DoD's $206M Honeywell contract for armored vehicle components awarded without competition

Contract Overview

Contract Amount: $205,830,739 ($205.8M)

Contractor: Honeywell International Inc.

Awarding Agency: Department of Defense

Start Date: 2024-11-14

End Date: 2028-02-28

Contract Duration: 1,201 days

Daily Burn Rate: $171.4K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: TIGER DO 13 ILSC

Place of Performance

Location: PHOENIX, MARICOPA County, ARIZONA, 85034

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $205.8 million to HONEYWELL INTERNATIONAL INC. for work described as: TIGER DO 13 ILSC Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential overpayment. 2. Significant duration of 1201 days suggests a long-term need for these critical components. 3. The contract's value of over $200 million indicates a substantial investment in defense readiness. 4. Focus on armored vehicle components highlights a key area of military equipment modernization. 5. Awarded to a single vendor, Honeywell, suggesting potential reliance on specialized capabilities. 6. The firm fixed-price structure aims to control costs, but competition is key to ensuring value. 7. Geographic location in Arizona may indicate a concentration of defense manufacturing or testing facilities.

Value Assessment

Rating: questionable

Without competitive bidding, it is difficult to benchmark the value for money. The $205.8 million award for armored vehicle components over approximately four years necessitates a thorough review of Honeywell's pricing against industry standards and historical performance. The lack of competition raises concerns that the government may not be securing the most advantageous pricing. Further analysis would require access to detailed cost breakdowns and comparisons with similar sole-source awards for comparable defense systems.

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 vendor possesses the necessary capabilities, technology, or is the sole provider of a critical component. The lack of multiple bidders limits the government's ability to leverage market forces to drive down prices and ensure the best possible value. It suggests a reliance on Honeywell's specific expertise or existing sole-source supply chain for these armored vehicle components.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without competing bids, there is a reduced incentive for the contractor to offer the lowest possible price, potentially leading to less efficient use of public funds.

Public Impact

The primary beneficiaries are the Department of Defense, specifically the Army, which will receive critical components for armored vehicles. This contract supports the maintenance and modernization of the U.S. Army's armored vehicle fleet, enhancing combat readiness. The contract's impact is concentrated in Arizona, where Honeywell's facility is located, potentially supporting local jobs and the defense industrial base in that region. It ensures the continued availability of specialized parts essential for the operation and sustainment of key military hardware.

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 bidding process makes it difficult to assess true value for money.
Dependence on a single supplier could create supply chain vulnerabilities.
Long contract duration may not account for potential technological advancements or alternative solutions.
Firm fixed-price contract, while aiming for cost certainty, could still be inflated without competition.

Positive Signals

Award ensures continued supply of critical components for essential military hardware.
Firm fixed-price contract provides cost predictability for the government.
Honeywell is an established defense contractor with a track record in this sector.
Contract supports the readiness and modernization objectives of the Department of Defense.

Sector Analysis

The defense industrial base for armored vehicle manufacturing is a critical sector within the broader aerospace and defense industry. This contract for components falls under the 'Military Armored Vehicle, Tank, and Tank Component Manufacturing' subsector. Spending in this area is driven by military modernization programs, readiness requirements, and geopolitical factors. Comparable spending benchmarks would involve analyzing other large sole-source or competitively awarded contracts for similar vehicle systems or their major sub-assemblies, considering factors like technological complexity and production volume.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false) and there is no explicit mention of subcontracting goals for small businesses (sb: false). This suggests that the primary contractor, Honeywell, is expected to fulfill the majority of the contract requirements internally or with large business partners. Consequently, there may be limited direct opportunities for small businesses to participate in this specific contract, potentially impacting the small business defense ecosystem unless Honeywell actively seeks out small business subcontractors outside of formal set-aside requirements.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. Accountability measures are typically embedded within the contract terms, including performance metrics, delivery schedules, and quality assurance provisions. Transparency is limited due to the sole-source nature of the award. The Inspector General for the Department of Defense may have jurisdiction to investigate allegations of fraud, waste, or abuse related to this contract, particularly concerning pricing and procurement processes.

Related Government Programs

Armored Vehicle Modernization Programs
Defense Logistics Agency (DLA) Procurement
Army Combat Systems Procurement
Military Vehicle Component Manufacturing
Honeywell Defense Contracts

Risk Flags

Sole Source Award
Lack of Competition
Potential for Inflated Pricing
Supply Chain Dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $205.8 million to HONEYWELL INTERNATIONAL INC.. TIGER DO 13 ILSC

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 $205.8 million.

What is the period of performance?

Start: 2024-11-14. End: 2028-02-28.

What is Honeywell's track record with the Department of Defense, particularly concerning armored vehicle components?

Honeywell International Inc. is a major defense contractor with a long history of supplying various components and systems to the U.S. military. Within the armored vehicle sector, Honeywell has provided engines, transmissions, and other critical systems for platforms like the Abrams tank and Bradley Fighting Vehicle. Their track record generally includes delivering complex systems, though like any large contractor, they have faced scrutiny over contract performance and pricing on specific awards. For this particular contract, the sole-source nature means the government is relying on Honeywell's established capabilities and past performance, but it also necessitates careful monitoring to ensure continued adherence to quality and delivery standards without the pressure of competitive bidding.

How does the $205.8 million value compare to similar sole-source contracts for armored vehicle components?

Benchmarking the $205.8 million value of this sole-source contract is challenging without access to detailed cost breakdowns and specific component specifications. However, large sole-source awards for major defense systems or their critical sub-assemblies frequently run into hundreds of millions of dollars due to the complexity, specialized manufacturing processes, and limited number of qualified suppliers. To assess value, one would need to compare the per-unit cost of the components being procured against similar items supplied under competitive contracts or against Honeywell's own historical pricing for comparable parts. The absence of competition inherently makes direct value-for-money comparisons difficult and raises the possibility of inflated pricing compared to a fully competed scenario.

What are the primary risks associated with awarding a contract of this magnitude on a sole-source basis?

The primary risks associated with a sole-source award of this magnitude ($205.8 million) include potential overpricing due to the lack of competitive pressure, reduced incentive for innovation, and increased vulnerability to supply chain disruptions if the sole provider faces issues. Taxpayers may bear a higher cost than necessary. Furthermore, the government's negotiating leverage is diminished, potentially leading to less favorable terms. There's also a risk that the government becomes overly dependent on a single supplier, making future transitions or sourcing alternatives more difficult and costly. Robust oversight and negotiation are critical to mitigate these risks.

How effective is the firm fixed-price (FFP) contract type in managing costs for sole-source defense procurements like this?

The Firm Fixed-Price (FFP) contract type is generally favored for its cost certainty, as it shifts most of the risk to the contractor. For sole-source procurements, FFP aims to establish a definitive price upfront, protecting the government from cost overruns if the contractor's actual costs are lower than anticipated. However, without competition, the initial negotiated price might be higher than it would be in a competitive environment. The effectiveness of FFP in managing costs for sole-source contracts hinges heavily on the government's negotiation strength, the accuracy of the initial cost estimates, and the thoroughness of the cost analysis performed. While it provides budget predictability, it doesn't inherently guarantee the lowest possible price.

What are the historical spending patterns for armored vehicle components by the Department of Defense?

Historical spending patterns for armored vehicle components by the Department of Defense are substantial and fluctuate based on modernization cycles, operational tempo, and geopolitical threats. The DoD consistently invests billions annually in the procurement, sustainment, and upgrade of its armored vehicle fleet. This includes spending on engines, armor plating, weapon systems, suspension, and electronic components. Spending can be concentrated during periods of active conflict or major force structure changes, and often involves a mix of competitively awarded contracts for common components and sole-source awards for highly specialized or proprietary systems. Analyzing past spending data reveals trends in technology adoption, contractor market share, and the overall budget allocation towards ground vehicle modernization.

What are the implications of this contract being awarded in Arizona (AZ)?

The contract being awarded to a facility in Arizona (AZ) suggests that Honeywell's manufacturing or support operations for these armored vehicle components are located there. This has implications for the regional economy, potentially creating or sustaining jobs in the defense manufacturing sector within Arizona. It also indicates a concentration of defense industrial capacity in that state. For the DoD, it might relate to existing supply chain logistics, proximity to testing facilities, or established relationships with local industry. The specific geographic location can influence transportation costs and lead times, though for high-value defense components, these factors are often secondary to capability and security.

Industry Classification

NAICS: Manufacturing › Other Transportation Equipment Manufacturing › Military Armored Vehicle, Tank, and Tank Component Manufacturing

Product/Service Code: ENGINES AND TURBINES AND COMPONENT

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 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: $205,830,739

Exercised Options: $205,830,739

Current Obligation: $205,830,739

Subaward Activity

Number of Subawards: 264

Total Subaward Amount: $51,378,725

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W56HZV20D0062

IDV Type: IDC

Timeline