DoD's $486M Engineering Services Contract with CAE USA Inc. awarded in 1999, spanning over a decade

Contract Overview

Contract Amount: $486,085,495 ($486.1M)

Contractor: CAE USA Inc.

Awarding Agency: Department of Defense

Start Date: 1999-10-26

End Date: 2011-03-31

Contract Duration: 4,174 days

Daily Burn Rate: $116.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIXED PRICE INCENTIVE

Sector: Defense

Place of Performance

Location: ARLINGTON, TARRANT County, TEXAS, 76011

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $486.1 million to CAE USA INC. for work described as: Key points: 1. Contract value represents significant long-term investment in engineering support. 2. Sole awardee suggests potential for concentrated relationship or specialized capabilities. 3. Long duration indicates sustained need and potential for evolving requirements. 4. Fixed Price Incentive contract type aims to balance cost control with performance. 5. Awarded by Department of the Army, highlighting defense sector focus. 6. Geographic location in Texas may point to specific operational or training needs.

Value Assessment

Rating: fair

The total award amount of $486 million over a 12-year period averages approximately $40.5 million annually. Benchmarking this against similar large-scale engineering services contracts is challenging without more granular data on the specific services provided. The Fixed Price Incentive (FPI) contract type suggests an attempt to manage costs while incentivizing performance, but the overall value indicates a substantial commitment. Without comparative data on unit costs or specific deliverables, a definitive value-for-money assessment is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple bidders had the opportunity to submit proposals. The presence of two bids suggests a competitive process, though the exact number of interested parties and the rigor of the evaluation are not detailed. A competitive award generally supports better price discovery and potentially more favorable terms for the government.

Taxpayer Impact: Full and open competition, even with a limited number of bids, generally benefits taxpayers by encouraging a wider range of offers and potentially driving down costs compared to sole-source procurements.

Public Impact

The Department of the Army benefits from sustained engineering expertise for its operations. Services likely support critical military readiness and infrastructure maintenance. Workforce implications include employment for engineers and technical specialists. Geographic impact is concentrated in Texas, potentially supporting regional defense installations or training centers.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Long contract duration could lead to scope creep or outdated technology if not actively managed.
Fixed Price Incentive contracts can be complex to administer and may require careful monitoring of performance metrics.
Reliance on a single contractor for an extended period might reduce future competitive pressure.

Positive Signals

Full and open competition suggests a robust initial selection process.
The FPI contract structure aims to align contractor incentives with government objectives.
Sustained award indicates contractor performance met or exceeded expectations over time.

Sector Analysis

This contract falls within the Engineering Services sector (NAICS 541330), a critical component of the broader professional, scientific, and technical services industry. This sector supports a wide range of government functions, particularly in defense, infrastructure, and research. The market is characterized by a mix of large, established firms and specialized smaller businesses. The substantial value of this contract suggests it represents a significant portion of the Army's needs in this area, potentially benchmarking against other large-scale engineering support contracts within the federal government.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses (ss=false, sb=false). While CAE USA Inc. is the prime contractor, there is no explicit information on subcontracting plans or performance related to small business participation. Without this data, it's difficult to assess the impact on the small business ecosystem, though large prime contracts often involve subcontracting opportunities.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. The Fixed Price Incentive structure necessitates monitoring of performance metrics and cost targets. Transparency is generally facilitated through contract award databases like FPDS. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Department of Defense Engineering Services
Army Combat Support Services
Long-Term Professional Services Contracts
Fixed Price Incentive Contracts
Defense Infrastructure Support

Risk Flags

Long contract duration may increase risk of scope creep or obsolescence.
FPI contract type requires careful administration and performance monitoring.
Limited number of bids (2) warrants scrutiny of competition effectiveness.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $486.1 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 (Department of the Army).

What is the total obligated amount?

The obligated amount is $486.1 million.

What is the period of performance?

Start: 1999-10-26. End: 2011-03-31.

What specific engineering services were provided under this contract?

The provided data identifies the contract under NAICS code 541330 for Engineering Services, awarded to CAE USA INC. by the Department of the Army. However, it does not detail the specific types of engineering services rendered. These could range broadly from design and development, systems engineering, technical support, testing and evaluation, to infrastructure planning and maintenance, depending on the Army's operational requirements at the time. Further investigation into contract line item numbers (CLINs) or task orders would be necessary to ascertain the precise nature of the services.

How does the $486 million total award compare to similar engineering services contracts for the Department of the Army?

The $486 million total award over approximately 12 years represents a significant, long-term investment in engineering services. Annualized, this is roughly $40.5 million per year. Comparing this to similar contracts requires access to a broader dataset of Army engineering procurements during the late 1990s and 2000s. However, for a single, sustained engineering support requirement over such a long period, this value is substantial and suggests a critical, ongoing need. It is likely comparable to other major support contracts for large weapon systems or infrastructure projects, but specific benchmarks depend heavily on the scope and complexity of services.

What are the primary risks associated with a Fixed Price Incentive (FPI) contract of this magnitude and duration?

The primary risks with an FPI contract of this scale and duration include: 1) Cost Overruns: While the incentive structure aims to control costs, if the target cost is set too high or performance targets are not met efficiently, the government could end up paying more than anticipated. 2) Performance Issues: If the contractor fails to meet the performance targets tied to the incentive, the government may not realize the full expected benefits, despite potentially paying a higher price. 3) Administrative Burden: FPI contracts require complex tracking of costs, performance metrics, and incentive fee calculations, demanding significant oversight resources from the government. 4) Contractor Lock-in: The long duration and specialized nature of services could make it difficult and costly to switch contractors, potentially reducing future bargaining power.

What was CAE USA Inc.'s track record prior to or around the time of this award in 1999?

Information on CAE USA Inc.'s specific track record immediately preceding or around the 1999 award date is not detailed in the provided data. CAE is known globally for its simulation and training systems, particularly in aviation and defense. However, the scope of this particular $486 million contract suggests engineering services beyond simulation. A comprehensive assessment would require reviewing their contract history, past performance evaluations, and financial stability reports from that era to understand their experience with large-scale government engineering contracts and their overall reputation within the defense sector at that time.

How did the 'full and open competition' process likely influence the final price and terms for this contract?

Full and open competition, by definition, allows any responsible source to submit an offer. This broadens the potential pool of contractors, increasing the likelihood of receiving multiple competitive bids. For this $486 million contract, even if only two bids were received, the competitive pressure likely encouraged both bidders to offer their best pricing and terms to secure the award. This process generally leads to a more favorable price for the government compared to sole-source or limited competition scenarios, as contractors must differentiate themselves on price, technical merit, and overall value proposition.

What are the potential implications of this contract being awarded in Texas (st=TX)?

The award being associated with Texas (st=TX) could imply several things. Texas hosts numerous major Army installations (e.g., Fort Hood, Fort Bliss, Joint Base San Antonio) and significant defense industry presence. The contract may have been awarded to support operations, training, or infrastructure at these Texas-based facilities. Alternatively, CAE USA Inc. might have a significant operational presence or headquarters in Texas, making it a logical location for contract administration or service delivery. This geographic linkage can sometimes influence local economies through job creation and subcontracting.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services

Product/Service Code: TRAINING AIDS AND DEVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Offers Received: 2

Pricing Type: FIXED PRICE INCENTIVE (L)

Contractor Details

Parent Company: L3 Technologies, Inc. (UEI: 008898884)

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

Business Categories: Category Business, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline