DoD's $38M contract for aircraft parts awarded to Honeywell International Inc. raises questions about competition and value

Contract Overview

Contract Amount: $38,045,041 ($38.0M)

Contractor: Honeywell International Inc.

Awarding Agency: Department of Defense

Start Date: 2020-03-17

End Date: 2022-03-16

Contract Duration: 729 days

Daily Burn Rate: $52.2K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: POP 1 PBL PERFORMANCE

Place of Performance

Location: TEMPE, MARICOPA County, ARIZONA, 85285

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $38.0 million to HONEYWELL INTERNATIONAL INC. for work described as: POP 1 PBL PERFORMANCE Key points: 1. The contract's value of $38 million over two years warrants scrutiny for cost-effectiveness. 2. Awarded on a sole-source basis, the lack of competition may have inflated prices. 3. Performance data is limited, making it difficult to assess the contractor's track record. 4. The contract falls under 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' a broad category. 5. Geographic location in Arizona for the contractor is noted. 6. The firm fixed-price contract type aims to control costs, but competition is key.

Value Assessment

Rating: questionable

Benchmarking the value of this $38 million contract is challenging without more detailed performance metrics and comparable sole-source awards. The lack of competition suggests potential for overpricing. The contract's duration of two years for aircraft parts implies a need for ongoing supply, but the specific nature of the parts and their criticality are not detailed, making a precise value-for-money assessment difficult. Further analysis would require understanding the market price for these specific parts and the justification for a sole-source award.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning only one bidder, Honeywell International Inc., was considered. The justification for this approach is not provided, but it significantly limits price discovery and competitive pressure. Without a competitive bidding process, it is difficult to ascertain if the government received the best possible pricing or if alternative solutions were overlooked. The absence of multiple bidders raises concerns about the government's ability to secure optimal terms.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as there is no competitive pressure to drive down prices. This limits the government's leverage in negotiations and may result in less efficient use of public funds.

Public Impact

The Department of Defense is the primary beneficiary, receiving essential aircraft parts. This contract supports the operational readiness of military aircraft. The services delivered are related to the manufacturing and supply of aircraft components. The geographic impact is primarily within Arizona, where the contractor is located. Workforce implications are likely within Honeywell's manufacturing and supply chain operations.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competitive bidding may result in inflated pricing.
Limited performance data makes it difficult to assess contractor effectiveness.
Sole-source awards can reduce transparency and accountability.
The specific nature of the 'Other Aircraft Parts' is not detailed, posing a potential risk if critical components are involved.
The contract's value of $38 million warrants close monitoring for cost overruns.

Positive Signals

Awarded to a known entity, Honeywell International Inc., suggesting some level of established capability.
Firm Fixed Price contract type helps to establish a ceiling on costs.
The contract supports critical defense needs for aircraft parts.
The duration of the contract provides a degree of supply chain stability for the DoD.

Sector Analysis

This contract falls within the aerospace and defense manufacturing sector, specifically focusing on aircraft parts. The broader industry is characterized by high technological demands, stringent quality control, and significant government procurement. The market size for aircraft parts is substantial, driven by both military and commercial aviation needs. This contract represents a portion of the Department of Defense's overall spending on sustainment and readiness for its aircraft fleet, fitting within the established supply chain for specialized components.

Small Business Impact

This contract was not set aside for small businesses, nor is there an indication of significant subcontracting opportunities for small businesses. The award to a large corporation like Honeywell International Inc. suggests that the primary focus was on established capabilities rather than fostering small business participation. This approach may limit the direct economic benefits to the small business ecosystem in this specific procurement.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and procurement oversight mechanisms. Given it's a sole-source award, the justification and negotiation process would be subject to review. Transparency is limited due to the lack of competition. Accountability rests with Honeywell to deliver the specified parts according to the firm fixed-price agreement and with the DoD to ensure compliance and manage the contract effectively. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Aircraft Procurement
Defense Logistics Agency (DLA) Aviation Support
Naval Air Systems Command (NAVAIR) Contracts
Aircraft Parts and Components Manufacturing
Sole-Source Defense Contracts

Risk Flags

Sole-source award lacks competitive justification.
Potential for inflated pricing due to lack of competition.
Limited public information on performance metrics.
Broad NAICS code obscures specific part details.
Contract value requires scrutiny for cost-effectiveness.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $38.0 million to HONEYWELL INTERNATIONAL INC.. POP 1 PBL PERFORMANCE

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 $38.0 million.

What is the period of performance?

Start: 2020-03-17. End: 2022-03-16.

What is the specific justification for awarding this contract on a sole-source basis to Honeywell International Inc.?

The provided data does not include the specific justification for the sole-source award. Typically, sole-source contracts are awarded when only one responsible source is available or capable of meeting the government's needs. This could be due to proprietary technology, unique capabilities, urgent and compelling circumstances, or a lack of adequate competition. Without the official justification document, it is impossible to definitively state why Honeywell was the only considered source. This lack of transparency is a common concern with sole-source procurements, as it limits the public's understanding of the necessity for avoiding a competitive process and potentially paying a premium.

How does the $38 million contract value compare to similar aircraft parts contracts awarded by the DoD?

Comparing this $38 million contract value to similar aircraft parts contracts requires access to a broader dataset of DoD procurements for comparable items. However, as a sole-source award over two years, this value is significant and warrants careful consideration. Without knowing the specific type and quantity of aircraft parts, a direct comparison is difficult. Generally, sole-source awards tend to be higher in price compared to competitively bid contracts for similar goods or services. Further analysis would involve identifying contracts for the same or similar parts, ideally awarded competitively, to establish a benchmark for pricing and value.

What performance metrics or data are available to assess Honeywell's track record on this specific contract?

The provided data indicates 'POP PBL PERFORMANCE' which suggests performance data exists, but it is not detailed within the snippet. The contract duration is from March 17, 2020, to March 16, 2022. To assess Honeywell's track record, one would need to examine delivery timeliness, quality of parts, adherence to specifications, and overall responsiveness to the DoD's requirements during this period. The absence of explicit performance ratings or specific outcomes in the summary data makes a thorough assessment challenging. A deeper dive into contract performance reports or award fee determinations would be necessary.

What are the potential risks associated with awarding a contract for aircraft parts on a sole-source basis?

The primary risk associated with sole-source awards for aircraft parts is the potential for inflated pricing due to the lack of competition. This can lead to inefficient use of taxpayer funds. Another risk is the potential for reduced innovation and quality, as the contractor may face less pressure to improve products or services. Furthermore, sole-source awards can create dependency on a single supplier, which can be problematic if that supplier experiences production issues, financial difficulties, or decides to discontinue the product line. There's also a risk that the government might not be aware of or have access to more cost-effective or technologically superior alternatives available in the market.

How does this contract fit into the broader landscape of DoD spending on aircraft sustainment and readiness?

This $38 million contract for aircraft parts is a component of the Department of Defense's extensive spending on aircraft sustainment and readiness. The DoD allocates billions annually to ensure its fleet remains operational, which includes procurement of new aircraft, upgrades, maintenance, repair, and the acquisition of spare parts. Contracts like this, even if sole-source, are essential for maintaining the supply chain of critical components needed for ongoing operations and repairs. Its significance lies in ensuring the availability of specific parts, contributing to the overall readiness posture of the air assets it supports.

What is the significance of the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code (336413) in the context of this contract?

The NAICS code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' indicates that the contract is for parts and auxiliary equipment used in aircraft that are not specifically covered by other manufacturing codes (like engines or airframes). This broad classification suggests the contract could encompass a wide range of components, from simple fasteners to more complex systems. The 'Other' designation implies a diverse product category, making it harder to benchmark against highly specific industry standards without further detail on the exact nature of the parts procured under this contract.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: AEROSPACE CRAFT COMPONENTS AND ACCESSORIES

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

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: $38,045,041

Exercised Options: $38,045,041

Current Obligation: $38,045,041

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0038320DWP01

IDV Type: IDC

Timeline