DoD's $140M Honeywell contract for guided missile subsystems awarded without competition

Contract Overview

Contract Amount: $14,197,054 ($14.2M)

Contractor: Honeywell International Inc.

Awarding Agency: Department of Defense

Start Date: 1999-11-30

End Date: 2009-11-30

Contract Duration: 3,653 days

Daily Burn Rate: $3.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Official Description: 200003!1700!00A060!XSP01 !STRATEGIC SYSTEMS PROGRAMS !N0003000C0016 !A!*!* !19991130!20030228!054332192!139691877!139691877!N!09128!HONEYWELL INTERNATIONAL INC !13350 US HIGHWAY 19 N !CLEARWATER !FL!33764!12875!103!12!CLEARWATER !PINELLAS !FLORIDA !0001!+000000448800!N!N!000000000000!1427!GUIDED MISSILE SUBSYSTEMS !A2 !MISSILE AND SPACE SYSTEMS !2CNJ!UGM-96 TRIDENT !3812!3!*!*!*!B!A!*!C !N!L!1!001!N!1A!Z!Y!Z!* !* !N!C!*!A!A!A!A!A!A!* !*!N!A!D!N!*!*!*!*!*!

Place of Performance

Location: CLEARWATER, PINELLAS County, FLORIDA, 33764

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $14.2 million to HONEYWELL INTERNATIONAL INC. for work described as: 200003!1700!00A060!XSP01 !STRATEGIC SYSTEMS PROGRAMS !N0003000C0016 !A!*!* !19991130!20030228!054332192!139691877!139691877!N!09128!HONEYWELL INTERNATIONAL INC !13350 US HIGHWAY 19 N !CLEARWATER !FL!33764!12875!103!12!CLEARWATER !PIN… Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential for overpayment. 2. The fixed-price incentive contract structure aims to balance cost control with performance incentives. 3. Long contract duration of over 10 years suggests a stable, long-term need for these subsystems. 4. The contractor, Honeywell International Inc., has a significant presence in the aerospace and defense sector. 5. Geographic concentration in Florida for contract performance and contractor location. 6. The contract falls under the 'Missile and Space Systems' product service code, indicating a specialized defense procurement.

Value Assessment

Rating: fair

The total award amount of approximately $142 million over a decade for guided missile subsystems appears substantial. Without comparable sole-source contracts or detailed cost breakdowns, a precise value-for-money assessment is challenging. However, the fixed-price incentive (FPI) contract type suggests an effort to manage costs by incentivizing the contractor to stay within target costs. The long duration implies a sustained need, but also a prolonged period where competitive pressure is absent, potentially impacting long-term cost efficiency.

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 among multiple vendors. This typically occurs when only one vendor possesses the necessary capabilities, technology, or is the sole provider of a critical component. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs for the government compared to a competitive procurement.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without a competitive process, there's less assurance that the government secured the best possible price for these critical missile subsystems.

Public Impact

The primary beneficiaries are the U.S. Navy's strategic systems programs, ensuring the continued operation and readiness of submarine-launched ballistic missile systems. The contract delivers essential guided missile subsystems, crucial for national defense and strategic deterrence. Contract performance is linked to Honeywell's facilities in Clearwater, Florida, impacting the local economy and workforce in that region. The procurement supports specialized engineering, manufacturing, and technical jobs within Honeywell and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs.
Long contract duration may reduce flexibility and opportunities for cost savings through re-competition.
Fixed-price incentive contracts can lead to cost overruns if target costs are not well-defined or if incentives are structured unfavorably.

Positive Signals

Contract awarded to a known entity (Honeywell) with established capabilities in defense systems.
Fixed-price incentive structure aims to align contractor and government interests on cost and performance.
Long-term nature of the contract suggests a stable and critical requirement for national security.

Sector Analysis

This contract falls within the Defense Industrial Base sector, specifically focusing on missile and space systems. The market for such specialized subsystems is often concentrated among a few key defense contractors due to high barriers to entry, including technological expertise, security clearances, and established relationships with government agencies. Honeywell International Inc. is a major player in this sector, with a broad portfolio of aerospace and defense products and services. Benchmarking this spending is difficult without comparable sole-source procurements, but it represents a significant investment in maintaining strategic defense capabilities.

Small Business Impact

There is no indication that this contract included small business set-asides. Given the specialized nature of guided missile subsystems and the sole-source award to a large prime contractor like Honeywell, it is unlikely that small businesses were directly solicited as prime contractors. However, Honeywell may engage small businesses as subcontractors, though the extent and impact on the small business ecosystem are not detailed in the provided data.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor compliance with contract terms and conditions. The Department of Defense's Inspector General may conduct audits or investigations into specific aspects of the contract if concerns arise regarding fraud, waste, or abuse. Transparency is limited due to the sole-source nature and the classified aspects often associated with strategic weapon systems.

Related Government Programs

Strategic Systems Programs (SSP)
Submarine-Launched Ballistic Missile (SLBM) Programs
Guided Missile Manufacturing
Aerospace and Defense Contracting
Honeywell International Inc. Defense Contracts

Risk Flags

Sole-source award
Long contract duration
Lack of transparency in pricing due to sole-source nature

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $14.2 million to HONEYWELL INTERNATIONAL INC.. 200003!1700!00A060!XSP01 !STRATEGIC SYSTEMS PROGRAMS !N0003000C0016 !A!*!* !19991130!20030228!054332192!139691877!139691877!N!09128!HONEYWELL INTERNATIONAL INC !13350 US HIGHWAY 19 N !CLEARWATER !FL!33764!12875!103!12!CLEARWATER !PINELLAS !FLORIDA !0001!+000000448800!N!N!000000000000!1427!GUIDED MISSILE SUBSYSTEMS !A2 !MISSILE AND SPACE SYSTEMS !2CNJ!UGM-96 TRIDENT !3812!3!*!*!*!B!A!*!C !N!L!

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 Contract Management Agency).

What is the total obligated amount?

The obligated amount is $14.2 million.

What is the period of performance?

Start: 1999-11-30. End: 2009-11-30.

What is the historical spending trend for guided missile subsystems by the Department of Defense, and how does this contract compare?

The Department of Defense (DoD) consistently allocates significant funding towards missile systems, including subsystems for guided missiles. Historical spending data reveals a substantial and often increasing budget for missile defense and offensive capabilities, driven by evolving threats and technological advancements. This specific contract, valued at approximately $142 million over its extended period, represents a notable but not extraordinary investment within the broader context of DoD's annual missile procurement budgets, which can run into billions of dollars across various programs. Without access to detailed historical spending on the UGM-96 TRIDENT program or comparable subsystems, it's challenging to pinpoint precise trends. However, the sustained funding for such critical components underscores their enduring importance to national security strategy.

What specific risks are associated with sole-source procurements of critical defense components like guided missile subsystems?

Sole-source procurements, like this one awarded to Honeywell, carry several inherent risks for the government. The most significant is the lack of competitive pressure, which can lead to inflated prices and reduced value for taxpayer money. Without competing bids, the government has less leverage to negotiate favorable terms and pricing. There's also a risk of vendor lock-in, where the government becomes overly reliant on a single supplier, potentially limiting future options and increasing vulnerability if that supplier faces production issues or decides to exit the market. Furthermore, without the scrutiny of a competitive process, there's a heightened need for robust government oversight to ensure quality, performance, and cost control, as the contractor may have less incentive to proactively seek efficiencies.

How does the Fixed Price Incentive (FPI) contract type aim to manage costs and performance for this missile subsystem procurement?

The Fixed Price Incentive (FPI) contract type is designed to share the risks and rewards between the government and the contractor. It establishes a target cost, a target profit, and an estimated price. If the final cost is below the target cost, both parties share in the savings according to a pre-negotiated formula. Conversely, if the final cost exceeds the target cost, both parties share in the overrun, up to a ceiling price. This structure incentivizes the contractor to control costs and meet performance specifications efficiently. For this missile subsystem contract, the FPI aims to encourage Honeywell to deliver the required components within budget and to the specified performance standards, while providing a mechanism for adjusting profit based on cost outcomes.

What is Honeywell International Inc.'s track record with the Department of Defense, particularly in missile systems?

Honeywell International Inc. has a long and extensive track record as a major contractor for the Department of Defense, spanning decades and encompassing a wide array of products and services. Within the realm of missile systems and related technologies, Honeywell has been involved in the development, manufacturing, and sustainment of various critical components. Their expertise often lies in advanced electronics, guidance systems, and integrated subsystems. While specific details on their performance for the UGM-96 TRIDENT program are not fully elaborated here, Honeywell's general history with the DoD suggests a capacity to handle complex, high-technology defense procurements. Their continued selection for such programs indicates a perceived reliability and capability by the government, though performance metrics and specific program successes would require deeper investigation.

What are the potential implications of awarding a contract for over 10 years for strategic missile components?

Awarding a contract for over 10 years for strategic missile components, such as those provided by Honeywell under this agreement, has several implications. Firstly, it signals a long-term strategic need and commitment by the government to the underlying weapon system, ensuring sustained readiness and capability. Secondly, it provides the contractor with significant program stability, allowing for long-range planning, investment in specialized facilities and workforce, and potentially economies of scale. However, such long durations also increase the risk of technological obsolescence if the system's requirements evolve or new technologies emerge. It also means the government is locked into a single supplier for an extended period, potentially missing out on cost savings that could arise from future competition or technological advancements if the contract were shorter.

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: FIXED PRICE INCENTIVE (L)

Evaluated Preference: NONE

Contractor Details

Parent Company: Honeywell International Inc (UEI: 139691877)

Address: 13350 US HIGHWAY 19 N, CLEARWATER, FL, 13

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

Contract Characteristics

Cost or Pricing Data: YES

Timeline