DoD's $109M Obsolescence Upgrades Contract with CAE USA Inc. Awarded via Full and Open Competition

Contract Overview

Contract Amount: $109,258,642 ($109.3M)

Contractor: CAE USA Inc.

Awarding Agency: Department of Defense

Start Date: 2008-09-12

End Date: 2016-06-30

Contract Duration: 2,848 days

Daily Burn Rate: $38.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: OBSOLESCENCE UPGRADES

Place of Performance

Location: ARLINGTON, TARRANT County, TEXAS, 76011

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $109.3 million to CAE USA INC. for work described as: OBSOLESCENCE UPGRADES Key points: 1. Significant investment in aircraft parts and auxiliary equipment, totaling over $109 million. 2. CAE USA Inc. secured the contract, indicating a competitive landscape for specialized defense manufacturing. 3. The contract duration of 2848 days suggests a long-term need for these upgrades. 4. Risk of obsolescence is directly addressed, ensuring continued operational capability for the Air Force.

Value Assessment

Rating: good

The contract value of $109.3 million over nearly 8 years appears reasonable given the specialized nature of obsolescence upgrades for aircraft parts. Benchmarking against similar long-term, complex defense contracts would provide a more precise assessment.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting a robust price discovery process. This method likely resulted in a more competitive price for the government compared to limited or sole-source options.

Taxpayer Impact: Full and open competition generally benefits taxpayers by driving down costs through market forces, ensuring the government receives the best value for its investment in critical defense components.

Public Impact

Ensures continued operational readiness of Air Force aircraft by mitigating risks associated with outdated components. Supports the defense industrial base by providing long-term contracts to manufacturers like CAE USA Inc. Investments in obsolescence management are crucial for maintaining the effectiveness and safety of aging military fleets.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns if unforeseen technical challenges arise during the long contract period.
Dependency on a single contractor for critical obsolescence upgrades could pose a risk if performance issues emerge.

Positive Signals

Proactive approach to managing component obsolescence, preventing costly emergency replacements.
Long-term contract provides stability and predictability for both the government and the contractor.
Awarded through full and open competition, indicating competitive pricing.

Sector Analysis

This contract falls within the 'Other Aircraft Parts and Auxiliary Equipment Manufacturing' sector, a critical component of the aerospace and defense industry. Spending in this area is driven by the need to maintain and modernize aging military fleets, ensuring technological superiority and operational readiness.

Small Business Impact

While the prime contractor is CAE USA Inc., the contract details do not specify subcontracting efforts to small businesses. Further analysis would be needed to determine the extent of small business participation in this procurement.

Oversight & Accountability

The contract was awarded by the Department of the Air Force, a branch of the Department of Defense, which has established oversight mechanisms for defense procurements. The long duration necessitates ongoing monitoring to ensure performance and cost control.

Related Government Programs

Other Aircraft Parts and Auxiliary Equipment Manufacturing
Department of Defense Contracting
Department of the Air Force Programs

Risk Flags

Long contract duration increases exposure to market fluctuations and technological changes.
Potential for scope creep if unforeseen obsolescence issues arise beyond the initial contract scope.
Dependency on CAE USA Inc. for critical upgrades requires robust performance monitoring.
Lack of explicit small business participation data requires further investigation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $109.3 million to CAE USA INC.. OBSOLESCENCE UPGRADES

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 $109.3 million.

What is the period of performance?

Start: 2008-09-12. End: 2016-06-30.

What specific types of aircraft parts are covered under this obsolescence upgrade contract, and how critical are they to Air Force operations?

The contract, 'OBSOLESCENCE UPGRADES,' likely covers a range of aircraft components and auxiliary equipment facing obsolescence. These could include avionics, structural parts, or engine components. Their criticality is high, as outdated parts can lead to mission failures, safety hazards, and increased maintenance costs, directly impacting the Air Force's operational readiness and effectiveness.

What are the primary risks associated with managing obsolescence in defense contracts, and how does this contract attempt to mitigate them?

Primary risks include the unavailability of replacement parts, increased costs due to limited suppliers, and potential performance degradation or safety issues. This contract mitigates these by proactively identifying and upgrading components before they become critical, securing long-term supply through a competitive process, and ensuring the continued availability of essential aircraft functionality.

How does the firm fixed price (FFP) contract type impact the government's financial risk and the contractor's incentive for cost control?

A firm fixed price contract shifts most of the financial risk to the contractor, as the price is set regardless of the contractor's actual costs. This incentivizes the contractor to manage costs efficiently to maximize profit. For the government, it provides cost certainty, although it may result in a higher initial price compared to cost-reimbursement contracts.

Industry Classification

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

Product/Service Code: MODIFICATION OF EQUIPMENT › MODIFICATION OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN 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: 2116 ARLINGTON DOWNS ROAD, ARLINGTON, TX, 76011

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $198,604,620

Exercised Options: $109,258,651

Current Obligation: $109,258,642

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: F3365701D2077

IDV Type: IDC

Timeline