DoD awards $4.96M for gas turbine power units, with limited competition and a long performance period

Contract Overview

Contract Amount: $4,960,425 ($5.0M)

Contractor: Honeywell International Inc.

Awarding Agency: Department of Defense

Start Date: 2026-01-08

End Date: 2027-04-28

Contract Duration: 475 days

Daily Burn Rate: $10.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: POWER UNIT,GAS TURB

Place of Performance

Location: PHOENIX, MARICOPA County, ARIZONA, 85034

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $5.0 million to HONEYWELL INTERNATIONAL INC. for work described as: POWER UNIT,GAS TURB Key points: 1. The contract value of $4.96 million for gas turbine power units appears reasonable given the duration and specialized nature of the equipment. 2. Limited competition for this contract raises concerns about potential price inflation and reduced value for taxpayer dollars. 3. The contract's duration of over 4 years (475 days) suggests a long-term need for these critical components. 4. The award to Honeywell International Inc. indicates a reliance on established, large defense contractors for specialized aerospace parts. 5. The absence of small business set-aside provisions means opportunities for smaller firms in this supply chain are limited. 6. The firm-fixed-price contract type shifts cost risk to the contractor, which can be beneficial for the government if managed effectively.

Value Assessment

Rating: fair

Benchmarking the value of this specific contract is challenging without more detailed cost breakdowns or comparable contract data. However, the $4.96 million award for specialized gas turbine power units over a period of approximately 1.5 years (from award to end date) suggests a significant investment. The firm-fixed-price structure aims to control costs, but the lack of robust competition could lead to a less favorable price than might be achieved in a more open market. Further analysis would require understanding the specific technical requirements and market availability of these units.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, indicating that the Department of the Navy identified Honeywell International Inc. as the only capable or authorized source for these specific gas turbine power units. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. While sole-source awards can be justified for unique or proprietary items, they limit the government's ability to leverage market competition to secure the best possible pricing and terms.

Taxpayer Impact: Sole-source awards can result in higher costs for taxpayers as the government cannot benefit from competitive pressures that drive down prices. This lack of competition means less assurance that the price paid reflects true market value.

Public Impact

The primary beneficiaries are the Department of the Navy and its aviation programs, which will receive essential power units for aircraft operations. The services delivered involve the provision of critical components for military aircraft, ensuring operational readiness and capability. The geographic impact is primarily within Arizona, where Honeywell International Inc. is located, but the ultimate operational use will be by naval aviation units globally. Workforce implications include the continued employment of skilled manufacturing and engineering personnel at Honeywell, supporting the defense industrial base.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may lead to higher prices and reduced value for taxpayer funds.
Sole-source award restricts opportunities for other qualified suppliers, potentially hindering market innovation.
Long contract duration increases exposure to potential cost overruns or performance issues over time.
Lack of small business participation limits the broader economic impact and diversity of the supply chain.

Positive Signals

Firm-fixed-price contract type provides cost certainty to the government.
Award to an established contractor like Honeywell suggests a high likelihood of technical capability and product reliability.
The contract supports critical defense needs, ensuring operational readiness for naval aviation.

Sector Analysis

The aerospace manufacturing sector is characterized by high barriers to entry, significant R&D investment, and stringent quality and regulatory requirements. This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' subsector. The market for specialized components like gas turbine power units is often dominated by a few large, established players due to the complexity and proprietary nature of the technology. Spending in this area is directly tied to defense procurement budgets and the operational needs of military branches.

Small Business Impact

This contract was not set aside for small businesses, nor does it appear to have specific subcontracting requirements for small businesses mentioned in the provided data. The award to a large prime contractor like Honeywell suggests that the primary focus was on meeting the technical specifications and delivery timelines. This limits the direct opportunities for small businesses to participate in this specific contract, although they may be part of Honeywell's broader supply chain.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a firm-fixed-price contract, performance monitoring will focus on delivery schedules and adherence to specifications. Transparency is generally maintained through contract databases like FPDS, though detailed cost breakdowns are often proprietary. The Inspector General for the Department of Defense would have jurisdiction for audits and investigations if any issues of fraud, waste, or abuse arise.

Related Government Programs

Aircraft Engine Manufacturing
Aerospace Parts and Components
Defense Procurement
Naval Aviation Support
Gas Turbine Engines

Risk Flags

Limited Competition
Sole-Source Award
Long Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $5.0 million to HONEYWELL INTERNATIONAL INC.. POWER UNIT,GAS TURB

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 $5.0 million.

What is the period of performance?

Start: 2026-01-08. End: 2027-04-28.

What is Honeywell International Inc.'s track record with the Department of the Navy for similar power unit contracts?

Honeywell International Inc. has a long-standing relationship with the Department of Defense, including the Navy, for various aerospace components and systems. Analyzing their historical performance on similar contracts for gas turbine power units would involve reviewing past contract awards, delivery performance metrics, and any documented issues or disputes. A review of public contract databases might reveal the volume and value of previous awards, the types of units supplied, and whether they met performance and schedule requirements. Generally, large, established contractors like Honeywell are chosen for their proven capabilities, but a detailed analysis would require access to specific performance reports and contract histories to assess reliability and adherence to terms.

How does the awarded price compare to market rates for similar gas turbine power units?

Determining the precise market rate for specialized gas turbine power units is complex due to proprietary designs, varying specifications, and the limited number of qualified manufacturers. Without access to detailed cost breakdowns from Honeywell or competitive bids from other suppliers, a direct price comparison is difficult. However, the fact that this contract was sole-sourced suggests that competitive benchmarking may not have been feasible or was bypassed. If comparable units from other manufacturers exist, their pricing could serve as a benchmark, but differences in performance, lifespan, and integration requirements would need careful consideration. The absence of competition inherently makes it harder to ascertain if the price achieved is optimal from a value-for-money perspective.

What are the primary risks associated with this sole-source contract for the Department of the Navy?

The primary risk associated with this sole-source contract is the potential for inflated pricing due to the lack of competitive pressure. The Navy may be paying more than necessary because there were no alternative bids to drive down costs. Another risk is vendor lock-in, where the Navy becomes dependent on Honeywell for these specific units, potentially limiting future flexibility in sourcing or upgrades. Performance risk also exists; while Honeywell is a reputable company, any sole-source award carries the inherent risk that the contractor may not perform to expectations without the immediate threat of losing future business to competitors. Finally, there's a risk of reduced innovation if alternative suppliers are not given opportunities to compete and introduce new technologies or efficiencies.

How effective is the firm-fixed-price contract type in managing costs for specialized defense equipment like this?

The firm-fixed-price (FFP) contract type is generally considered effective for managing costs when the scope of work is well-defined and risks can be reasonably estimated. For specialized defense equipment like gas turbine power units, FFP shifts the cost risk from the government to the contractor. This means Honeywell is responsible for absorbing any cost overruns incurred during production. This provides cost certainty to the Department of the Navy, as the final price is fixed. However, the effectiveness of FFP in achieving the best value is heavily dependent on the initial negotiation and the level of competition. In a sole-source situation, the contractor has more leverage in setting the initial price, potentially negating some of the cost-saving benefits of the FFP structure if not rigorously negotiated.

What are the historical spending patterns for gas turbine power units within the Department of Defense?

Historical spending patterns for gas turbine power units within the Department of Defense (DoD) are typically substantial, reflecting their critical role in aviation, naval propulsion, and ground support equipment. The DoD procures a wide array of turbine engines and related components across different branches (Army, Navy, Air Force) and platforms. Spending can fluctuate based on modernization programs, fleet readiness requirements, and new platform acquisitions. Analyzing historical data would reveal trends in contract values, key suppliers (often large aerospace firms), and the prevalence of different contract types and competition levels. This specific award of $4.96 million for Navy aircraft parts fits within the broader context of ongoing defense investments in maintaining and upgrading its air and sea assets.

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

Solicitation ID: N0038325RD155

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Honeywell Safety Products USA, Inc.

Address: 1944 E SKY HARBOR CIR, PHOENIX, AZ, 85034

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: $4,960,425

Exercised Options: $4,960,425

Current Obligation: $4,960,425

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: N0038326GA801

IDV Type: BOA

Timeline