DoD awards $84.3M contract for commercial and service industry machinery manufacturing to CAE USA INC

Contract Overview

Contract Amount: $84,344,400 ($84.3M)

Contractor: CAE USA Inc.

Awarding Agency: Department of Defense

Start Date: 2004-08-03

End Date: 2020-10-14

Contract Duration: 5,916 days

Daily Burn Rate: $14.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Place of Performance

Location: ARLINGTON, TARRANT County, TEXAS, 76011

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $84.3 million to CAE USA INC. for work described as: Key points: 1. Contract value of $84.3M over 16 years suggests significant investment in specialized machinery. 2. Awarded under full and open competition, indicating a potentially competitive bidding process. 3. The long duration of the contract (over 16 years) may present risks related to technological obsolescence or changing requirements. 4. Fixed-price contract type aims to control costs, but requires careful scope definition to avoid change orders. 5. The North American Industry Classification System (NAICS) code 333319 covers a broad range of machinery, requiring specific understanding of the procured items. 6. The contract was awarded by the Department of the Navy, suggesting a focus on naval operational needs. 7. The contractor, CAE USA INC., is based in Texas, potentially impacting local economic contributions. 8. The absence of small business set-aside indicates the primary contractor is likely not a small business, with subcontracting opportunities needing further review.

Value Assessment

Rating: fair

The contract value of $84.3 million spread over 16 years averages to approximately $5.27 million per year. Without specific details on the machinery procured, it is difficult to benchmark against similar contracts. However, the extended duration for a machinery contract could indicate a need for long-term support, maintenance, or specialized, non-standard equipment. The firm fixed-price nature suggests an attempt to lock in costs, but the long timeline increases the risk of price escalation if not managed carefully through contract clauses.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'full and open competition,' which typically means that all responsible sources were permitted to submit a bid. This suggests a robust bidding process where multiple companies had the opportunity to compete for the contract. The number of bidders is not specified, but a competitive process generally leads to better pricing and value for the government. The open nature of the competition is a positive indicator for price discovery and market responsiveness.

Taxpayer Impact: A full and open competition process is beneficial for taxpayers as it fosters a competitive environment, driving down prices and encouraging innovation among potential bidders, ultimately leading to more cost-effective procurement.

Public Impact

The primary beneficiaries are likely the Department of the Navy, receiving specialized machinery and related services to support its operations. The contract supports the manufacturing and potentially the maintenance or integration of commercial and service industry machinery. The geographic impact is primarily centered in Texas, where the contractor CAE USA INC. is located, potentially creating or sustaining jobs in that region. Workforce implications may include skilled manufacturing labor, engineers, and support personnel required for the production and delivery of the machinery.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration (16 years) increases risk of technological obsolescence and requirement changes.
Lack of specific details on the machinery procured makes value assessment and benchmarking difficult.
Potential for cost overruns if fixed-price contract does not adequately account for long-term inflation or unforeseen technical challenges.
Limited insight into the number of bidders and specific competitive dynamics.

Positive Signals

Awarded under full and open competition, suggesting a competitive environment.
Firm fixed-price contract type provides cost certainty if scope is well-defined.
Contractor CAE USA INC. has a long-term award, indicating potential for established performance.
The contract supports critical defense needs for the Department of the Navy.

Sector Analysis

The manufacturing of commercial and service industry machinery falls under the broader industrial manufacturing sector. This sector is characterized by diverse product lines, technological advancements, and significant capital investment. The NAICS code 333319 specifically covers machinery used in various service industries, from cleaning to food preparation and business operations. The contract value of $84.3 million over 16 years is substantial, indicating a significant procurement for specialized equipment. Comparable spending benchmarks would depend heavily on the specific type of machinery being acquired, but this award represents a notable investment within this niche manufacturing area.

Small Business Impact

The data indicates that this contract was not set aside for small businesses (ss: false, sb: false). This suggests that the primary award went to a larger entity, CAE USA INC. While there is no explicit mention of subcontracting requirements, large prime contracts often include provisions for small business participation. Further analysis would be needed to determine if CAE USA INC. is meeting any subcontracting goals or if there are opportunities for small businesses to participate in the supply chain for this contract.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Navy's contracting and program management offices. As a long-term award, regular performance reviews, milestone tracking, and financial audits would be expected. Transparency is facilitated by the contract award being publicly available. The specific Inspector General jurisdiction would be that of the Department of Defense's Inspector General, who investigates waste, fraud, and abuse in DoD programs.

Related Government Programs

Defense Manufacturing Contracts
Industrial Machinery Procurement
Naval Operations Support Equipment
Commercial Machinery Manufacturing
Long-Term Service Contracts

Risk Flags

Long-term contract duration increases risk of obsolescence.
Lack of specific machinery details hinders value assessment.
Potential for cost creep despite fixed-price structure over extended period.
Unknown number of bidders in 'full and open competition'.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $84.3 million to CAE USA INC.. See the official description on USAspending.

Who is the contractor on this award?

The obligated recipient is CAE USA 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 $84.3 million.

What is the period of performance?

Start: 2004-08-03. End: 2020-10-14.

What specific types of commercial and service industry machinery were procured under this contract?

The provided data identifies the contract under NAICS code 333319, which covers 'Other Commercial and Service Industry Machinery Manufacturing.' This broad category includes machinery for various applications such as cleaning, laundry, food preparation, packaging, and business operations. However, the specific details of the machinery acquired (e.g., model numbers, technical specifications, intended use) are not present in the abbreviated data. To understand the precise nature of the procurement, one would need to access the full contract details, including statements of work, technical exhibits, and any associated amendments. This information is crucial for assessing the contract's relevance, value, and potential risks.

How does the $84.3 million contract value compare to historical spending on similar machinery by the Department of the Navy?

Benchmarking the $84.3 million contract value against historical spending requires access to detailed procurement data for similar machinery by the Department of the Navy. The provided data indicates a 16-year duration, making a direct annual comparison potentially misleading. If the machinery is highly specialized or custom-built, direct comparisons might be scarce. A comprehensive analysis would involve searching historical contract databases for awards under NAICS 333319 or related codes, filtering by the Department of the Navy, and examining the value, duration, and scope of those contracts. Without this comparative data, it's challenging to definitively state whether this award represents high, low, or average spending for such procurements.

What are the key performance indicators (KPIs) and performance standards outlined in the contract for CAE USA INC.?

The abbreviated data does not specify the Key Performance Indicators (KPIs) or performance standards for CAE USA INC. Typically, long-term contracts, especially those for machinery, would include metrics related to delivery timelines, quality of manufactured goods, reliability, uptime, maintenance responsiveness, and adherence to technical specifications. The firm fixed-price nature suggests that meeting these defined standards is critical to the contractor's compensation. To ascertain these KPIs, one would need to review the contract's 'Service Level Agreements' (SLAs), 'Performance Work Statement' (PWS), or similar sections detailing the expected outcomes and the government's evaluation criteria.

What is the track record of CAE USA INC. in fulfilling similar large-scale government contracts, particularly within the defense sector?

The provided data indicates CAE USA INC. received this significant award, suggesting they possess the capability to handle large-scale contracts. However, it does not detail their specific track record. A thorough assessment would involve researching CAE USA INC.'s past performance on government contracts, looking for metrics such as on-time delivery, quality adherence, cost control, and customer satisfaction ratings (e.g., from past performance questionnaires). Examining their history with the Department of Defense or similar agencies for machinery manufacturing or related services would provide crucial insights into their reliability and expertise in fulfilling defense-related requirements.

Given the 16-year duration, what are the identified risks associated with technological obsolescence or evolving operational needs for this machinery?

The 16-year duration of this contract presents a significant risk of technological obsolescence. Machinery developed today may be outdated or less efficient by the latter half of the contract term, especially in rapidly advancing fields. Evolving operational needs within the Department of the Navy could also render the procured machinery less suitable or entirely obsolete. Mitigation strategies within the contract might include provisions for upgrades, modernization, or phased replacements. However, without explicit contract details on how these risks are managed (e.g., technology refresh clauses, flexible scope adjustments), there is a considerable inherent risk that the government may end up with outdated or underutilized assets.

Industry Classification

NAICS: Manufacturing › Commercial and Service Industry Machinery Manufacturing › Other Commercial and Service Industry Machinery Manufacturing

Product/Service Code: TRAINING AIDS AND DEVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: L-3 Communications Holdings, Inc. (UEI: 008898843)

Address: 2200 ARLINGTON DOWNS ROAD, ARLINGTON, TX, 90

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6133903D5006

IDV Type: IDC

Timeline