Honeywell awarded $41.3M for aircraft engine parts, raising questions about competition and value

Contract Overview

Contract Amount: $41,312,160 ($41.3M)

Contractor: Honeywell International Inc.

Awarding Agency: Department of Defense

Start Date: 2023-11-06

End Date: 2027-02-28

Contract Duration: 1,210 days

Daily Burn Rate: $34.1K/day

Competition Type: NOT COMPETED

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: T55-GA-714A ENGINES, ELECTRONIC CONTROL UNITS, AND ENGINEINSTALLATION KITS

Place of Performance

Location: PHOENIX, MARICOPA County, ARIZONA, 85034

State: Arizona Government Spending

Plain-Language Summary

Department of Defense obligated $41.3 million to HONEYWELL INTERNATIONAL INC. for work described as: T55-GA-714A ENGINES, ELECTRONIC CONTROL UNITS, AND ENGINEINSTALLATION KITS Key points: 1. The contract's value, while significant, warrants scrutiny due to the lack of competitive bidding. 2. Potential for overpayment exists without a competitive process to benchmark pricing. 3. Reliance on a single source for critical aircraft components presents supply chain risks. 4. The firm-fixed-price structure aims to control costs, but initial pricing is unverified. 5. This award falls within the Aircraft Engine and Engine Parts Manufacturing sector. 6. The contract duration extends over three years, indicating a sustained need for these parts.

Value Assessment

Rating: questionable

Benchmarking the value of this contract is challenging without competitive bids. The $41.3 million award for T55-GA-714A engines, electronic control units, and installation kits lacks a clear comparison point. While firm-fixed-price contracts can offer cost certainty, the absence of competition means the government cannot be assured it received the best possible price. Further analysis would require access to historical pricing data for similar components or internal cost estimates from the Department of the Army.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning Honeywell International Inc. was the only vendor considered. This approach bypasses the standard competitive bidding process, which typically involves multiple vendors submitting proposals. Without competition, there is a reduced incentive for the contractor to offer the most competitive pricing, and the government has fewer options to explore alternative suppliers or innovative solutions.

Taxpayer Impact: Sole-source awards can lead to higher costs for taxpayers as the government may not benefit from price reductions typically achieved through competitive bidding. This also limits opportunities for other businesses to compete for government contracts.

Public Impact

The Department of the Army is the primary beneficiary, receiving critical components for its aircraft fleet. The contract ensures the continued operational readiness of aircraft relying on T55-GA-714A engines. The contract's geographic impact is primarily linked to the Department of the Army's operational bases and maintenance facilities. The award supports jobs within Honeywell International Inc., particularly in manufacturing and supply chain roles related to aircraft engines and parts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may result in inflated pricing.
Sole-source awards can limit innovation and alternative solutions.
Dependency on a single supplier creates potential supply chain vulnerabilities.
The contract's value and justification for sole-source award require further transparency.

Positive Signals

Firm-fixed-price contract type provides cost certainty once awarded.
The contract addresses a clear need for critical aircraft engine components.
Honeywell is an established supplier with a track record in this product area.

Sector Analysis

This contract falls within the Aircraft Engine and Engine Parts Manufacturing industry, a specialized sector crucial for defense and aerospace. The North American Industry Classification System (NAICS) code 336412 represents this segment. The market for these components is often characterized by high barriers to entry due to technical expertise, research and development costs, and stringent quality requirements. Spending in this sector is heavily influenced by defense budgets and the lifecycle of military aircraft fleets. Comparable spending benchmarks are difficult to establish without more specific details on the exact components and their market value.

Small Business Impact

This contract was not competed and there is no indication of small business set-asides or subcontracting requirements. As a sole-source award to a large corporation, it does not directly benefit the small business ecosystem through set-aside provisions. The potential for small business involvement would likely be through subcontracting opportunities, which are not explicitly detailed in the provided data.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Army's contracting and program management offices. As a sole-source award, the justification and review process are critical. Transparency regarding the rationale for not competing the award and the pricing negotiation would be key oversight elements. Inspector General jurisdiction may be invoked if allegations of impropriety or waste arise.

Related Government Programs

Aircraft Engine Manufacturing
Aerospace Parts Procurement
Defense Logistics Support
Military Aircraft Maintenance

Risk Flags

Sole-source award lacks competitive justification.
Potential for non-competitive pricing.
Limited transparency on cost reasonableness.
Supply chain risk due to single-source dependency.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $41.3 million to HONEYWELL INTERNATIONAL INC.. T55-GA-714A ENGINES, ELECTRONIC CONTROL UNITS, AND ENGINEINSTALLATION KITS

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 $41.3 million.

What is the period of performance?

Start: 2023-11-06. End: 2027-02-28.

What is Honeywell's track record with the Department of Defense for similar engine components?

Honeywell International Inc. has a long-standing relationship with the Department of Defense, supplying various components for military aircraft. Specifically for T55-GA-714A engines, Honeywell is a known provider of these complex systems and their associated parts. Their history includes numerous contracts for engine production, maintenance, and upgrades across different military branches. While this specific award is sole-source, Honeywell's extensive experience and established position as a primary manufacturer for these engines suggest a deep familiarity with the technical requirements and performance expectations of the Department of the Army. Further investigation into past contract performance metrics, delivery timeliness, and quality control records would provide a more comprehensive view of their track record.

How does the $41.3 million value compare to historical spending on T55-GA-714A engine components?

Direct comparison of the $41.3 million award to historical spending on T55-GA-714A engine components is difficult without access to detailed historical contract data. The provided data indicates this is a single award with a defined period of performance (ending Feb 2027). If this represents the total anticipated spend over the contract duration, it would need to be compared against previous sole-source or competed awards for similar quantities and types of components. Factors such as inflation, technological upgrades, and changes in demand can significantly influence year-over-year spending. A comprehensive analysis would involve examining contract vehicles from previous years, noting any differences in scope, quantity, and pricing structures to establish a relevant benchmark.

What are the specific risks associated with awarding this contract on a sole-source basis?

The primary risk associated with awarding this contract on a sole-source basis is the potential for paying a non-competitive price. Without the pressure of competing bids, Honeywell may not have been incentivized to offer the lowest possible price, potentially leading to increased costs for the government and taxpayers. Another significant risk is the lack of innovation; a competitive environment often fosters new solutions and efficiencies that are forgone in a sole-source scenario. Furthermore, over-reliance on a single supplier can create supply chain vulnerabilities. If Honeywell faces production issues, delays, or unforeseen cost increases, the Department of the Army's operational readiness could be directly impacted due to the lack of alternative sources for these critical engine parts.

What is the expected impact of this contract on the operational readiness of Army aircraft?

This contract is expected to have a positive impact on the operational readiness of Army aircraft that utilize the T55-GA-714A engines. By securing a supply of essential components, including electronic control units and installation kits, the Department of the Army ensures that these aircraft can be maintained and repaired effectively. This procurement directly supports the sustainment of the fleet, preventing potential grounding of aircraft due to a lack of necessary parts. The extended performance period through February 2027 suggests a strategic effort to maintain a consistent supply chain for these critical engine systems, thereby contributing to the overall availability and mission capability of the affected aircraft.

Are there any alternative suppliers or technologies that could have been considered for these engine components?

The decision to award this contract on a sole-source basis implies that, at the time of procurement, the Department of the Army determined Honeywell International Inc. was the only responsible source capable of providing the required T55-GA-714A engines, electronic control units, and installation kits. This determination often stems from factors such as proprietary technology, unique manufacturing capabilities, or existing integration with current systems. However, without a competitive solicitation, it is impossible to definitively state whether alternative suppliers or emerging technologies exist that could meet or exceed the requirements. A thorough market research process, which may have been conducted prior to the sole-source justification, would typically explore such alternatives.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Engine and Engine Parts Manufacturing

Product/Service Code: ENGINES AND TURBINES AND COMPONENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Resideo Technologies, 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: $41,312,160

Exercised Options: $41,312,160

Current Obligation: $41,312,160

Subaward Activity

Number of Subawards: 107

Total Subaward Amount: $14,237,562

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: W58RGZ21D0027

IDV Type: IDC

Timeline