DoD's $545M Aircraft Parts Contract with CAE USA Raises Questions on Value and Competition

Contract Overview

Contract Amount: $545,323,008 ($545.3M)

Contractor: CAE USA, Inc.

Awarding Agency: Department of Defense

Start Date: 2010-08-31

End Date: 2021-07-31

Contract Duration: 3,987 days

Daily Burn Rate: $136.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: OTHER AIRCRAFT PART AND AUXILIARY EQUIPMENT MANUFACTURING

Place of Performance

Location: TAMPA, HILLSBOROUGH County, FLORIDA, 33634

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $545.3 million to CAE USA, INC. for work described as: OTHER AIRCRAFT PART AND AUXILIARY EQUIPMENT MANUFACTURING Key points: 1. Significant spending on aircraft parts manufacturing highlights a critical defense sector. 2. CAE USA, a major player, faces scrutiny over pricing and competition effectiveness. 3. The contract's long duration and firm fixed-price nature may impact cost control. 4. Lack of small business participation warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: questionable

The contract's total value of over $545 million is substantial. Benchmarking against similar contracts for aircraft parts manufacturing is difficult without more granular data on specific components and services provided. The firm fixed-price structure suggests an attempt at cost certainty, but the overall value assessment requires deeper analysis of the delivered goods and services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating a competitive bidding process. However, the long duration and the specific nature of the parts may have limited the number of viable bidders. The impact on price discovery is positive in principle due to competition, but the final price achieved needs to be evaluated against market benchmarks.

Taxpayer Impact: Taxpayers are impacted by the significant expenditure on defense-related aircraft parts. While competition aims for fair pricing, the scale and duration of this contract necessitate careful oversight to ensure value for money.

Public Impact

Ensures continued availability of critical aircraft parts for the Air Force. Supports a key manufacturing sector within the defense industrial base. Potential for job creation and economic activity in Florida. Long-term commitment may provide stability for suppliers and subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of small business participation
Long contract duration
Potential for cost overruns despite fixed price

Positive Signals

Awarded under full and open competition
Supports critical defense capabilities

Sector Analysis

This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, a vital component of the aerospace and defense industry. Spending in this sector is often driven by military readiness requirements and technological advancements. Benchmarks are difficult to establish without specific part details, but large-scale contracts like this represent significant government investment.

Small Business Impact

The data indicates that small business participation was not a stated factor in this contract (ss: false, sb: false). This suggests that prime contractors may not have been required to subcontract with small businesses, or that opportunities were not effectively identified or pursued. Further investigation into subcontracting plans and actual participation is warranted.

Oversight & Accountability

Oversight of this contract would involve monitoring performance, delivery schedules, and adherence to the firm fixed-price terms. The Department of Defense, specifically the Air Force, is responsible for ensuring accountability. The long duration necessitates continuous oversight to manage risks and ensure continued value.

Related Government Programs

Other Aircraft Parts and Auxiliary Equipment Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Potential for cost creep despite firm fixed price
Limited visibility into specific parts and pricing
Lack of demonstrated small business utilization
Long contract duration may reduce flexibility
Dependence on a single contractor for critical parts

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $545.3 million to CAE USA, INC.. OTHER AIRCRAFT PART AND AUXILIARY EQUIPMENT MANUFACTURING

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 $545.3 million.

What is the period of performance?

Start: 2010-08-31. End: 2021-07-31.

What specific aircraft parts and auxiliary equipment were procured under this contract, and how do their costs compare to industry standards for similar items?

The provided data lacks specificity regarding the exact parts and equipment. To assess value, a detailed breakdown of procured items is necessary. Comparing unit costs against industry benchmarks for comparable components, considering factors like material, complexity, and quantity, would reveal if the $545 million expenditure represents fair market value or potential overpayment.

Given the 'full and open competition' award, what was the level of actual competition, and did it effectively drive down prices for these specialized aircraft parts?

While the award mechanism was 'full and open,' the actual number of bids received and the competitive range are not detailed. Specialized aircraft parts may inherently limit the number of capable bidders. Evaluating the price discovery requires knowing the number of competitors and the variance in their proposals to determine if the competition was robust enough to secure optimal pricing for the government.

What is the long-term effectiveness of this contract in ensuring the availability and readiness of Air Force aircraft, considering its duration and the nature of the parts supplied?

The contract's extended duration (nearly 11 years) suggests a strategic need for a consistent supply of specific aircraft parts. Its effectiveness hinges on CAE USA's ability to meet demand reliably and maintain quality standards throughout the period. Assessing effectiveness requires tracking delivery performance, part reliability, and the impact on aircraft operational readiness metrics.

Industry Classification

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

Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

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

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

Financial Breakdown

Contract Ceiling: $643,494,104

Exercised Options: $581,556,091

Current Obligation: $545,323,008

Actual Outlays: $8,993,632

Subaward Activity

Number of Subawards: 81

Total Subaward Amount: $35,492,811

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline