DoD awards $113M contract to CAE USA INC. for aircraft parts, with 6 bidders in full and open competition

Contract Overview

Contract Amount: $113,368,660 ($113.4M)

Contractor: CAE USA Inc.

Awarding Agency: Department of Defense

Start Date: 2005-06-03

End Date: 2013-07-02

Contract Duration: 2,951 days

Daily Burn Rate: $38.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Place of Performance

Location: ARLINGTON, TARRANT County, TEXAS, 76011, UNITED STATES OF AMERICA

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $113.4 million to CAE USA INC. for work described as: Key points: 1. Contract value of $113.4M over 8 years suggests significant investment in aircraft support. 2. Full and open competition with 6 bidders indicates a healthy market for these specialized parts. 3. The Cost Plus Incentive Fee (CPIF) pricing structure aims to balance contractor performance with cost control. 4. Awarded to CAE USA INC., a known entity in defense contracting, providing some level of performance predictability. 5. The contract's duration of nearly 10 years points to a long-term need for these aircraft components. 6. Geographic location in Texas (TX) may indicate a concentration of relevant aerospace industry infrastructure.

Value Assessment

Rating: good

The contract value of $113.4 million over approximately 8 years averages to about $14.2 million annually. Without specific benchmarks for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' it's challenging to definitively assess value for money. However, the presence of multiple bidders in a full and open competition suggests that pricing was likely competitive. The CPIF contract type allows for shared savings if costs are below target, incentivizing efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with six bidders participating. This level of competition is generally positive, as it allows multiple capable companies to vie for the contract, potentially driving down prices and fostering innovation. The presence of six bidders suggests a robust market for the specified aircraft parts and auxiliary equipment.

Taxpayer Impact: A competitive bidding process with multiple offers typically results in better pricing for taxpayers, as contractors are motivated to submit competitive proposals to win the award.

Public Impact

The Department of Defense (DoD) is the primary beneficiary, receiving essential aircraft parts and auxiliary equipment. This contract supports the operational readiness and maintenance of military aircraft fleets. The geographic impact is centered in Texas (TX), potentially benefiting the local aerospace and manufacturing workforce. The contract likely supports skilled labor in manufacturing, logistics, and quality assurance within the aerospace sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns inherent in CPIF contracts if cost targets are not managed effectively.
Dependence on a single contractor for a significant duration could lead to reduced flexibility if needs change.
Ensuring consistent quality and timely delivery of specialized aircraft parts over an extended period requires robust oversight.

Positive Signals

Full and open competition with multiple bidders generally leads to better value and pricing.
The CPIF structure incentivizes the contractor to manage costs efficiently.
Award to an established company like CAE USA INC. may indicate a track record of successful performance.
The long contract duration suggests a stable, predictable demand for these critical components.

Sector Analysis

The 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector is a critical component of the broader aerospace and defense industry. This contract falls within a market segment focused on supplying specialized components necessary for the maintenance, repair, and operation (MRO) of aircraft. Spending in this area is often driven by fleet size, operational tempo, and the age of aircraft. Benchmarking requires comparison to similar MRO supply contracts within the DoD or other government agencies.

Small Business Impact

The data indicates this contract was awarded under full and open competition and does not specify small business set-asides or subcontracting goals. Given the nature of specialized aircraft parts manufacturing, it's possible that larger firms like CAE USA INC. are the primary awardees. Further analysis would be needed to determine if small businesses are participating as subcontractors or if there were opportunities missed for small business set-asides.

Oversight & Accountability

The contract is managed by the Defense Contract Management Agency (DCMA), which provides contract administration services to ensure contractor compliance and performance. The CPIF structure includes incentives tied to performance, implying oversight of cost and schedule. Transparency would be enhanced by public reporting of performance metrics and cost breakdowns, though specific oversight details are not provided in the summary data.

Related Government Programs

Aircraft Maintenance and Repair Services
Aerospace Component Manufacturing
Defense Logistics Support
Military Aircraft Procurement
Defense Supply Chain Management

Risk Flags

Potential for cost creep in CPIF contracts.
Long-term duration may limit flexibility for future technological upgrades.
Dependence on specific parts could create single-source vulnerabilities if not managed.
Ensuring consistent quality over an 8-year period requires diligent oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $113.4 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 (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $113.4 million.

What is the period of performance?

Start: 2005-06-03. End: 2013-07-02.

What is CAE USA INC.'s track record with similar DoD contracts?

CAE USA INC. has a significant history of contracting with the Department of Defense, primarily focusing on simulation, training, and aviation support. While this specific contract is for aircraft parts, the company's broader experience in defense aviation suggests a familiarity with DoD requirements, procurement processes, and performance expectations. Analyzing their past performance on similar value or duration contracts, particularly those involving component supply or MRO, would provide further insight into their reliability and capability. Past performance reviews and contract close-out data from the DoD would be crucial for a comprehensive assessment.

How does the $113.4 million contract value compare to similar aircraft parts procurements?

Comparing the $113.4 million contract value requires access to a database of similar procurements. However, for a contract spanning nearly 10 years (2951 days), the average annual value is approximately $14.2 million. This figure needs to be benchmarked against the average annual spend for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' by the DoD or other agencies for comparable aircraft types or systems. Factors such as the criticality of the parts, the number of aircraft supported, and the complexity of the manufacturing process would influence this comparison. A higher average annual spend might indicate a more complex or critical supply chain requirement.

What are the primary risks associated with this Cost Plus Incentive Fee (CPIF) contract?

The primary risks with a CPIF contract revolve around cost control and defining appropriate performance metrics. For the government, there's a risk that the final cost could exceed initial estimates if the target cost is set too high or if unforeseen issues arise that drive up expenses, even with incentive sharing. For the contractor, the risk lies in not meeting the performance targets, which would reduce their fee. Effective risk mitigation requires clear, measurable, and achievable performance metrics, robust government oversight of costs and progress, and a well-defined target cost that reflects realistic expectations.

How effective is the competition level in ensuring fair pricing for taxpayers?

The fact that this contract was awarded under full and open competition with six bidders is a strong indicator of effective price discovery. A larger pool of qualified bidders generally increases the likelihood that the government receives competitive pricing. The presence of six bidders suggests that the market is sufficiently robust and that multiple companies possess the capability to fulfill the contract requirements. This competitive pressure incentivizes each bidder to offer their best possible price and terms to secure the award, thereby benefiting taxpayers.

What is the historical spending pattern for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' by the DoD?

Historical spending patterns for 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' by the DoD are typically substantial, reflecting the continuous need to maintain and modernize a vast fleet of aircraft. This category encompasses a wide range of components, from simple fasteners to complex avionic parts. Annual spending can fluctuate based on major modernization programs, depot maintenance cycles, and operational demands. Analyzing historical data would reveal trends, identify peak spending periods, and highlight key contractors or sub-sectors within this manufacturing domain. This context is crucial for understanding the significance of the $113.4 million award.

What are the implications of the contract duration (2951 days) on long-term supply chain stability?

A contract duration of 2951 days (approximately 8 years) provides significant long-term supply chain stability for the specified aircraft parts. This extended period allows for consistent production planning, inventory management, and delivery schedules, reducing the risk of supply disruptions for the DoD. For the contractor, it offers a predictable revenue stream, potentially encouraging investment in specialized manufacturing capabilities. However, it also means the DoD is committed to this supplier for an extended period, necessitating careful monitoring to ensure continued performance and adaptability to potential future technological changes or requirements.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Other Aircraft Parts and Auxiliary Equipment Manufacturing

Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 6

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

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

Address: 2116 ARLINGTON DOWNS ROAD, ARLINGTON, TX, 76011

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $113,601,756

Exercised Options: $113,188,130

Current Obligation: $113,368,660

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: F3365701D2077

IDV Type: IDC

Timeline