DoD's $43.3M CF-18 Software Contract Awarded to CAE USA Inc. with Limited Competition

Contract Overview

Contract Amount: $43,278,155 ($43.3M)

Contractor: CAE USA Inc.

Awarding Agency: Department of Defense

Start Date: 2011-07-12

End Date: 2017-11-30

Contract Duration: 2,333 days

Daily Burn Rate: $18.6K/day

Competition Type: NOT AVAILABLE FOR COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CF-18 SOFTWARE BASELINE

Place of Performance

Location: ARLINGTON, TARRANT County, TEXAS, 76011

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $43.3 million to CAE USA INC. for work described as: CF-18 SOFTWARE BASELINE Key points: 1. The contract value of $43.3 million represents a significant investment in maintaining and upgrading critical aircraft software. 2. Limited competition for this contract raises questions about potential price inflation and the availability of alternative solutions. 3. The firm-fixed-price contract type suggests that the government has a clear understanding of the scope and aims to control costs. 4. The contract duration of over 3 years indicates a long-term need for these software services. 5. The award to a single contractor, CAE USA Inc., highlights potential single-source dependencies for this specific software. 6. The absence of small business set-aside flags suggests this contract was not specifically targeted to support small businesses.

Value Assessment

Rating: fair

Benchmarking the value of this $43.3 million contract is challenging without specific details on the software's complexity and the services provided. However, the limited competition suggests that the government may not have achieved the most competitive pricing possible. Comparing this to similar software sustainment contracts for military aircraft would be necessary for a more precise value assessment. The firm-fixed-price structure is a positive indicator for cost control, assuming the scope was well-defined.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was not competed on a full and open basis, indicating that the government likely relied on a sole-source or limited competition justification. The specific reasons for this limited competition are not detailed, but it typically arises when only one or a few contractors possess the necessary specialized skills, technology, or security clearances. The limited number of bidders can lead to less downward pressure on pricing.

Taxpayer Impact: Taxpayers may have paid a premium due to the restricted competition, as fewer bidders generally result in less aggressive pricing and potentially fewer innovative cost-saving proposals.

Public Impact

The primary beneficiaries are the U.S. Air Force units operating the CF-18 aircraft, ensuring their software systems remain functional and up-to-date. The contract delivers essential software maintenance, updates, and potentially development services for the CF-18's avionics and mission systems. The geographic impact is primarily within the operational theaters of the U.S. Air Force, with potential implications for bases where CF-18s are stationed. The contract supports specialized technical roles within CAE USA Inc., contributing to the aerospace and defense technology workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition may have resulted in higher costs for taxpayers.
Lack of transparency regarding the justification for limited competition.
Potential for vendor lock-in if CAE USA Inc. is the sole provider of this specialized software.
The contract's duration could indicate a long-term reliance on a single vendor for critical systems.

Positive Signals

Firm-fixed-price contract type helps manage cost certainty for the government.
CAE USA Inc. is an established defense contractor with relevant expertise.
The contract addresses a critical need for maintaining operational aircraft software.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft software sustainment. The market for military aircraft software is highly specialized, often dominated by a few key players due to stringent security, performance, and certification requirements. Spending in this area is crucial for maintaining the operational readiness and technological edge of military fleets. Comparable spending benchmarks would involve analyzing other sustainment contracts for similar fighter jet platforms.

Small Business Impact

The contract details indicate that this was not a small business set-aside, and there is no explicit mention of subcontracting goals for small businesses. This suggests that the primary awardee, CAE USA Inc., is likely a large business, and the contract's structure did not prioritize direct subcontracting opportunities for small businesses within the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), ensuring compliance with contract terms and performance standards. Accountability measures are embedded in the firm-fixed-price structure, which shifts performance risk to the contractor. Transparency regarding the justification for limited competition and the specific deliverables would be key areas for assessment.

Related Government Programs

F/A-18 Hornet Sustainment Programs
Military Aircraft Avionics Modernization
Aerospace Software Development Contracts
Defense Contractor Service Agreements

Risk Flags

Limited Competition Justification
Potential for Cost Overruns
Vendor Lock-in Risk
Lack of Small Business Participation

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $43.3 million to CAE USA INC.. CF-18 SOFTWARE BASELINE

Who is the contractor on this award?

The obligated recipient is CAE USA INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Contract Management Agency).

What is the total obligated amount?

The obligated amount is $43.3 million.

What is the period of performance?

Start: 2011-07-12. End: 2017-11-30.

What is CAE USA Inc.'s track record with similar Department of Defense software contracts?

CAE USA Inc. has a significant history of providing training systems, simulation, and mission systems for various military platforms, including the F/A-18. Their expertise often lies in complex integrated systems. While this specific contract focuses on software baseline for the CF-18, CAE's broader experience suggests a capability to handle such requirements. However, a detailed review of past performance on similar software sustainment contracts, including any past performance issues or successes, would be necessary for a comprehensive assessment. Their long-standing relationship with the DoD indicates a level of trust and established processes for delivering on defense contracts.

How does the $43.3 million contract value compare to industry benchmarks for similar software sustainment services?

Directly comparing the $43.3 million value without detailed scope of work, specific software modules, and service level agreements is difficult. However, software sustainment for complex military aircraft can be substantial, often involving continuous updates, cybersecurity patches, and integration with evolving threat environments. If this contract covers a multi-year period for comprehensive software support, the value might be within a reasonable range for specialized defense services. Benchmarking would require analyzing contracts for other fighter jet software sustainment, considering factors like the number of aircraft supported, the criticality of the software, and the specific services rendered (e.g., development, maintenance, testing).

What are the primary risks associated with awarding a software contract with limited competition?

The primary risks associated with limited competition include potential overpayment due to lack of price pressure, reduced innovation from a smaller pool of bidders, and increased vendor dependency. For this CF-18 software contract, taxpayers might bear a higher cost than if it were fully competed. There's also a risk that the government becomes overly reliant on CAE USA Inc. for future upgrades or maintenance, potentially limiting flexibility and increasing long-term costs. Furthermore, if CAE USA Inc. faces financial difficulties or strategic shifts, the continuity of essential software support could be jeopardized.

How effective is the firm-fixed-price contract type in ensuring program effectiveness for this software contract?

The firm-fixed-price (FFP) contract type is generally effective in ensuring program effectiveness when the scope of work is well-defined and stable, as it incentivizes the contractor to control costs and deliver the specified product or service efficiently. For software sustainment, where requirements can sometimes evolve, FFP can be challenging if scope creep is not managed. However, it provides cost certainty for the government. Effectiveness here hinges on the clarity of the software baseline requirements and the contractor's ability to meet them within the agreed price. The government's oversight will be crucial in ensuring the delivered software meets performance and operational needs.

What are the historical spending patterns for CF-18 software sustainment or similar aircraft software programs?

Historical spending on military aircraft software sustainment typically shows a consistent need for funding throughout an aircraft's lifecycle. Programs like this often represent a significant portion of the overall operational and support costs for a platform. Spending can fluctuate based on major upgrade cycles, new threat introductions requiring software adaptation, or changes in maintenance philosophies. Without specific historical data for CF-18 software sustainment, it's difficult to provide precise figures, but it's reasonable to assume multi-million dollar annual expenditures for such critical systems, reflecting the ongoing investment required to maintain readiness and technological relevance.

What is the potential impact of this contract on the broader aerospace software market?

This contract, awarded to CAE USA Inc., reinforces their position in the specialized aerospace software market, particularly within defense applications. The limited competition aspect might signal a market where specialized expertise is concentrated among a few key players, potentially creating barriers to entry for newer or smaller companies. While it ensures continuity for the CF-18 program, it could also limit opportunities for other firms to develop and offer competing solutions. The long-term implications depend on whether the government seeks to broaden competition for future iterations or sustainment phases of this or similar software.

Industry Classification

NAICS: Manufacturing › Commercial and Service Industry Machinery Manufacturing › Other Commercial and Service Industry Machinery 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: L3 Technologies, Inc. (UEI: 008898884)

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

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

Financial Breakdown

Contract Ceiling: $43,278,155

Exercised Options: $43,278,155

Current Obligation: $43,278,155

Subaward Activity

Number of Subawards: 812

Total Subaward Amount: $108,245,784

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline