DoD's $18.2M contract for air transportation support awarded to CAE USA INC. shows fair value

Contract Overview

Contract Amount: $18,223,213 ($18.2M)

Contractor: CAE USA Inc.

Awarding Agency: Department of Defense

Start Date: 2008-11-14

End Date: 2009-12-31

Contract Duration: 412 days

Daily Burn Rate: $44.2K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: SV

Place of Performance

Location: ARLINGTON, TARRANT County, TEXAS, 76011

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $18.2 million to CAE USA INC. for work described as: SV Key points: 1. The contract's value appears reasonable when benchmarked against similar support services. 2. Full and open competition was utilized, suggesting a competitive pricing environment. 3. The firm fixed-price contract type mitigates cost overrun risks for the government. 4. Performance duration of over a year provides a stable operational window. 5. The contract falls within the 'Other Support Activities for Air Transportation' NAICS code, a common area for defense spending. 6. No small business set-aside was applied, indicating a focus on prime contractor capabilities.

Value Assessment

Rating: good

The contract value of $18.2 million for air transportation support services appears to be within a reasonable range for the scope of work. Benchmarking against similar contracts for logistical and operational support within the Department of Defense suggests that the pricing is competitive. The firm fixed-price nature of the award further supports the assessment of good value, as it caps the government's liability and incentivizes the contractor to manage costs efficiently. Without specific details on the exact services rendered, a precise per-unit cost comparison is difficult, but the overall contract value aligns with industry standards for such support.

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. The presence of two bidders suggests a moderate level of competition for this specific requirement. While more bidders could potentially drive prices lower, two offers are sufficient to establish a competitive baseline and allow for informed selection based on technical merit and price. The open competition process is generally favorable for price discovery and ensuring the government receives the best value.

Taxpayer Impact: The use of full and open competition is beneficial for taxpayers as it encourages multiple companies to bid, which typically leads to more competitive pricing and better overall value for the government's investment.

Public Impact

The Department of Defense is the primary beneficiary, receiving essential support for air transportation operations. Services provided likely include logistical support, maintenance coordination, or operational planning related to air assets. The contract's geographic impact is likely concentrated around military air bases or operational areas where air transportation is critical. The contract supports a specialized segment of the defense industrial base, potentially impacting skilled aviation support personnel.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for limited visibility into specific performance metrics due to the broad nature of 'air transportation support'.
Dependence on a single prime contractor (CAE USA INC.) for critical support functions.
Risk of scope creep if the definition of 'support activities' is not tightly managed.

Positive Signals

Firm fixed-price contract structure limits financial risk for the government.
Award to an established contractor (CAE USA INC.) suggests a degree of reliability and experience.
Full and open competition process generally leads to better value and reduces the risk of non-competitive pricing.

Sector Analysis

The contract falls under the 'Other Support Activities for Air Transportation' category, which is a niche but vital segment of the aerospace and defense industry. This sector involves providing specialized services that enable the efficient operation of air fleets, often including logistical planning, maintenance oversight, and operational support. The market size for such services is substantial, driven by consistent government and commercial demand for aviation capabilities. This contract represents a typical allocation of resources within the defense sector for maintaining operational readiness and efficiency in air transport.

Small Business Impact

This contract was not set aside for small businesses, and there is no indication of subcontracting requirements for small businesses in the provided data. This suggests that the prime contractor, CAE USA INC., was selected based on its capabilities to fulfill the entire requirement. While this may limit direct opportunities for small businesses on this specific prime contract, it does not preclude them from participating in the broader defense supply chain or competing for other set-aside contracts.

Oversight & Accountability

Oversight for this contract would typically be managed by the Defense Contract Management Agency (DCMA), which is responsible for ensuring contractor performance and compliance with contract terms. The firm fixed-price nature of the contract provides a degree of accountability by capping costs. Transparency is generally maintained through contract award databases and reporting requirements, although detailed operational performance data may be considered sensitive. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Defense Logistics Agency Support Contracts
Air Mobility Command Operations Support
Naval Air Systems Command Services
Aviation Maintenance and Repair Contracts

Risk Flags

Contract duration may be insufficient for long-term strategic planning.
Limited competition (2 bidders) could indicate potential market concentration.
Lack of specific performance metrics in summary data hinders detailed value assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $18.2 million to CAE USA INC.. SV

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 $18.2 million.

What is the period of performance?

Start: 2008-11-14. End: 2009-12-31.

What specific services are included under 'Other Support Activities for Air Transportation' for this contract?

The provided data indicates the contract falls under NAICS code 488190, 'Other Support Activities for Air Transportation.' While the specific details are not fully elaborated, this typically encompasses a range of services essential for the operation and maintenance of air transportation systems. This could include services such as air traffic control support, airport operations management, aircraft maintenance coordination, logistical planning for air cargo and personnel movement, and potentially specialized training related to air operations. The firm fixed-price nature suggests a defined scope of services for which CAE USA INC. is responsible, aiming to ensure the efficient functioning of the air transportation elements supported by this contract for the Department of Defense.

How does the performance of CAE USA INC. on this contract compare to their general track record?

Assessing CAE USA INC.'s performance on this specific $18.2 million contract requires access to detailed performance reports and historical data, which are not fully available in the provided summary. However, CAE USA INC. is a well-established defense contractor with a significant presence in aviation training, simulation, and support services. Their broader track record generally indicates experience in delivering complex solutions to military clients. Without specific performance metrics or past performance evaluations tied directly to this contract, a definitive comparison is challenging. Generally, the Department of Defense conducts thorough past performance reviews during the procurement process, suggesting that CAE USA INC. was deemed a reliable choice based on their overall history.

What are the key risks associated with this firm fixed-price contract, and how are they mitigated?

The primary risk with a firm fixed-price (FFP) contract is that the contractor may face financial losses if their costs exceed the agreed-upon price, potentially leading to quality compromises or contractor default. However, FFP contracts are generally favored by the government because they shift cost risk to the contractor, providing budget certainty. For this contract, the mitigation lies in the initial pricing and scope definition. The Department of Defense would have evaluated the proposed price against cost estimates and market rates. The contractor, CAE USA INC., is responsible for managing its own costs to remain profitable. Risks related to performance quality are mitigated through contract oversight by the Defense Contract Management Agency (DCMA) and the potential for negative past performance feedback on future contracts if standards are not met.

How does the $18.2 million spending compare to historical patterns for similar air transportation support services?

The $18.2 million awarded to CAE USA INC. for air transportation support represents a significant but not extraordinary investment within the context of Department of Defense spending. Historical data for similar support activities within the defense sector often shows annual spending in the tens to hundreds of millions of dollars, depending on the scope and duration of services required. Contracts for aviation support, logistics, and operational services are recurring needs for the DoD. This particular contract, with a duration of approximately 13 months (from November 2008 to December 2009), suggests an annual spending rate of roughly $14 million. This rate is consistent with medium-to-large scale support contracts in this domain, indicating it aligns with typical historical spending patterns for such essential services.

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

This contract contributes to the revenue stream of CAE USA INC., a key player in the aerospace and defense sector, particularly in simulation, training, and support services. Its award signifies continued government investment in maintaining robust air transportation capabilities. The $18.2 million value, while substantial for the contractor, represents a fraction of the overall defense budget and the broader aerospace market. The impact is primarily felt by the direct recipients of the funds (the contractor and its potential subcontractors/employees) and indirectly by reinforcing the demand for specialized aviation support services. It underscores the ongoing need for companies capable of providing such critical infrastructure support to military operations.

Industry Classification

NAICS: Transportation and Warehousing › Support Activities for Air Transportation › Other Support Activities for Air Transportation

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: L-3 Communications Holdings, Inc. (UEI: 008898843)

Address: 2200 ARLINGTON DOWNS ROAD, ARLINGTON, TX, 90

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $18,859,395

Exercised Options: $18,859,395

Current Obligation: $18,223,213

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0001904D0110

IDV Type: IDC

Timeline