DoD's $21.8M Energy Savings Contract with Honeywell Faces Scrutiny Over Value and Competition
Contract Overview
Contract Amount: $21,800,094 ($21.8M)
Contractor: Honeywell International, Inc
Awarding Agency: Department of Defense
Start Date: 2018-08-03
End Date: 2043-02-28
Contract Duration: 8,975 days
Daily Burn Rate: $2.4K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 7
Pricing Type: FIRM FIXED PRICE
Sector: Energy
Official Description: IGF::OT::IGF ENERGY SAVINGS PERFORMANCE CONTRACT
Place of Performance
Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55422
Plain-Language Summary
Department of Defense obligated $21.8 million to HONEYWELL INTERNATIONAL, INC for work described as: IGF::OT::IGF ENERGY SAVINGS PERFORMANCE CONTRACT Key points: 1. The contract's substantial value raises questions about cost-effectiveness and potential for savings. 2. Honeywell International, Inc. is the sole awardee, prompting an examination of the competition method. 3. Long duration (2043) and firm-fixed-price structure may limit flexibility and risk allocation. 4. Engineering services sector is prone to cost overruns if not managed tightly.
Value Assessment
Rating: questionable
The $21.8 million contract value for engineering services needs further benchmarking against similar energy savings performance contracts. Without detailed performance metrics and verified savings, assessing the true value is difficult.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
Despite being awarded under full and open competition, the fact that Honeywell International, Inc. is the sole awardee for this specific delivery order warrants investigation into the bidding process and proposal evaluation to ensure fair market price discovery.
Taxpayer Impact: The long-term nature of the contract and the fixed-price model could lead to taxpayers bearing the brunt of any inefficiencies or unforeseen cost escalations over its 15-year duration.
Public Impact
Taxpayers may be locked into a potentially suboptimal energy solution for over a decade. The effectiveness of energy savings needs independent verification to ensure public funds are used efficiently. Lack of transparency in the competition for this specific delivery order could indicate missed opportunities for better pricing.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Long contract duration (15 years)
- Sole awardee for delivery order
- Potential for cost overruns in fixed-price engineering contracts
- Lack of clear savings verification metrics
Positive Signals
- Addresses energy savings, a strategic priority
- Awarded under full and open competition framework
Sector Analysis
This contract falls within the Engineering Services sector, specifically related to energy savings performance contracts (ESPCs). ESPCs are complex, long-term agreements where a contractor guarantees energy savings, often involving significant upfront investment and performance-based payments. Benchmarks for this sector vary widely based on project scope and technology.
Small Business Impact
The data indicates this contract was not awarded to small businesses, as 'sb' is false. Further analysis is needed to determine if small businesses had a fair opportunity to compete or if subcontracting opportunities were made available.
Oversight & Accountability
The long duration and fixed-price nature of this contract necessitate robust oversight from the Defense Logistics Agency to ensure Honeywell meets its energy savings guarantees and that the contract remains cost-effective throughout its term.
Related Government Programs
- Engineering Services
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Potential for overpayment due to sole awardee status for delivery order
- Long contract duration limits flexibility and exposes government to technological obsolescence
- Firm fixed-price structure may not adequately account for performance variations or cost efficiencies
- Lack of detailed savings verification metrics raises concerns about contract value realization
Tags
engineering-services, department-of-defense, mn, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $21.8 million to HONEYWELL INTERNATIONAL, INC. IGF::OT::IGF ENERGY SAVINGS PERFORMANCE CONTRACT
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 Logistics Agency).
What is the total obligated amount?
The obligated amount is $21.8 million.
What is the period of performance?
Start: 2018-08-03. End: 2043-02-28.
What specific energy-saving technologies and methodologies are being implemented under this contract, and how are their projected savings calculated and verified?
The contract details do not specify the exact technologies or methodologies. Verification of savings is crucial for ESPCs. Typically, savings are measured against a baseline established before the project begins. Independent third-party verification is often recommended to ensure accuracy and prevent potential manipulation of savings data, thereby safeguarding taxpayer investment.
Given the sole awardee status for this delivery order, what measures were in place to ensure a competitive price and prevent potential market manipulation?
While the contract was initially awarded under 'full and open competition,' the specific delivery order to Honeywell warrants scrutiny. Agencies should ensure robust evaluation criteria and price analysis were conducted to confirm the price is fair and reasonable. If competition was limited for this specific order, it raises concerns about potential overpayment and the need for stronger justification.
How does the long-term (2043) fixed-price structure of this contract impact the government's ability to adapt to future energy technologies or market changes?
A fixed-price contract extending to 2043 presents a significant risk of inflexibility. Technological advancements in energy efficiency could render the contracted solutions obsolete or less cost-effective over time. The government may be locked into paying for services or equipment that no longer represent the best value, limiting its ability to capitalize on newer, potentially cheaper, or more effective energy solutions.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: SPECIAL STUDIES/ANALYSIS, NOT R&D › SPECIAL STUDIES - NOT R and D
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Solicitation ID: SP060017R0413
Offers Received: 7
Pricing Type: FIRM FIXED PRICE (J)
Evaluated Preference: NONE
Contractor Details
Parent Company: Honeywell Safety Products USA, Inc.
Address: 1985 DOUGLAS DRIVE, GOLDEN VALLEY, MN, 55422
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $120,043,392
Exercised Options: $120,037,392
Current Obligation: $21,800,094
Actual Outlays: $8,014,082
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: DEAM3609GO29035
IDV Type: IDC
Timeline
Start Date: 2018-08-03
Current End Date: 2043-02-28
Potential End Date: 2043-02-28 00:00:00
Last Modified: 2026-01-29
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