for cost overruns due to lack of competition.
Need for robust government oversight to ensure value.
Classification ambiguity (aircraft engine vs. tank engine).

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $105.0 million to HONEYWELL INTERNATIONAL INC.. EGYPT INCREMENT 11 AGT 1500 ENGINES

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 Army).

What is the total obligated amount?

The obligated amount is $105.0 million.

What is the period of performance?

Start: 2012-08-30. End: 2015-10-30.

What is the specific type of aircraft engine being procured and what is its intended application?

The provided data indicates the procurement is for 'EGYPT INCREMENT 11 AGT 1500 ENGINES'. While the specific aircraft model is not explicitly stated, the AGT1500 engine is famously associated with the M1 Abrams main battle tank, not typically aircraft. This suggests a potential mislabeling in the data or a specialized application. If it is indeed for tanks, the 'Aircraft Engine' classification in the `nd` field might be inaccurate. Assuming it pertains to a defense platform, the application would be critical for ground vehicle mobility or potentially a specialized aviation role if the engine has been adapted. Further clarification on the exact platform and engine variant would be necessary for a complete understanding.

What is the justification for the sole-source award, and were alternative solutions considered?

Sole-source awards are typically justified under specific circumstances outlined in federal acquisition regulations, such as when only one responsible source can provide the required item, or in cases of urgent and compelling need. For this $105 million contract awarded to Honeywell International Inc. for AGT 1500 engines, the justification would likely stem from proprietary technology, unique manufacturing capabilities, or extensive integration with existing platforms where switching suppliers would be prohibitively costly or technically infeasible. Without access to the official Justification and Approval (J&A) document, it's impossible to detail the specific reasons. However, the government is required to explore all reasonable avenues to ensure competition, and the rationale must be robustly documented and approved.

How does the $105 million contract value compare to historical spending on similar engines or by similar agencies?

Comparing the $105 million contract value for 1500 AGT 1500 engines requires context on the unit price and the specific configuration. The AGT1500 is a gas turbine engine primarily used in the M1 Abrams tank. Historical data suggests that the US Army has procured these engines over many years. For instance, previous contracts for AGT1500 engines have varied significantly based on quantity, upgrades, and contract type. A rough estimate based on the total value ($104,978,941.06) and the number of engines (1500) suggests a per-unit cost of approximately $70,000. This figure needs to be benchmarked against known unit costs from competitive procurements or previous sole-source awards for the same engine model, considering inflation and any included services or upgrades. Without more granular data on the specific engine variant and contract terms, a precise comparison is difficult, but this price point should be evaluated against established cost baselines for this engine type.

What are the key performance metrics or deliverables associated with this contract, and how is performance monitored?

The contract specifies the delivery of 1500 AGT 1500 engines under a Firm Fixed Price (FFP) award. Key performance metrics would typically revolve around the timely delivery of these engines according to the schedule (start date 2012-08-30, end date 2015-10-30), adherence to technical specifications, and quality standards. For FFP contracts, the contractor bears most of the risk for cost overruns, incentivizing efficient performance. Monitoring would likely involve regular progress reports from Honeywell, quality assurance inspections by government representatives (e.g., DCMA), and potentially acceptance testing of the engines. Specific metrics might include delivery schedules, defect rates, and compliance with technical data packages. The contract's duration of 1156 days (approximately 3.17 years) indicates a phased delivery approach.

What is the track record of Honeywell International Inc. in delivering similar defense contracts, particularly sole-source awards?

Honeywell International Inc. is a major defense contractor with a long history of supplying complex systems, including engines, to the U.S. military. They have a substantial track record in delivering gas turbine engines for various applications. Regarding sole-source awards, like this one, it's common for specialized components where Honeywell holds unique manufacturing capabilities or intellectual property. Their performance on past contracts, both competitive and sole-source, is generally evaluated through contract performance reports (CPARs). While specific details of their performance on this particular AGT 1500 engine contract aren't provided, Honeywell's overall standing as a large, established aerospace and defense supplier suggests a generally reliable, though potentially high-cost, provider, especially in areas where competition is limited.

Industry Classification

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

Product/Service Code: ENGINES AND TURBINES AND COMPONENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W56HZV11R0489

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Honeywell International Inc (UEI: 139691877)

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: $104,978,941

Exercised Options: $104,978,941

Current Obligation: $104,978,941

Subaward Activity

Number of Subawards: 64

Total Subaward Amount: $4,026,582

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline