Navy awards $31.6M for aviation parts, with limited competition raising cost concerns

Contract Overview

Contract Amount: $31,584,253 ($31.6M)

Contractor: Honeywell International Inc.

Awarding Agency: Department of Defense

Start Date: 2018-08-29

End Date: 2021-04-20

Contract Duration: 965 days

Daily Burn Rate: $32.7K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: NAVAL AVIATION REQUIREMENT

Place of Performance

Location: TEMPE, MARICOPA County, ARIZONA, 85284

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $31.6 million to HONEYWELL INTERNATIONAL INC. for work described as: NAVAL AVIATION REQUIREMENT Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant duration of the contract (965 days) suggests a long-term need for these parts. 3. The award is for aircraft parts, indicating a critical role in maintaining naval aviation readiness. 4. The contractor, Honeywell International Inc., is a major player in the aerospace industry. 5. Lack of competition is a key risk indicator for potential overspending. 6. The contract value is substantial, requiring careful oversight to ensure value for money.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging due to the sole-source nature of the award. Without competitive bids, it's difficult to definitively assess if the pricing reflects fair market value. However, the contract value of over $31 million for aircraft parts suggests a significant investment. Further analysis would require comparing the unit prices of the specific parts to industry benchmarks or historical pricing for similar components, which is not readily available in the provided data. The duration of the contract also implies a sustained need, which could influence pricing negotiations.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one vendor, Honeywell International Inc., was solicited. This approach bypasses the competitive bidding process, which typically drives down prices and encourages innovation. The lack of competition here suggests potential reasons such as unique technical requirements, proprietary technology, or a lack of alternative qualified suppliers. This limits the government's ability to explore a wider range of pricing and solutions.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government does not benefit from the price reductions typically achieved through competitive bidding. This can result in less efficient use of public funds.

Public Impact

Naval aviation operations benefit from the supply of critical aircraft parts, ensuring fleet readiness. The contract supports the maintenance and operational capabilities of the U.S. Navy's aircraft. The primary beneficiaries are the personnel and units within the Naval Aviation enterprise. The geographic impact is primarily within the operational theaters and maintenance facilities of the U.S. Navy. The contract supports jobs within Honeywell International Inc., a large aerospace manufacturer.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition, potentially leading to higher costs for taxpayers.
Lack of transparency in the procurement process due to limited competition.
Dependence on a single supplier for critical aviation components could pose supply chain risks.
The substantial contract value necessitates rigorous oversight to ensure accountability.

Positive Signals

Contract awarded to a well-established aerospace manufacturer with a track record in defense.
The contract addresses a clear requirement for naval aviation parts, supporting critical defense functions.
The fixed-price contract type provides some cost certainty for the government.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The market for these components is often characterized by high barriers to entry due to specialized technology, stringent quality requirements, and long development cycles. Major defense contractors like Honeywell dominate this space. Comparable spending benchmarks would involve analyzing other contracts for similar aircraft components awarded by the Department of Defense or other military branches, considering factors like part complexity and volume.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have significant subcontracting requirements for small businesses based on the provided data. The award to a large prime contractor like Honeywell suggests that the primary focus was on fulfilling a direct requirement rather than promoting small business participation. This contract is unlikely to have a direct positive impact on the small business ecosystem within this specific procurement.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a sole-source award, there is an increased emphasis on ensuring the reasonableness of the price and the necessity of the procurement. Accountability measures would involve performance monitoring and adherence to contract terms. Transparency is limited due to the non-competitive nature of the award, but contract award data is publicly available. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Naval Aviation Maintenance Programs
Aircraft Component Procurement
Defense Logistics Agency (DLA) Aviation
Department of Defense Supply Chain Management

Risk Flags

Sole-source award
Lack of competition
Potential for cost overruns
Supply chain dependency

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.6 million to HONEYWELL INTERNATIONAL INC.. NAVAL AVIATION REQUIREMENT

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 Navy).

What is the total obligated amount?

The obligated amount is $31.6 million.

What is the period of performance?

Start: 2018-08-29. End: 2021-04-20.

What is Honeywell International Inc.'s track record with the Department of Defense for similar aviation parts?

Honeywell International Inc. has a long-standing and extensive track record as a major supplier of aerospace components and systems to the Department of Defense (DoD). They are known for providing a wide range of products, including engines, avionics, and auxiliary power units, as well as various parts and services for military aircraft. Their history with the DoD includes numerous contracts, both competitive and sole-source, across different branches of the military. While specific details on past performance for identical parts are not provided here, Honeywell's established presence and capabilities suggest a significant capacity to meet the Navy's requirements. However, the nature of sole-source awards means that direct comparisons of performance against competing suppliers for this specific requirement are not available.

How does the $31.6 million contract value compare to similar aviation parts procurements?

Directly comparing the $31.6 million contract value to 'similar' procurements is challenging without knowing the specific types and quantities of aircraft parts involved. However, for major defense platforms, contracts in the tens of millions of dollars for parts and support are not uncommon, reflecting the complexity and cost of aerospace components. The value is substantial enough to warrant scrutiny. To assess value for money, one would ideally compare the unit prices of the awarded parts against industry benchmarks or historical pricing for identical or functionally equivalent items. Given this was a sole-source award, a robust comparison to competitive bids for the same requirement is absent, making a definitive value assessment difficult based solely on the provided data.

What are the primary risks associated with a sole-source award for critical aviation parts?

The primary risks associated with a sole-source award for critical aviation parts include potential overpricing due to the lack of competitive pressure, reduced incentive for the contractor to innovate or improve efficiency, and a heightened dependence on a single supplier. This dependence can create supply chain vulnerabilities if the sole source experiences production issues, financial instability, or decides to discontinue a product line. Furthermore, the absence of competition limits the government's ability to explore alternative solutions or technologies that might be more cost-effective or performant. For critical components like aircraft parts, these risks can directly impact operational readiness and maintenance costs.

How effective is a firm-fixed-price contract type in managing costs for aviation parts?

A firm-fixed-price (FFP) contract type is generally considered effective in managing costs for aviation parts because it shifts the majority of the cost risk from the government to the contractor. Under an FFP agreement, the contractor is obligated to complete the work for a predetermined price, regardless of the actual costs incurred. This provides the government with cost certainty, as the total price is fixed. However, the effectiveness of FFP in this sole-source context is somewhat diminished. While the government knows the total price, the lack of competition means that the 'fixed' price itself may not be the most competitive available. The contractor has less incentive to reduce costs if they know they are the only option.

What are the historical spending patterns for aircraft parts by the Department of the Navy?

Historical spending patterns for aircraft parts by the Department of the Navy (DoN) are substantial and consistent, reflecting the continuous need to maintain a large and complex aviation fleet. The DoN procures a vast array of parts, ranging from simple consumables to highly complex avionic and structural components, across numerous aircraft types. Spending typically fluctuates based on fleet modernization programs, operational tempo, and depot maintenance cycles. While specific aggregate figures for 'aircraft parts' can vary depending on how the category is defined (e.g., including engines, repair services, etc.), annual spending often runs into billions of dollars. This contract, valued at $31.6 million, represents a segment of this broader, ongoing investment in aviation readiness.

What oversight mechanisms are in place for sole-source defense contracts of this magnitude?

Oversight mechanisms for sole-source defense contracts of this magnitude are typically robust, though they vary based on agency policy and contract specifics. Key mechanisms include mandatory Justification and Approval (J&A) documentation for sole-source awards, which requires detailed reasoning for bypassing competition. Program offices conduct technical reviews, and contracting officers perform price and cost analyses to ensure reasonableness. Contract Performance Management (CPM) systems track contractor performance against milestones and quality standards. Audits by the Defense Contract Audit Agency (DCAA) may be conducted to verify cost data. Furthermore, the Inspector General's office provides an independent layer of oversight to detect fraud, waste, and abuse. Public reporting requirements also contribute to transparency.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment 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 International Inc (UEI: 139691877)

Address: 1300 WEST WARNER ROAD, TEMPE, AZ, 85284

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: $31,584,253

Exercised Options: $31,584,253

Current Obligation: $31,584,253

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0038312D003D

IDV Type: IDC

Timeline