DOE's $17.27B National Security Campus contract to Honeywell shows strong performance but limited competition

Contract Overview

Contract Amount: $17,272,920,116 ($17.3B)

Contractor: Honeywell Federal Manufacturing & Technologies, LLC

Awarding Agency: Department of Energy

Start Date: 2015-07-09

End Date: 2030-09-30

Contract Duration: 5,562 days

Daily Burn Rate: $3.1M/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: COST PLUS AWARD FEE

Sector: Other

Official Description: IGF::CL,CT::IGF MANAGEMENT AND OPERATION OF THE NATIONAL SECURITY CAMPUS -- CONTRACT NO. DE-NA0002839

Place of Performance

Location: KANSAS CITY, JACKSON County, MISSOURI, 64147

State: Missouri Government Spending

Plain-Language Summary

Department of Energy obligated $17.27 billion to HONEYWELL FEDERAL MANUFACTURING & TECHNOLOGIES, LLC for work described as: IGF::CL,CT::IGF MANAGEMENT AND OPERATION OF THE NATIONAL SECURITY CAMPUS -- CONTRACT NO. DE-NA0002839 Key points: 1. The contract's value of over $17 billion over its lifespan indicates a significant investment in national security infrastructure. 2. Honeywell's long-standing management of the facility suggests a deep understanding of operational requirements and a stable performance history. 3. The 'Cost Plus Award Fee' structure incentivizes performance but requires careful oversight to manage costs effectively. 4. The contract's duration of over 15 years highlights the long-term nature of national security facility management. 5. The award was made under full and open competition, but the limited number of bidders warrants further examination. 6. The contract's focus on facilities support services is critical for the operational readiness of national security assets.

Value Assessment

Rating: good

The contract's total value of $17.27 billion over its extended period suggests a substantial investment. Benchmarking this against similar large-scale, long-term facilities management contracts for national security assets is complex due to the unique nature of these sites. However, the 'Cost Plus Award Fee' (CPAF) structure, while common for complex services, necessitates rigorous performance monitoring to ensure value for money. The award fee component allows for adjustments based on performance, which can be a positive indicator if managed well, but also presents a risk of cost overruns if not strictly controlled. Without specific per-unit cost data for services rendered, a direct price comparison is difficult, but the overall scale implies significant resource allocation.

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 offers. However, with only two bidders identified (implied by 'no': 2), the level of competition may have been limited in practice. This suggests that while the process was open, the specialized nature of managing a national security campus might restrict the pool of qualified and willing contractors. A low number of bidders, even in an open competition, can sometimes lead to less aggressive pricing than a more crowded field.

Taxpayer Impact: For taxpayers, a limited number of bidders, even in an open competition, can mean potentially higher costs than if there were more firms vying for the contract. It suggests that the government may not have achieved the full benefit of price competition.

Public Impact

The primary beneficiaries are the agencies and personnel reliant on the National Security Campus for their operations, ensuring a secure and functional environment. The contract delivers essential facilities support services, including maintenance, operations, security, and potentially specialized technical support for national security functions. The geographic impact is concentrated in Missouri, where the National Security Campus is located, supporting the local economy through employment and subcontracting. The contract supports a significant workforce, both directly employed by Honeywell Federal Manufacturing & Technologies and indirectly through subcontractors, contributing to specialized job creation in the region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The 'Cost Plus Award Fee' structure, while incentivizing performance, carries inherent risks of cost escalation if not meticulously managed and overseen.
Limited competition, even under 'full and open,' raises concerns about whether the government secured the most competitive pricing possible.
The extended duration of the contract (over 15 years) necessitates robust mechanisms for contract modification and performance review to adapt to evolving needs and technologies.

Positive Signals

Honeywell's long tenure and the contract's renewal suggest a history of satisfactory performance and a strong working relationship with the Department of Energy.
The 'award fee' component provides a mechanism to reward exceptional performance, potentially driving higher quality service delivery.
The contract's focus on critical national security infrastructure indicates a high level of importance and likely stringent oversight from the agency.

Sector Analysis

This contract falls within the Facilities Support Services sector, a critical component of the broader professional, scientific, and technical services industry. This sector encompasses a wide range of services essential for the operation and maintenance of government and private facilities. The National Security Campus likely represents a large and complex facility, requiring specialized expertise in areas such as physical security, infrastructure management, and potentially hazardous material handling. Comparable spending benchmarks are difficult to establish precisely due to the unique national security designation and scale, but large government facility management contracts often run into billions of dollars over their lifetimes.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Given the immense scale and specialized nature of managing a national security campus, it is unlikely that small businesses would be primary contractors for the entirety of the work. However, there may be opportunities for small businesses to participate as subcontractors, particularly in specialized service areas. The extent of small business subcontracting would be a key factor in assessing the contract's broader economic impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract is primarily vested within the Department of Energy, likely through dedicated contracting officers and program managers. The 'Cost Plus Award Fee' structure implies a need for detailed performance metrics and regular evaluations to determine award fee payouts, serving as a key accountability measure. Transparency is typically managed through contract reporting requirements and agency-level oversight. While specific Inspector General (IG) jurisdiction isn't detailed, the DOE's Office of Inspector General would likely have audit and investigative authority over such a significant contract, especially concerning financial integrity and performance.

Related Government Programs

Department of Energy National Nuclear Security Administration Facilities
Department of Defense Base Operations Support Contracts
Federal Buildings and Facilities Management
National Security Infrastructure Management
Large-Scale Government Service Contracts

Risk Flags

Limited Competition
Cost Plus Award Fee Structure
Long Contract Duration
National Security Critical Infrastructure

Frequently Asked Questions

What is this federal contract paying for?

Department of Energy awarded $17.27 billion to HONEYWELL FEDERAL MANUFACTURING & TECHNOLOGIES, LLC. IGF::CL,CT::IGF MANAGEMENT AND OPERATION OF THE NATIONAL SECURITY CAMPUS -- CONTRACT NO. DE-NA0002839

Who is the contractor on this award?

The obligated recipient is HONEYWELL FEDERAL MANUFACTURING & TECHNOLOGIES, LLC.

Which agency awarded this contract?

Awarding agency: Department of Energy (Department of Energy).

What is the total obligated amount?

The obligated amount is $17.27 billion.

What is the period of performance?

Start: 2015-07-09. End: 2030-09-30.

What is Honeywell Federal Manufacturing & Technologies' track record with the Department of Energy, particularly concerning this specific contract?

Honeywell Federal Manufacturing & Technologies has a long-standing relationship with the Department of Energy, managing the National Security Campus under this contract since its inception. The contract's duration, starting in 2015 and extending to 2030, indicates a sustained engagement. The renewal and continuation of such a large-scale contract suggest a generally satisfactory performance history. The 'Cost Plus Award Fee' structure implies that performance has met or exceeded certain benchmarks, allowing for award fee payments. However, a comprehensive review would require examining specific performance reviews, any past disputes, or corrective actions taken during the contract's life to fully assess their track record.

How does the pricing structure (Cost Plus Award Fee) compare to industry standards for similar large-scale facilities management contracts?

The Cost Plus Award Fee (CPAF) structure is common for complex service contracts where performance outcomes are critical and difficult to define precisely upfront, such as managing large, secure facilities. It allows the government to reimburse the contractor for allowable costs while providing incentives (the award fee) for exceeding performance expectations. Compared to fixed-price contracts, CPAF offers more flexibility but requires robust government oversight to control costs. For facilities management of this scale and criticality, CPAF is a recognized approach. However, the 'value for money' depends heavily on the clarity of performance standards and the rigor of the government's evaluation process in determining the award fee.

What are the primary risks associated with a contract of this magnitude and duration?

The primary risks associated with a contract of this magnitude ($17.27 billion) and duration (over 15 years) include cost overruns due to the CPAF structure, potential for contractor complacency over time, and the risk of technological or operational obsolescence if the contract is not agile. Scope creep, where requirements expand beyond the original intent without commensurate price adjustments, is another significant risk. Furthermore, the long-term nature necessitates careful management of the contractor-government relationship to ensure continued alignment of objectives. Security risks associated with managing a national security campus are also paramount and require constant vigilance and adaptation.

How effective has the competition been in driving value for taxpayers, given it was full and open but had only two bidders?

The effectiveness of competition in driving value for taxpayers is questionable when a 'full and open' solicitation results in only two bidders. While the process was technically open, the limited number of participants suggests that the market for managing such a specialized and large-scale national security facility may be concentrated. This concentration can reduce the downward pressure on prices that typically occurs with robust competition. Taxpayers may not have benefited from the most aggressive pricing strategies that could have emerged from a more crowded field. The government's negotiation skills and the specific evaluation criteria used would be crucial in mitigating this risk and ensuring fair value.

What are the historical spending patterns for facilities support services at the National Security Campus prior to or during this contract?

Historical spending data for this specific contract shows a total obligated amount of $17,272,920,116.27 as of the provided data. The contract duration is from July 9, 2015, to September 30, 2030, spanning over 15 years. The 'dur' field indicates 5562 days, which aligns with this timeframe. Without prior contract data for the same facility or detailed annual spending breakdowns within this contract, it's difficult to establish a precise historical spending trend. However, the sheer magnitude of the obligated amount suggests consistently high annual expenditures, reflecting the ongoing operational costs of a major national security facility.

What specific performance metrics are used to determine the 'award fee' for Honeywell?

The specific performance metrics used to determine the 'award fee' for Honeywell are not detailed in the provided data. However, for a contract of this nature (managing a National Security Campus), performance metrics typically encompass a wide range of areas. These often include the reliability and uptime of critical infrastructure, the effectiveness of security operations, responsiveness to maintenance requests, adherence to safety protocols, environmental compliance, and the efficiency of facility operations. The 'Cost Plus Award Fee' structure implies that these metrics are clearly defined in the contract's Performance Work Statement (PWS) and are subject to regular government evaluation. The 'award' portion is contingent upon meeting or exceeding these predefined standards.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Facilities Support Services › Facilities Support Services

Product/Service Code: OPERATION OF GOVT OWNED FACILITY › OPERATE GOVT OWNED BUILDINGS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: DE-SOL-0007749

Offers Received: 2

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Honeywell International Inc.

Address: 14520 BOTTS RD, KANSAS CITY, MO, 64147

Business Categories: Category Business, Limited Liability Corporation, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $21,458,981,666

Exercised Options: $18,521,494,331

Current Obligation: $17,272,920,116

Actual Outlays: $9,272,087,125

Subaward Activity

Number of Subawards: 3447

Total Subaward Amount: $1,942,749,581

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline