DoD's $202M Flight Training Contract Awarded to CAE USA, Inc. for MQ-1/9 Operations

Contract Overview

Contract Amount: $202,220,593 ($202.2M)

Contractor: CAE USA, Inc.

Awarding Agency: Department of Defense

Start Date: 2013-07-31

End Date: 2019-04-30

Contract Duration: 2,099 days

Daily Burn Rate: $96.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: IGF::OT::IGF MQ-1/9 CAT/CWD CONTRACT AWARD FY13-FY18.

Place of Performance

Location: HOLLOMAN AFB, OTERO County, NEW MEXICO, 88330

State: New Mexico Government Spending

Plain-Language Summary

Department of Defense obligated $202.2 million to CAE USA, INC. for work described as: IGF::OT::IGF MQ-1/9 CAT/CWD CONTRACT AWARD FY13-FY18. Key points: 1. Contract value of over $202 million over six years indicates significant investment in specialized training. 2. Full and open competition suggests a robust bidding process, potentially leading to competitive pricing. 3. The contract's duration and scope present moderate performance and delivery risks. 4. This award falls within the broader context of military aviation training modernization efforts. 5. The sector is characterized by high barriers to entry due to specialized equipment and expertise. 6. The contract's fixed-price nature aims to control costs for the government.

Value Assessment

Rating: good

The contract value of $202.2 million over approximately six years for MQ-1/9 flight training appears reasonable given the specialized nature of the services. Benchmarking against similar large-scale, long-term military training contracts is challenging due to unique platform requirements. However, the fixed-price contract type suggests an effort to establish clear cost expectations. The number of bids received (6) in a full and open competition provides some assurance of market interest and a degree of price discovery.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with six bids received. This indicates a healthy level of market interest and a competitive environment for this specialized training service. The multiple bidders likely contributed to price discovery and allowed the Department of the Air Force to select the most advantageous offer based on technical merit and cost. The open competition is a positive indicator for achieving value for taxpayer dollars.

Taxpayer Impact: The full and open competition process is beneficial for taxpayers as it encourages multiple companies to bid, driving down prices and ensuring the government receives competitive rates for essential services like flight training.

Public Impact

The primary beneficiaries are the U.S. Air Force personnel requiring training on MQ-1/9 aircraft, enhancing their operational readiness. The services delivered include crucial flight training, simulator operations, and potentially curriculum development for unmanned aerial systems. The contract is geographically focused on New Mexico, where the training is likely conducted. This contract supports specialized aviation jobs within the defense sector, particularly in training and simulation roles.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for scope creep if training requirements evolve beyond the initial MQ-1/9 platform.
Dependency on CAE USA, Inc. for critical training services could pose a risk if performance issues arise.
Ensuring consistent quality of training across all instructors and simulators over the contract's duration.

Positive Signals

Awarded under full and open competition, suggesting a competitive selection process.
Fixed-price contract type helps to control costs and provides budget certainty.
The contractor, CAE USA, Inc., likely possesses specialized expertise in aviation training.
The contract duration allows for long-term planning and development of training programs.

Sector Analysis

The defense training sector is a significant market within the broader aerospace and defense industry. It encompasses simulation, instruction, and curriculum development for military personnel. Spending in this area is driven by the need for continuous modernization of military platforms and the requirement for highly skilled operators. This contract for MQ-1/9 training fits within the niche of unmanned aerial system (UAS) operations training, a rapidly growing segment of defense spending.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). While CAE USA, Inc. is the prime contractor, there is potential for subcontracting opportunities for small businesses that can provide supporting services or components. However, the primary focus of this large contract is likely on specialized capabilities held by larger firms. Further analysis would be needed to determine the extent of small business participation through subcontracting.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of the Air Force's contracting and program management offices. The contract type (Definitive Contract) and fixed-price nature suggest a degree of cost control. Transparency is generally maintained through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

MQ-1 Predator Training
MQ-9 Reaper Training
Unmanned Aerial System Training
Air Force Simulation and Training Programs
Defense Contractor Training Services

Risk Flags

Potential for training obsolescence due to evolving UAS technology.
Dependency on a single contractor for critical training services.
Ensuring consistent training quality over a multi-year contract.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $202.2 million to CAE USA, INC.. IGF::OT::IGF MQ-1/9 CAT/CWD CONTRACT AWARD FY13-FY18.

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 Air Force).

What is the total obligated amount?

The obligated amount is $202.2 million.

What is the period of performance?

Start: 2013-07-31. End: 2019-04-30.

What is CAE USA, Inc.'s track record with similar defense training contracts?

CAE USA, Inc. has a substantial track record in providing simulation and training solutions for various defense applications. They are a well-established player in the defense training market, known for developing and delivering training systems for aircraft, including simulators and integrated training environments. Their experience often spans multiple aircraft types and mission profiles for different branches of the U.S. military and international partners. Specific to unmanned systems, CAE has been involved in providing training solutions for platforms similar to the MQ-1 and MQ-9. The company's history suggests a capacity to handle large, complex training programs, which is crucial for a contract of this magnitude and duration. Their performance on previous contracts, while not detailed here, would be a key factor in the Air Force's decision-making process.

How does the $202.2 million contract value compare to historical spending on MQ-1/9 training?

The $202.2 million awarded to CAE USA, Inc. represents a significant investment over the contract's approximately six-year period (FY13-FY19). Historical spending on MQ-1/9 training would likely show fluctuations based on operational tempo, fleet size, and technological advancements. Without specific historical data for this exact training service, a direct comparison is difficult. However, the sustained investment over multiple fiscal years suggests a consistent need for these training capabilities. It's important to note that the MQ-1 program has been largely retired, with the MQ-9 Reaper being the primary focus for current operations and training. Therefore, this contract likely reflects a transition or continued support for both platforms during a period where the MQ-1 was still in service or being phased out, and the MQ-9 training was ramping up. The total value should be considered in the context of the evolving UAS landscape.

What are the primary risks associated with this specific flight training contract?

The primary risks associated with this flight training contract include performance risk, schedule risk, and potential obsolescence risk. Performance risk stems from ensuring the quality and effectiveness of the training delivered by CAE USA, Inc. over the contract's duration, especially concerning the complex systems of the MQ-1/9. Schedule risk could arise from delays in simulator availability, instructor scheduling, or curriculum updates, impacting pilot readiness. Given that the MQ-1 program is being retired, there's also an obsolescence risk associated with the training curriculum and simulators if not adequately updated to reflect the current operational focus on the MQ-9 and future UAS platforms. The fixed-price nature, while beneficial for cost control, can also incentivize the contractor to minimize costs, potentially impacting training quality if not carefully monitored.

How effective is full and open competition in ensuring value for taxpayer money in specialized defense training?

Full and open competition is generally considered the most effective method for ensuring value for taxpayer money in specialized defense training. By allowing all responsible sources to submit bids, it fosters a competitive environment where contractors are incentivized to offer their best technical solutions at the most competitive prices. The presence of multiple bidders, as seen with the six bids in this case, increases the likelihood of price discovery and prevents a single provider from dictating terms. This process allows the government to compare different approaches, technologies, and cost structures, ultimately selecting the offer that provides the best overall value. While specialized training has high barriers to entry, open competition ensures that the government explores the entire market capable of meeting the requirements, thereby maximizing the return on investment for defense spending.

What is the significance of the 'Flight Training' National બદل Code (NAICS) for this contract?

The NAICS code 611512, 'Flight Training,' is highly significant as it precisely categorizes the core service being procured under this contract. This code signifies that the contract is for establishments primarily engaged in providing flight training, including pilot training, flight instruction, and simulator training. For the Department of the Air Force, this means they are contracting with entities that specialize in the complex and regulated field of aviation education. This code helps in identifying relevant industry players, benchmarking contract values against similar services, and understanding the specific market dynamics. It confirms that the government is seeking expertise in educating and certifying personnel to operate specific aircraft, in this case, the MQ-1/9, which requires specialized knowledge and equipment.

What are the implications of the contract being a 'Definitive Contract' with a 'Firm Fixed Price' (FFP) type?

The contract being a 'Definitive Contract' signifies a standard, legally binding agreement with defined terms and conditions, as opposed to more flexible contract types like basic ordering agreements. The 'Firm Fixed Price' (FFP) type is particularly important for cost control. Under an FFP contract, the price is set and not subject to adjustment based on the contractor's cost experience. This places the risk of cost overruns squarely on the contractor, CAE USA, Inc. For the government, this provides budget certainty and predictability. It incentivizes the contractor to manage their costs efficiently and perform the work within the agreed-upon price. This contract structure is often preferred for services where the scope of work is well-defined and the potential for unforeseen cost increases is manageable, making it suitable for established training programs like MQ-1/9 operations.

Industry Classification

NAICS: Educational Services › Technical and Trade Schools › Flight Training

Product/Service Code: EDUCATION AND TRAINING › EDUCATION AND TRAINING SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: FA489013R0001

Offers Received: 6

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: CAE Inc (UEI: 202131454)

Address: 4908 TAMPA WEST BLVD, TAMPA, FL, 33634

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign-Owned and U.S.-Incorporated Business, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $204,373,214

Exercised Options: $202,223,215

Current Obligation: $202,220,593

Subaward Activity

Number of Subawards: 18

Total Subaward Amount: $38,125,364

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Timeline