DoD's B-2 Training System contract awarded to CAE USA INC. for over $302M, spanning a decade

Contract Overview

Contract Amount: $302,046,698 ($302.0M)

Contractor: CAE USA Inc.

Awarding Agency: Department of Defense

Start Date: 2009-04-14

End Date: 2019-12-31

Contract Duration: 3,913 days

Daily Burn Rate: $77.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 3

Pricing Type: COST PLUS INCENTIVE FEE

Sector: Defense

Official Description: B-2 TRAINING SYSTEM

Place of Performance

Location: ARLINGTON, TARRANT County, TEXAS, 76011

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $302.0 million to CAE USA INC. for work described as: B-2 TRAINING SYSTEM Key points: 1. Contract value exceeds $302 million, indicating a significant investment in B-2 bomber training capabilities. 2. Awarded through full and open competition, suggesting a robust market for training system providers. 3. The contract duration of nearly 11 years points to long-term strategic importance and sustained need. 4. Performance-based contract type (Cost Plus Incentive Fee) aims to align contractor incentives with government objectives. 5. The primary contractor, CAE USA INC., is a key player in simulation and training systems. 6. The contract falls under the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' NAICS code, highlighting its specialized nature.

Value Assessment

Rating: good

The contract value of over $302 million for a decade-long training system appears substantial but requires benchmarking against similar large-scale defense training programs. Given the specialized nature of B-2 training, direct comparisons may be limited. The Cost Plus Incentive Fee (CPIF) structure suggests an effort to manage costs while incentivizing performance, which is a common and generally effective approach for complex, long-term projects. Without specific cost breakdowns or comparable unit costs, a definitive value-for-money assessment is challenging, but the competitive award process provides some assurance of fair pricing.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under a full and open competition, indicating that multiple vendors were likely invited to bid. The presence of 3 bids suggests a healthy level of competition for this specialized defense training system. A competitive process generally leads to better price discovery and encourages contractors to offer their best value propositions. The fact that a definitive contract was awarded after competition implies that the government received acceptable proposals that met its requirements and budget.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure the best possible price and performance for a critical defense training system, preventing potential overspending associated with sole-source awards.

Public Impact

The primary beneficiaries are the U.S. Air Force pilots and aircrew who will receive advanced training on the B-2 Spirit stealth bomber. The contract delivers essential training services and systems necessary for maintaining the operational readiness of the B-2 fleet. The geographic impact is primarily centered around the B-2 bomber's operational bases, likely Whiteman Air Force Base in Missouri. Workforce implications include specialized roles for instructors, technicians, and support staff involved in operating and maintaining the training systems.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration could lead to scope creep or evolving requirements that may not be fully captured in initial pricing.
CPIF contracts, while incentivizing, can still result in costs exceeding initial estimates if not managed rigorously.
Dependence on a single contractor for such a critical system could pose risks if the contractor faces financial or operational difficulties.

Positive Signals

Awarded through full and open competition, indicating a competitive market and potentially better value.
The use of a CPIF contract structure aims to align contractor performance with government objectives and cost control.
The contractor, CAE USA INC., has a strong track record in simulation and training, suggesting technical capability.
The contract's long duration implies a stable, long-term commitment to B-2 training, ensuring continuity.

Sector Analysis

The defense simulation and training market is a significant segment within the aerospace and defense industry. This contract for the B-2 Training System fits within the broader category of specialized aircraft support and training solutions. The market is characterized by high barriers to entry due to technological complexity and stringent security requirements. Spending in this sector is driven by the need to maintain pilot proficiency, introduce new aircraft capabilities, and ensure readiness for complex missions. Comparable spending benchmarks would involve other large-scale simulation and training programs for advanced military platforms.

Small Business Impact

This contract was awarded under full and open competition and does not indicate any specific small business set-aside provisions. While the prime contractor is CAE USA INC., a large entity, there may be opportunities for small businesses to participate as subcontractors. The extent of small business subcontracting would depend on CAE USA INC.'s procurement practices and the availability of specialized small business capabilities relevant to the training system's components or services. Further analysis would be needed to determine the specific impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Air Force contracting and program management offices. Accountability measures are embedded within the Cost Plus Incentive Fee (CPIF) structure, which links contractor payment to performance metrics and cost targets. Transparency is generally maintained through contract reporting requirements and potential reviews by the Government Accountability Office (GAO) or the Department of Defense Inspector General (IG) if issues arise. The contract's long duration necessitates ongoing monitoring to ensure continued compliance and effectiveness.

Related Government Programs

B-2 Spirit Program
Air Force Training Systems
Defense Simulation and Training Contracts
Aircraft Maintenance and Support Services

Risk Flags

Long-term contract duration
Potential for cost overruns in CPIF contracts
Dependence on a single prime contractor for critical training

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $302.0 million to CAE USA INC.. B-2 TRAINING SYSTEM

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 $302.0 million.

What is the period of performance?

Start: 2009-04-14. End: 2019-12-31.

What is CAE USA INC.'s track record with the Department of Defense, particularly in simulation and training systems?

CAE USA INC., a subsidiary of CAE Inc., has a well-established history of providing simulation and training solutions to the U.S. military. They are known for developing and manufacturing flight simulators, virtual reality training systems, and other advanced training devices for various aircraft platforms. Their portfolio includes contracts for fighter jets, helicopters, and transport aircraft, demonstrating a broad capability. For the Department of Defense, CAE has been a consistent provider of training technologies, often securing contracts through competitive bidding processes. Their experience with complex systems and long-term support contracts suggests a strong understanding of military training requirements and the ability to deliver reliable solutions. Specific to bomber training, their expertise would be highly relevant for systems like the B-2 training program.

How does the $302 million contract value compare to other large-scale defense training system contracts?

The $302 million contract value for the B-2 Training System is substantial, reflecting the complexity and long-term nature of training for a strategic asset like the B-2 bomber. To benchmark this, one would look at similar large-scale simulation and training programs for advanced platforms. For instance, contracts for training systems for the F-35 Joint Strike Fighter, the B-1 Lancer, or major helicopter fleets often run into hundreds of millions, sometimes billions, over their lifecycle. The B-2 training system, given its specialized nature and the platform's strategic importance, likely represents a significant but not necessarily outlier investment within the realm of high-end military simulation. The decade-long duration also contributes to the overall value, spreading the cost over a longer period compared to shorter-term procurements.

What are the primary risks associated with a decade-long Cost Plus Incentive Fee (CPIF) contract for a training system?

A decade-long CPIF contract for a training system presents several risks. Firstly, the extended duration increases the potential for requirement evolution; the B-2's operational needs or technological landscape might change, necessitating costly modifications or scope adjustments. Secondly, while CPIF aims to control costs by incentivizing performance and cost efficiency, there's still a risk of cost overruns if the baseline estimates are inaccurate or if unforeseen technical challenges arise. The government bears a significant portion of the cost risk. Thirdly, contractor performance degradation over such a long period is a concern; maintaining consistent quality and responsiveness requires robust oversight. Finally, dependence on a single contractor for such a critical system can create vulnerabilities if the contractor faces financial instability, mergers, or strategic shifts.

How effective is the Cost Plus Incentive Fee (CPIF) structure in ensuring value for money for this B-2 training system?

The Cost Plus Incentive Fee (CPIF) structure is designed to promote value for money by aligning the contractor's financial interests with the government's objectives. In this B-2 training system contract, the CPIF likely sets target costs and target profits, with provisions for adjusting the fee based on performance against specific metrics (e.g., system availability, training effectiveness, cost savings). This incentivizes the contractor, CAE USA INC., to not only complete the work but to do so efficiently and effectively. If the contractor performs better than targets (e.g., comes in under budget or exceeds performance benchmarks), their fee increases; conversely, poor performance can reduce their fee. This structure encourages proactive problem-solving and cost management, theoretically leading to better value than a simple cost-plus contract, provided the incentive targets are well-defined and measurable.

What are the historical spending patterns for B-2 related training systems or support contracts?

Historical spending on B-2 related training systems and support contracts would likely show a consistent, albeit specialized, investment over the aircraft's operational life. As a premier strategic asset, the B-2 Spirit has required continuous investment in training infrastructure to ensure aircrew proficiency and mission readiness. Early spending would have focused on the initial development and procurement of training devices. Subsequent spending over decades would cover sustainment, upgrades, modifications to reflect evolving threats or tactics, and potentially new training methodologies. While specific historical dollar figures for B-2 training alone are not readily available in this dataset, the overall lifecycle cost of the B-2 program is substantial, and training is a critical component. The $302 million awarded over approximately 10 years suggests a significant but sustained level of funding for this specific training system contract.

What is the significance of the NAICS code 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' for this contract?

The North American Industry Classification System (NAICS) code 336413, 'Other Aircraft Parts and Auxiliary Equipment Manufacturing,' indicates the primary industry classification for the goods or services procured under this contract. While this contract is for a 'Training System,' the NAICS code suggests that the procurement may involve the manufacturing or integration of specialized hardware components, simulators, or related equipment that fall under this manufacturing category. It implies that the contractor is responsible for producing or assembling physical or complex integrated systems that are considered 'parts' or 'auxiliary equipment' for aircraft operations, even if the end product is a training solution. This classification helps in categorizing government spending and understanding the industrial base supporting defense procurements.

Industry Classification

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

Product/Service Code: AEROSPACE CRAFT AND STRUCTURAL COMPONENTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 3

Pricing Type: COST PLUS INCENTIVE FEE (V)

Evaluated Preference: NONE

Contractor Details

Parent Company: CAE Inc

Address: 2200 ARLINGTON DOWNS RD, ARLINGTON, TX, 76011

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

Financial Breakdown

Contract Ceiling: $305,823,025

Exercised Options: $303,309,035

Current Obligation: $302,046,698

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline