DoD's $22.9M contract for aircraft parts awarded to CAE USA INC. shows limited competition

Contract Overview

Contract Amount: $22,909,375 ($22.9M)

Contractor: CAE USA Inc.

Awarding Agency: Department of Defense

Start Date: 2007-06-28

End Date: 2013-12-31

Contract Duration: 2,378 days

Daily Burn Rate: $9.6K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: GREECE, PEACE XENIA IV

Place of Performance

Location: ARLINGTON, TARRANT County, TEXAS, 76011

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $22.9 million to CAE USA INC. for work described as: GREECE, PEACE XENIA IV Key points: 1. The contract's value of $22.9 million over approximately six years suggests a significant investment in specialized aircraft components. 2. Awarded as 'NOT AVAILABLE FOR COMPETITION', this indicates potential sole-source justifications or limited market availability for the required parts. 3. The duration of the contract (2378 days) points to a long-term need for these specific aircraft parts. 4. The contract was awarded to CAE USA INC., a company with a presence in Texas. 5. The Public Sector Code (PSC) is not specified, making direct comparisons to similar spending categories challenging. 6. The contract type is Firm Fixed Price, which shifts cost risk to the contractor.

Value Assessment

Rating: fair

Benchmarking the value of this contract is difficult without specific details on the aircraft parts and their market rates. The $22.9 million over nearly six years averages to approximately $3.8 million annually. Without comparable contracts or detailed specifications of the parts, assessing value for money is challenging. The firm fixed-price nature provides cost certainty but doesn't inherently guarantee the best price without competitive pressure.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded under a 'NOT AVAILABLE FOR COMPETITION' designation, strongly suggesting a sole-source procurement. This typically occurs when only one responsible source can provide the required supplies or services, or in cases of urgent need where competition is impractical. The lack of competition means that price discovery through market forces was bypassed, potentially leading to higher costs for the government.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive bidding. Without multiple offers, the government lacked the leverage to negotiate the lowest possible price.

Public Impact

The primary beneficiaries are likely the Department of the Air Force and potentially specific aircraft maintenance units that rely on these parts. The services delivered are the provision of specialized aircraft parts, crucial for maintaining the operational readiness of Air Force assets. The geographic impact is centered around the operational bases of the Air Force units utilizing these parts, with the contractor based in Texas. Workforce implications may include specialized manufacturing or logistics roles within CAE USA INC. and its supply chain.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition raises concerns about potential overpricing and reduced value for taxpayer funds.
The 'NOT AVAILABLE FOR COMPETITION' status requires thorough justification to ensure no viable alternatives were overlooked.
Limited transparency on the specific parts procured makes independent value assessment difficult.

Positive Signals

Firm Fixed Price contract provides cost predictability for the government.
Award to an established contractor like CAE USA INC. may indicate reliability in supply.
The contract duration suggests a stable and predictable supply chain for essential components.

Sector Analysis

The aerospace and defense sector is characterized by high technological complexity and significant government procurement. Contracts for aircraft parts fall under the broader 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' industry. This segment is critical for maintaining military readiness and involves specialized manufacturing processes. Spending in this area is often driven by specific platform needs and long-term sustainment strategies. Benchmarking requires detailed knowledge of specific aircraft models and their component requirements.

Small Business Impact

There is no indication that this contract included small business set-asides. The award to CAE USA INC., a potentially larger entity, suggests that subcontracting opportunities for small businesses might exist, but this is not explicitly detailed in the provided data. The absence of set-asides means that the direct impact on the small business ecosystem for this specific procurement is likely minimal unless significant subcontracting occurs.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Air Force's contracting and program management offices. Accountability measures are inherent in the Firm Fixed Price structure, requiring the contractor to deliver specified parts. Transparency is limited by the sole-source nature and the lack of detailed public information on the specific parts. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Aircraft Parts Procurement
Defense Logistics and Sustainment
Air Force Maintenance, Repair, and Overhaul (MRO)
Aerospace Manufacturing Contracts

Risk Flags

Sole-source award
Lack of competition
Limited transparency on specific parts

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $22.9 million to CAE USA INC.. GREECE, PEACE XENIA IV

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 $22.9 million.

What is the period of performance?

Start: 2007-06-28. End: 2013-12-31.

What specific aircraft platforms or systems are these parts intended for?

The provided data does not specify the exact aircraft platforms or systems for which these parts are intended. The National Industrial Classification (NAICS) code '336413 - Other Aircraft Parts and Auxiliary Equipment Manufacturing' indicates a broad category. To understand the strategic importance and value, knowing the specific platforms (e.g., fighter jets, transport planes, bombers) and the criticality of the parts (e.g., engine components, avionics, structural elements) would be essential. This information would allow for a more precise assessment of the contract's role in maintaining Air Force readiness and operational capabilities.

What was the justification for awarding this contract on a sole-source basis?

The contract was awarded under the 'NOT AVAILABLE FOR COMPETITION' designation, which strongly implies a sole-source justification. Common reasons for sole-source awards include unique technical capabilities possessed by only one contractor, urgent and compelling needs where competition is impractical, or when the government has already made substantial investments in a particular system that necessitates proprietary parts or services from the original manufacturer. A detailed justification document, typically required for such awards, would outline the specific rationale, such as the unavailability of alternative sources or the need for specialized expertise only CAE USA INC. possesses for the PEACE XENIA IV program.

How does the per-unit cost of these parts compare to market rates or similar government contracts?

Without specific details on the individual parts being procured under this $22.9 million contract, a direct per-unit cost comparison to market rates or similar government contracts is not feasible. The contract covers a range of 'Other Aircraft Parts and Auxiliary Equipment.' To perform such a comparison, one would need to identify the specific part numbers, their technical specifications, and the quantities ordered. Subsequently, these would need to be benchmarked against publicly available pricing data for identical or comparable parts from other suppliers or against historical contract data for similar items procured through competitive means.

What is CAE USA INC.'s track record with the Department of Defense, particularly for aircraft parts?

CAE USA INC. has a significant track record with the Department of Defense, often involved in simulation, training, and aviation support services. While this specific contract focuses on parts manufacturing/supply, the company's broader engagement with the DoD suggests familiarity with military requirements and procurement processes. A deeper dive into their contract history would reveal the volume and nature of previous awards, performance ratings, and any past issues related to quality, delivery, or cost. Their established presence implies a level of capability and reliability, though specific performance on this particular parts contract would require more granular data.

What is the historical spending trend for similar aircraft parts by the Department of the Air Force?

Historical spending trends for similar aircraft parts by the Department of the Air Force are substantial, given the size and operational tempo of the Air Force fleet. The category 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' (NAICS 336413) represents a significant portion of defense logistics and sustainment spending. Annual outlays can range from hundreds of millions to billions of dollars, depending on modernization programs, fleet age, and operational demands. Analyzing past spending patterns for specific aircraft types or part categories would reveal fluctuations, identify major suppliers, and highlight the government's long-term investment in maintaining its aviation assets.

What are the potential risks associated with a sole-source award for critical aircraft components?

The primary risks associated with a sole-source award for critical aircraft components include inflated pricing due to lack of competition, potential for complacency from the sole provider leading to quality or delivery issues, and a lack of innovation. Taxpayers are exposed to paying a premium without the benefit of competitive market forces driving down costs. Furthermore, reliance on a single source can create supply chain vulnerabilities; if the sole provider experiences production issues, financial instability, or ceases operations, the government may face significant operational disruptions and difficulties in finding alternatives, especially if the parts are proprietary or require specialized manufacturing knowledge.

Industry Classification

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

Product/Service Code: TRAINING AIDS AND DEVICES

Competition & Pricing

Extent Competed: NOT AVAILABLE FOR COMPETITION

Solicitation Procedures: ONLY ONE SOURCE

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, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $24,161,036

Exercised Options: $24,161,036

Current Obligation: $22,909,375

Contract Characteristics

Cost or Pricing Data: YES

Timeline