DoD's $22M Honeywell contract for vehicle electronics lacked competition, raising value concerns

Contract Overview

Contract Amount: $22,079,830 ($22.1M)

Contractor: Honeywell International Inc.

Awarding Agency: Department of Defense

Start Date: 2009-12-23

End Date: 2011-02-28

Contract Duration: 432 days

Daily Burn Rate: $51.1K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: J7 DECU'S UPGRADE 260

Place of Performance

Location: TEMPE, MARICOPA County, ARIZONA, 85284

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $22.1 million to HONEYWELL INTERNATIONAL INC. for work described as: J7 DECU'S UPGRADE 260 Key points: 1. Contract awarded without competition suggests potential for overpayment and reduced value for taxpayer funds. 2. Limited competition may have hindered price discovery and prevented access to potentially more innovative solutions. 3. The contract's duration and firm-fixed-price nature could expose the government to risks if requirements change. 4. Performance context is limited due to the lack of competitive benchmarking. 5. This contract falls within the 'Other Motor Vehicle Electrical and Electronic Equipment Manufacturing' sector, a niche area. 6. The absence of small business set-asides or subcontracting plans is noted.

Value Assessment

Rating: questionable

Without a competitive bidding process, it is difficult to definitively assess the value for money. The $22 million awarded to Honeywell International Inc. for the J7 DECU'S UPGRADE 260 project lacks a clear benchmark against similar contracts or market rates due to its sole-source nature. The firm-fixed-price contract type, while offering cost certainty, does not inherently guarantee the best price without competition. Further analysis would require access to internal cost data or comparable sole-source awards.

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. This indicates that only one vendor, Honeywell International Inc., was considered capable of fulfilling the requirement. The lack of competition means there was no opportunity for multiple bidders to submit proposals, which typically drives down prices and encourages innovation. The specific justification for the sole-source award would be critical to understanding why other potential vendors were excluded.

Taxpayer Impact: Sole-source awards mean taxpayers may not have received the most competitive pricing available in the market. Without competition, the government loses leverage to negotiate better terms and prices, potentially leading to higher overall expenditure.

Public Impact

The primary beneficiaries are the Department of the Army and potentially military personnel relying on upgraded vehicle electronic systems. The contract delivers upgrades to the J7 DECU'S UPGRADE 260 system, enhancing the functionality and reliability of military vehicles. The geographic impact is primarily within Arizona, where Honeywell International Inc. is based, and wherever the upgraded vehicles are deployed. Workforce implications include the employment of individuals at Honeywell involved in the design, manufacturing, and integration of these electronic components.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to higher costs for taxpayers.
Sole-source award raises questions about the availability of alternative solutions or potential for innovation.
Firm-fixed-price contract could be disadvantageous if project scope changes significantly.
Limited transparency into the justification for sole-source award.

Positive Signals

Award to an established contractor like Honeywell suggests potential for reliable execution.
Firm-fixed-price contract provides cost certainty for the government once awarded.
Specific system upgrade indicates a focused effort to improve military vehicle capabilities.

Sector Analysis

This contract falls under the 'Other Motor Vehicle Electrical and Electronic Equipment Manufacturing' industry. This sector is characterized by the production of specialized electronic components for vehicles, often requiring advanced engineering and manufacturing capabilities. The market size for such specialized defense-related electronics can be significant, driven by government procurement needs. Benchmarking this contract's value is challenging without comparable sole-source awards or detailed market analysis of specialized vehicle electronics.

Small Business Impact

There is no indication that this contract included small business set-asides or subcontracting goals. The award to a large corporation like Honeywell suggests that small businesses were not directly involved as prime contractors. Further investigation would be needed to determine if any subcontracting opportunities were extended to small businesses by the prime contractor.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of Defense's contracting and procurement regulations. Accountability measures would be tied to the terms of the firm-fixed-price contract and performance requirements. Transparency is limited due to the sole-source nature of the award, with the specific justification for not competing the contract being a key area for oversight.

Related Government Programs

Military Vehicle Modernization Programs
Department of Defense Electronics Procurement
Vehicle Systems Upgrades
Honeywell Defense Contracts

Risk Flags

Sole-source award
Lack of competition
Potential for overpricing
Limited transparency on justification

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.1 million to HONEYWELL INTERNATIONAL INC.. J7 DECU'S UPGRADE 260

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 Army).

What is the total obligated amount?

The obligated amount is $22.1 million.

What is the period of performance?

Start: 2009-12-23. End: 2011-02-28.

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

The specific justification for a sole-source award typically involves circumstances such as unique capabilities, urgent and compelling needs, or the unavailability of other sources. For this contract, the Department of the Army would have had to document why Honeywell was the only responsible source capable of meeting the requirement for the J7 DECU'S UPGRADE 260. Common reasons include proprietary technology, essential integration with existing systems, or a lack of viable alternatives within the required timeframe. Without access to the official justification documentation (e.g., a Justification and Approval or J&A document), the precise reasoning remains speculative, but it is a critical piece of information for understanding the procurement decision and assessing its necessity.

How does the $22 million contract value compare to similar vehicle electronic upgrade contracts within the Department of Defense?

Direct comparison of this $22 million contract value to similar vehicle electronic upgrade contracts is challenging due to its sole-source nature and the specific 'J7 DECU'S UPGRADE 260' designation, which may represent a niche system. Competitive contracts for vehicle electronics can vary widely in price depending on the complexity of the upgrade, the number of vehicles affected, and the specific technologies involved. Sole-source awards, by definition, lack a competitive benchmark, making it difficult to ascertain if the price reflects market value. To provide a meaningful comparison, one would need to identify other sole-source awards for comparable systems or analyze the cost breakdown of similar competitive procurements, adjusting for differences in scope and technology.

What are the potential risks associated with a firm-fixed-price contract awarded without competition?

A firm-fixed-price (FFP) contract generally shifts the risk of cost overruns from the government to the contractor. However, when awarded without competition, the primary risk for the government is paying a price that is not the most economical. The contractor may have less incentive to control costs if they believe the price is already set favorably due to the lack of competition. Furthermore, if the scope of work changes or unforeseen issues arise, the FFP nature can make contract modifications complex and potentially costly if not managed carefully. The absence of competition means the government did not benefit from the contractor's efforts to offer the lowest possible price to win the bid.

What is the track record of Honeywell International Inc. in fulfilling similar defense contracts?

Honeywell International Inc. has a long and extensive track record of fulfilling defense contracts for the U.S. Department of Defense and other government agencies. They are a major aerospace and defense contractor involved in a wide array of products and services, including avionics, propulsion systems, sensing and control technologies, and building solutions. Their experience spans numerous military platforms and systems. While specific performance data for individual contracts is often not publicly detailed, Honeywell is generally considered a capable and established supplier within the defense industrial base. However, past performance on other contracts does not negate the concerns associated with a lack of competition on this specific award.

What is the historical spending pattern for 'Other Motor Vehicle Electrical and Electronic Equipment Manufacturing' by the Department of Defense?

Historical spending patterns for 'Other Motor Vehicle Electrical and Electronic Equipment Manufacturing' by the Department of Defense can be substantial, reflecting the military's reliance on a vast fleet of vehicles requiring sophisticated electronic systems. This category encompasses a wide range of components, from engine control units and navigation systems to communication equipment and sensor arrays. While specific aggregate spending figures for this precise NAICS code (336322) are not readily available in summary form, the DoD consistently invests billions annually in vehicle procurement, sustainment, and modernization. This includes upgrades to existing platforms and the development of new systems, where specialized electronic equipment plays a crucial role. Analyzing historical spending would require delving into detailed procurement databases to track contracts awarded under this or related classifications over time.

Industry Classification

NAICS: Manufacturing › Motor Vehicle Parts Manufacturing › Other Motor Vehicle Electrical and Electronic Equipment Manufacturing

Product/Service Code: ELECTRICAL/ELECTRONIC EQPT COMPNTS

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W56HZV09R0125

Offers Received: 1

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, 04

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Federally Funded Research and Development Corp, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $22,079,830

Exercised Options: $22,079,830

Current Obligation: $22,079,830

Contract Characteristics

Cost or Pricing Data: YES

Timeline