Honeywell International Inc. awarded $1.16B for TIGER II Services and Hardware, a sole-source definitive contract

Contract Overview

Contract Amount: $1,155,380,302 ($1.2B)

Contractor: Honeywell International Inc.

Awarding Agency: Department of Defense

Start Date: 2012-07-30

End Date: 2023-02-28

Contract Duration: 3,865 days

Daily Burn Rate: $298.9K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: TIGER II SERVICES AND HARDWARE UCA

Place of Performance

Location: PHOENIX, MARICOPA County, ARIZONA, 85034

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $1.16 billion to HONEYWELL INTERNATIONAL INC. for work described as: TIGER II SERVICES AND HARDWARE UCA Key points: 1. Contract awarded on a sole-source basis, raising questions about price discovery and potential value. 2. Long contract duration of over 10 years suggests a sustained need for these services. 3. The contract is a definitive contract, indicating a commitment to a specific set of goods or services. 4. Firm Fixed Price (FFP) contract type aims to control costs, but sole-source nature may limit savings. 5. The contract falls under the 'Military Armored Vehicle, Tank, and Tank Component Manufacturing' NAICS code. 6. Awarded by the Department of the Army, indicating a focus on defense-related equipment and support.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging due to its sole-source nature and long duration. Without competitive bids, it's difficult to assess if the $1.16 billion price reflects fair market value. The firm fixed price structure provides cost certainty but may not incentivize the contractor to offer the lowest possible price. Further analysis would require comparing the specific services and hardware provided to similar sole-source procurements or internal cost estimates.

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 among multiple vendors. This approach is typically used when only one vendor can provide the required goods or services, or in cases of urgent need. The lack of competition means there were no other bidders to drive down prices through a bidding process, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may be paying a premium for this contract due to the absence of competitive pressure. Without multiple offers, the government has less leverage to negotiate the best possible price.

Public Impact

The primary beneficiaries are the U.S. Army personnel who will utilize the TIGER II vehicles and associated hardware. Services and hardware provided are critical for the operational readiness and maintenance of armored vehicles. The contract's impact is primarily within the defense sector, supporting military operations. Workforce implications may include specialized technical support and maintenance personnel for armored vehicle systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits competitive pressure, potentially increasing costs.
Long contract duration may obscure current market price fluctuations.
Lack of transparency in sole-source justification requires careful review.

Positive Signals

Firm Fixed Price contract type provides cost certainty for the government.
Award to a known entity (Honeywell) suggests a reliance on established capabilities.
Long-term contract indicates a sustained and critical need for the TIGER II system.

Sector Analysis

This contract falls within the defense industrial base, specifically focusing on armored vehicle manufacturing and support. The market for such specialized military hardware is often characterized by limited suppliers and long development cycles. Comparable spending benchmarks would likely involve other large, sole-source contracts for major defense systems, where pricing is heavily influenced by unique specifications and contractor expertise.

Small Business Impact

The provided data does not indicate any small business set-aside provisions or subcontracting goals for this contract. As a sole-source award to a large prime contractor, the direct impact on small businesses is likely minimal unless Honeywell actively engages them for subcontracting opportunities. Further investigation into Honeywell's subcontracting plans would be necessary to assess any potential benefits to the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. Accountability measures are inherent in the contract terms, particularly the firm fixed price structure. Transparency is limited due to the sole-source nature, but contract award details are publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Military Vehicle Procurement
Armored Vehicle Maintenance
Defense Hardware Contracts
Honeywell Defense Contracts

Risk Flags

Sole-source award
Long contract duration
High contract value

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $1.16 billion to HONEYWELL INTERNATIONAL INC.. TIGER II SERVICES AND HARDWARE UCA

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 $1.16 billion.

What is the period of performance?

Start: 2012-07-30. End: 2023-02-28.

What specific services and hardware are included under the TIGER II Services and Hardware contract?

The TIGER II Services and Hardware contract, awarded to Honeywell International Inc., encompasses a broad range of support for the TIGER II family of vehicles. While the specific details are often proprietary, this typically includes the provision of spare parts, maintenance and repair services, technical support, engineering services, and potentially upgrades or modifications to the existing vehicle fleet. The contract's classification under NAICS code 336992 ('Military Armored Vehicle, Tank, and Tank Component Manufacturing') suggests a focus on the physical components and manufacturing aspects, alongside the necessary operational support to keep these complex systems functional.

Why was this contract awarded on a sole-source basis, and what are the implications for cost?

The contract was awarded on a sole-source basis, meaning it was not competed. This typically occurs when a specific product or service is only available from a single source, or in situations where the government determines that competition is not feasible or not in the national interest. For taxpayers, a sole-source award generally implies a higher potential cost compared to a competitively bid contract. Without the pressure of multiple bidders vying for the contract, the government may have less leverage to negotiate the lowest possible price. The firm fixed price (FFP) structure aims to provide cost certainty, but the baseline price itself might be higher due to the lack of competition.

What is the track record of Honeywell International Inc. in providing similar defense services and hardware?

Honeywell International Inc. has a long-standing and extensive track record as a major defense contractor, providing a wide array of products and services to government agencies, including the Department of Defense. The company is known for its expertise in aerospace, defense, and building technologies. In the defense sector, Honeywell has been involved in numerous contracts related to aircraft systems, avionics, engines, and other critical military hardware and support services. Their experience with complex defense systems, including armored vehicles, suggests a deep understanding of the technical requirements and operational demands associated with contracts like the TIGER II Services and Hardware.

How does the $1.16 billion contract value compare to other similar defense procurements?

The $1.16 billion value for the TIGER II Services and Hardware contract is substantial, reflecting the significant investment in maintaining and supporting specialized military equipment over an extended period. Direct comparisons are difficult without knowing the exact scope of services and hardware. However, large-scale, long-duration contracts for major defense systems, especially those involving sole-source awards for sustainment and upgrades, often reach into the hundreds of millions or billions of dollars. The firm fixed price nature and the decade-long duration contribute to this high total value. It is indicative of the high cost associated with keeping advanced military platforms operational.

What are the potential risks associated with a sole-source contract of this magnitude and duration?

A sole-source contract of this magnitude and duration carries several potential risks. Firstly, the lack of competition can lead to inflated prices and reduced value for money, as the government cannot leverage competitive bidding to secure the best terms. Secondly, a long contract term (over 10 years in this case) means the government is locked into a single provider for an extended period, potentially missing out on technological advancements or more cost-effective solutions that might emerge from the market. There's also a risk of vendor lock-in, where the contractor may become indispensable, reducing the government's bargaining power in future negotiations. Finally, without competitive oversight, there's a heightened need for robust internal government oversight to ensure performance and prevent cost overruns or quality issues.

What is the historical spending pattern for TIGER II Services and Hardware or similar programs?

Historical spending data for the TIGER II Services and Hardware program, particularly prior to this $1.16 billion definitive contract, would provide context on the program's lifecycle costs and trends. Without specific historical figures, it's reasonable to infer that sustainment and support for major military platforms like the TIGER II are ongoing, significant expenses. Defense spending on vehicle maintenance, parts, and upgrades typically follows a pattern of substantial investment over the operational life of the equipment, often spanning decades. This $1.16 billion award likely represents a significant portion of the total lifecycle cost for this specific contract period, building upon previous investments.

Industry Classification

NAICS: Manufacturing › Other Transportation Equipment Manufacturing › Military Armored Vehicle, Tank, and Tank Component Manufacturing

Product/Service Code: ENGINES AND TURBINES AND COMPONENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W56HZV12R0184

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Honeywell Safety Products USA, Inc.

Address: 111 S 34TH ST, 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: $1,159,755,302

Exercised Options: $1,155,380,302

Current Obligation: $1,155,380,302

Actual Outlays: $120,222,070

Subaward Activity

Number of Subawards: 2582

Total Subaward Amount: $3,883,475,179

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Timeline