DoD awards $1.62B for engineering services to CAE USA, Inc. over 6 years

Contract Overview

Contract Amount: $162,368,586 ($162.4M)

Contractor: CAE USA, Inc.

Awarding Agency: Department of Defense

Start Date: 2018-05-01

End Date: 2024-09-30

Contract Duration: 2,344 days

Daily Burn Rate: $69.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 6

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: MOBILIZATION FUNDING

Place of Performance

Location: TAMPA, HILLSBOROUGH County, FLORIDA, 33634

State: Florida Government Spending

Plain-Language Summary

Department of Defense obligated $162.4 million to CAE USA, INC. for work described as: MOBILIZATION FUNDING Key points: 1. Contract value represents significant investment in specialized engineering capabilities. 2. Long duration suggests a sustained need for these services. 3. Competition dynamics will be key to assessing value for money. 4. Performance over the contract period will indicate contractor effectiveness. 5. Sector positioning highlights the critical role of engineering in defense readiness. 6. Geographic concentration in Florida warrants attention for regional economic impact.

Value Assessment

Rating: good

The contract's value of $1.62 billion over six years indicates a substantial commitment by the Department of Defense. Benchmarking this against similar large-scale engineering service contracts is challenging without more specific service details. However, the firm-fixed-price structure suggests that the government has a clear understanding of costs, which can be favorable. The number of bids received (6) provides a baseline for competition, but the ultimate value for money will depend on the quality and efficiency of the services delivered throughout the contract's lifespan.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. Six bids were received, suggesting a reasonably competitive environment for these specialized engineering services. A healthy number of bidders generally supports price discovery and can lead to more favorable pricing for the government. The specific nature of the engineering services will influence the pool of potential bidders.

Taxpayer Impact: The full and open competition with multiple bidders is positive for taxpayers, as it increases the likelihood of receiving competitive pricing and high-quality services.

Public Impact

The Department of Defense benefits from access to critical engineering expertise. Services likely support naval operations, infrastructure, or platform development. Geographic impact is concentrated in Florida, potentially boosting the local economy and workforce. Workforce implications include job creation for engineers and support staff in the region.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if scope creep occurs despite firm-fixed-price.
Dependence on a single contractor for critical engineering functions.
Risk of vendor lock-in if specialized knowledge is developed.
Ensuring consistent quality across a long-duration contract.
Geographic concentration could limit broader access to talent or create regional dependencies.

Positive Signals

Firm-fixed-price contract provides cost certainty.
Full and open competition suggests a robust bidding process.
Multiple bidders (6) indicate market interest and potential for choice.
Long contract duration allows for stable planning and execution.
Award to an established entity (CAE USA, Inc.) may imply proven capability.

Sector Analysis

This contract falls within the Engineering Services sector, a critical component of the broader professional, scientific, and technical services industry. This sector is vital for supporting government operations, particularly in defense, infrastructure, and technology development. The market size for defense engineering services is substantial, driven by the need for advanced capabilities and platform sustainment. This award represents a significant portion of spending within this niche, highlighting the government's reliance on specialized firms for complex projects.

Small Business Impact

The data indicates this contract was awarded under full and open competition and does not specify any small business set-aside. Therefore, direct benefits to small businesses through this specific award are unlikely unless they are subcontractors. The prime contractor, CAE USA, Inc., is a large entity. Future subcontracting opportunities could arise, but the primary focus appears to be on large-scale prime contracting. Analysis of subcontracting plans would be necessary to determine the extent of small business involvement.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of the Navy contracting officers and program managers. Accountability measures are inherent in the firm-fixed-price structure, requiring the contractor to deliver specified services within the agreed budget. Transparency is generally facilitated through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract's execution.

Related Government Programs

Naval Sea Systems Command (NAVSEA) Engineering Services
Defense Engineering and Technical Services
Military Construction and Facilities Engineering
Aerospace Engineering Services
Platform Modernization Contracts

Risk Flags

Long-term contract duration increases exposure to changing requirements or technology.
Concentration of services in one state may limit broader economic benefits.
Potential for contractor performance issues over an extended period.
Need for robust oversight to ensure quality and prevent scope creep.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $162.4 million to CAE USA, INC.. MOBILIZATION FUNDING

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 Navy).

What is the total obligated amount?

The obligated amount is $162.4 million.

What is the period of performance?

Start: 2018-05-01. End: 2024-09-30.

What specific engineering services are covered under this $1.62 billion contract?

The provided data indicates the contract is for 'Engineering Services' (NAICS code 541330) awarded to CAE USA, INC. by the Department of the Navy. However, the specific nature of these services is not detailed. Typically, engineering services in this context could encompass a wide range of activities, including design, development, testing, analysis, systems integration, and technical support for naval platforms, infrastructure, or weapon systems. Given the substantial value and duration, it likely involves complex, long-term projects critical to naval operations or readiness. Further details would be found in the contract's Statement of Work (SOW).

How does the $1.62 billion value compare to historical spending on similar engineering services by the DoD?

The $1.62 billion awarded to CAE USA, INC. for engineering services is a significant sum, reflecting a major commitment by the Department of Defense. To benchmark this historically, one would need to analyze aggregate DoD spending on NAICS code 541330 (Engineering Services) or similar codes over several fiscal years. Comparing this single award's value against the total annual spend for such services would provide context. Large, multi-year contracts like this are common in defense procurement for specialized capabilities, but its relative size would be better understood by examining the average contract value and total market spend within the defense engineering sector over time.

What are the primary risks associated with a six-year, $1.62 billion engineering services contract?

Key risks for a contract of this magnitude and duration include scope creep, where the project's requirements expand beyond the initial agreement, potentially leading to cost overruns despite the firm-fixed-price structure. There's also the risk of technological obsolescence if the engineering solutions developed become outdated before the contract concludes. Contractor performance degradation over time, loss of key personnel, and potential cybersecurity vulnerabilities are also significant concerns. Furthermore, a long-term reliance on a single contractor for critical services can create vendor lock-in and reduce future flexibility. Ensuring consistent quality and adherence to evolving regulatory or operational requirements throughout the six years presents an ongoing challenge.

What is CAE USA, Inc.'s track record with large federal engineering contracts?

CAE USA, Inc. has a notable track record in providing simulation, training, and mission systems, often involving complex engineering and technical services for defense clients. While this specific $1.62 billion contract is substantial, the company has experience managing large-scale programs. A deeper dive into their contract history with the Department of Defense and other federal agencies would reveal the types and values of previous engineering-related awards, their performance ratings (e.g., CPARS), and any history of contract modifications or disputes. Their established presence suggests a capacity to handle significant federal contracts, but the specifics of their engineering service delivery performance are crucial for a full assessment.

What does the 'FL' (Florida) designation signify in the contract details?

The 'FL' designation likely indicates the primary place of performance or the location of the contractor's facility relevant to this contract. In this case, it suggests that the engineering services will be performed in or significantly managed from Florida. This has implications for the geographic distribution of federal spending, potential economic impact on the Florida region through job creation and local procurement, and the specific state-level regulatory or business environment that might apply. It also helps in understanding the logistical and operational footprint associated with the contract.

How does the firm-fixed-price (FFP) contract type influence value for money and risk allocation?

A Firm-Fixed-Price (FFP) contract type is generally considered favorable for the government in terms of cost control, as the price is set and not subject to adjustment based on the contractor's cost experience. This places the risk of cost overruns primarily on the contractor, incentivizing them to manage their expenses efficiently. For value for money, FFP encourages the contractor to deliver the specified scope of work at the agreed price. However, it can also lead to the contractor potentially cutting corners on quality if not adequately monitored, or demanding higher prices upfront to account for the risks they assume. Clear and comprehensive specifications in the SOW are critical for FFP contracts to ensure the government receives the intended value.

Industry Classification

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

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: N6134015R0052

Offers Received: 6

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, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $166,638,317

Exercised Options: $166,638,317

Current Obligation: $162,368,586

Actual Outlays: $81,812,249

Subaward Activity

Number of Subawards: 20

Total Subaward Amount: $53,605,739

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N6134016D1001

IDV Type: IDC

Timeline