Army awards $188.5M contract for small arms ammunition manufacturing to Honeywell International Inc

Contract Overview

Contract Amount: $22,255,579 ($22.3M)

Contractor: Honeywell International Inc.

Awarding Agency: Department of Defense

Start Date: 2004-03-30

End Date: 2011-09-30

Contract Duration: 2,740 days

Daily Burn Rate: $8.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: TIME AND MATERIALS

Sector: Defense

Official Description: 200407!000579!2100!W15QKN!TACOM - PICATINNY !DAAE3003D1004 !A!N! !N!0012 ! !20040330!20040630!188459929!188459929!139691877!N!HONEYWELL INTERNATIONAL INC -!9201 SAN MATEO BLVD !ALBUQUERQUE !NM!87113!02000!001!35!ALBUQUERQUE !BERNALILLO !NEW MEXICO!+000015074658!N!N!000000000000!AD91!RDTE/OTHER DEFENSE-BASIC RESEARCH !A6 !AMMUNITION !000 !* !332992!E! !5!B!S! ! ! !99990909!B! ! !A! !A!N!Y!2!003!A! !A!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!C!N! ! ! ! ! ! !0001! !

Place of Performance

Location: ALBUQUERQUE, BERNALILLO County, NEW MEXICO, 87113

State: New Mexico Government Spending

Plain-Language Summary

Department of Defense obligated $22.3 million to HONEYWELL INTERNATIONAL INC. for work described as: 200407!000579!2100!W15QKN!TACOM - PICATINNY !DAAE3003D1004 !A!N! !N!0012 ! !20040330!20040630!188459929!188459929!139691877!N!HONEYWELL INTERNATIONAL INC -!9201 SAN MATEO BLVD !ALBUQUERQUE !NM!87113!02000!001!35!ALBUQUERQUE !BERN… Key points: 1. Contract awarded for manufacturing of small arms ammunition, a critical component for defense operations. 2. The contract duration spans over 7 years, indicating a long-term need for these services. 3. Awarded under full and open competition, suggesting a robust bidding process. 4. The contract type is Time and Materials, which can pose cost control challenges if not managed effectively. 5. The geographic location of the contractor is New Mexico, potentially impacting local employment and economic activity. 6. This contract falls under the Research, Development, Test, and Evaluation (RDTE) category for defense.

Value Assessment

Rating: fair

The total award amount is $188,459,929. Without specific details on the quantity of ammunition or the types of small arms it supports, a direct per-unit cost comparison is difficult. However, the contract's Time and Materials (T&M) nature suggests that the final cost is dependent on the labor hours and materials consumed. This pricing model can sometimes lead to higher costs compared to fixed-price contracts if not closely monitored for efficiency and necessity of resources. Benchmarking against similar ammunition manufacturing contracts would require more granular data on specifications and quantities.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit bids. The data shows 3 bids were received. A competitive environment with multiple bidders generally leads to better price discovery and potentially lower costs for the government. The fact that only three bids were submitted might warrant further investigation into the market dynamics for this specific type of ammunition manufacturing.

Taxpayer Impact: A full and open competition with multiple bidders is generally favorable for taxpayers, as it encourages competitive pricing and can lead to cost savings compared to sole-source or limited competition awards.

Public Impact

The primary beneficiaries are the U.S. Army and potentially other branches of the Department of Defense requiring small arms ammunition. The contract ensures the supply of essential ammunition for training, operations, and readiness. The geographic impact is centered in New Mexico, where Honeywell International Inc. is located, potentially creating or sustaining jobs in the Albuquerque area. Workforce implications include skilled labor in manufacturing, quality control, and logistics related to ammunition production.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Time and Materials contract type can lead to cost overruns if not managed diligently.
Limited number of bidders (3) may indicate potential market concentration or barriers to entry.
The contract's long duration (over 7 years) requires sustained oversight to ensure continued value and performance.
Lack of specific details on ammunition types and quantities makes precise value assessment challenging.

Positive Signals

Awarded through full and open competition, suggesting a fair and accessible bidding process.
Contractor, Honeywell International Inc., is a large, established defense contractor with significant experience.
The contract addresses a critical defense need for small arms ammunition.
The contract duration indicates a stable, long-term supply chain for the military.

Sector Analysis

This contract falls within the Defense sector, specifically focusing on the manufacturing of ammunition. The market for defense manufacturing is characterized by high barriers to entry, stringent quality requirements, and significant government oversight. Spending in this area is driven by military readiness needs and geopolitical factors. Comparable spending benchmarks would typically involve analyzing other large-scale ammunition procurement contracts awarded by the Department of Defense or allied nations, considering factors like quantity, caliber, and technological sophistication.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (sb: false). There is no explicit information regarding subcontracting plans for small businesses within this award. Therefore, the direct impact on the small business ecosystem is likely minimal unless Honeywell actively engages small businesses as subcontractors for components or services related to this manufacturing effort.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army, likely managed by the TACOM (Tank-automotive and Armaments Command) or a similar procurement agency. Accountability measures would include performance metrics, quality assurance checks, and adherence to the terms of the Time and Materials contract. Transparency is facilitated by the contract award data being publicly available, but detailed operational oversight and Inspector General jurisdiction would depend on specific program reviews and audits.

Related Government Programs

Department of Defense Ammunition Procurement
Small Arms Manufacturing Contracts
RDTE Defense Contracts
Time and Materials Defense Contracts
Honeywell International Inc. Defense Contracts

Risk Flags

Potential for cost overruns due to Time and Materials contract type.
Limited competition (3 bidders) may indicate market concentration.
Long contract duration increases risk of technology obsolescence and price volatility.
Need for robust oversight to ensure quality and performance over the contract's life.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.3 million to HONEYWELL INTERNATIONAL INC.. 200407!000579!2100!W15QKN!TACOM - PICATINNY !DAAE3003D1004 !A!N! !N!0012 ! !20040330!20040630!188459929!188459929!139691877!N!HONEYWELL INTERNATIONAL INC -!9201 SAN MATEO BLVD !ALBUQUERQUE !NM!87113!02000!001!35!ALBUQUERQUE !BERNALILLO !NEW MEXICO!+000015074658!N!N!000000000000!AD91!RDTE/OTHER DEFENSE-BASIC RESEARCH !A6 !AMMUNITION !000 !* !332992!E! !5!B!S! ! ! !999

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 $22.3 million.

What is the period of performance?

Start: 2004-03-30. End: 2011-09-30.

What is the historical spending pattern for small arms ammunition manufacturing by the Department of the Army?

Analyzing historical spending patterns for small arms ammunition manufacturing by the Department of the Army requires access to comprehensive historical contract databases. Generally, such spending fluctuates based on global security environments, troop deployment levels, and modernization programs. The Army procures ammunition through various contract types, including fixed-price and time-and-materials, often with multiple award contracts to ensure supply chain resilience. Key factors influencing historical spending include the phasing out of older weapon systems and the introduction of new ones, requiring different ammunition types. Furthermore, depot-level maintenance and overhaul activities also contribute to the overall budget allocated for ammunition sustainment. Without specific historical data points for this contract's category, it's difficult to provide precise figures, but it represents a consistent and significant portion of the Army's operational and readiness budget.

How does the Time and Materials (T&M) contract type compare to other contract types for ammunition manufacturing in terms of cost-effectiveness?

Time and Materials (T&M) contracts are generally considered less cost-effective for the government compared to fixed-price contracts when procuring goods like ammunition, especially for well-defined manufacturing processes. T&M contracts reimburse the contractor for direct labor hours at specified hourly rates and for the actual cost of materials. This structure offers flexibility but lacks the cost certainty of fixed-price contracts, where the contractor assumes more risk for cost overruns. For ammunition manufacturing, where production volumes and processes are often predictable, a firm-fixed-price (FFP) contract is typically preferred as it incentivizes the contractor to control costs and improve efficiency to maximize profit. The government's risk in a T&M contract is that costs can escalate beyond initial estimates if labor hours or material costs increase unexpectedly. Therefore, rigorous oversight and detailed tracking of hours and materials are crucial to mitigate these risks.

What is the track record of Honeywell International Inc. in fulfilling defense manufacturing contracts, particularly for ammunition?

Honeywell International Inc. has a long and extensive track record as a major defense contractor, involved in a wide array of products and services for the U.S. military and allied nations. While known for aerospace, building technologies, and performance materials, they also have capabilities and past performance in defense manufacturing. Specific to ammunition, their involvement might range from component manufacturing to complete round assembly, depending on the contract scope. Assessing their specific track record for ammunition contracts would involve reviewing past performance evaluations, delivery histories, and any documented issues or commendations on similar awards. Given their size and tenure in the defense sector, it is probable they possess the necessary infrastructure, quality control systems, and expertise to manage complex manufacturing contracts like this one, though specific performance metrics for this particular award would be detailed in internal government performance reports.

What are the potential risks associated with a long-duration contract (over 7 years) for ammunition manufacturing?

Long-duration contracts for ammunition manufacturing, such as this 7-year award, present several potential risks. Firstly, technology obsolescence is a concern; weapon systems and their associated ammunition requirements can evolve rapidly, potentially rendering the contracted ammunition less relevant or requiring costly modifications. Secondly, economic volatility can impact the cost of raw materials and labor over such an extended period, potentially leading to price increases if not adequately protected by contract clauses. Thirdly, maintaining consistent quality and performance standards over many years requires sustained oversight and contractor commitment. Lastly, market dynamics can change, potentially leading to more competitive pricing options becoming available later in the contract term, which the government might be locked out of due to the existing agreement. Effective risk mitigation involves incorporating economic price adjustment clauses, regular performance reviews, and clear specifications for technological relevance.

How does the geographic location of the contractor (New Mexico) impact the logistics and cost of this ammunition contract?

The geographic location of Honeywell International Inc. in New Mexico has several implications for this ammunition contract. Logistically, it affects the transportation costs and lead times for delivering the finished ammunition to military depots or operational units, which are likely located elsewhere. Proximity to major transportation hubs (airports, rail lines, highways) can mitigate these costs. From an economic perspective, awarding the contract to a New Mexico-based facility can stimulate local employment and contribute to the state's economy through job creation and associated tax revenues. However, if New Mexico has higher labor costs or less developed supply chains for specific raw materials compared to other regions, it could potentially increase the overall cost of production. The government's decision to award to this location suggests that, on balance, the total cost, including logistics and production, was deemed competitive and acceptable.

Industry Classification

NAICS: Manufacturing › Other Fabricated Metal Product Manufacturing › Small Arms Ammunition Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › DEFENSE (OTHER) R&D

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 3

Pricing Type: TIME AND MATERIALS (Y)

Contractor Details

Parent Company: Honeywell International Inc (UEI: 139691877)

Address: 9201 SAN MATEO BLVD, ALBUQUERQUE, NM, 01

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: DAAE3003D1004

IDV Type: IDC

Timeline