Military training dilemma: to outsource or not?

• Author: Erwin, Sandra I.

CAE offered the government of Brunei a deal it could not refuse: To build a state-of-the-art training center the Southeast Asian nation could make available to its armed forces, civilian aviation agencies and private industries, and split the cost 60/40.

An agreement was signed in 2012. The CAE Brunei "multi-purpose training center" was completed in 2014 and the facility officially started training pilots in September.

The Canadian company, which supplies simulators, training equipment and services in 30 countries, sees the Brunei project as representative of how the training business is trending toward outsourcing.

Most governments cannot afford the upfront cost of building cutting-edge facilities, but they need training services and are willing to entertain alternative business models, said Gene Cola-batistto, CAE's goup president of defense and security.

Under the joint venture, CAE owns 60 percent, and the government of Brunei 40 percent. The company recoups its investment over time, providing training services under fee-for-service agreements. And local jobs are created for the host country. Colabatistto said the facility will start offering new simulation-based training programs for the energy, aerospace and health care industries.

These private-public partnerships' have become the norm rather than the exception in many countries such as the United Kingdom and Australia. CAE is eyeing new deals in places like Poland, where the government is about to spend billions of dollars to modernize its Soviet-era military helicopter fleet and will need to retrain its pilots.

In the United States, there has been less enthusiasm for privatized training, partly because the Pentagon has had plenty of money to build and operate its own facilities. But that could change as military budgets shrink and officials rethink spending priorities.

The U.S. Navy decided to outsource aircrew training services for its T-44C flight trainer aircraft at Naval Air Station Corpus Christi in Texas. CAE USA is under contract to provide T-44C aircrew training services under a nine-month base agreement for $3.5 million with six one-year options valued at more than $30 million. The contractor-owned, contractor-operated program covers classroom and simulator training for more than 500 students annually.

This type of arrangement is unusual for the U.S. government, Colabatistto said in an interview. "But they're looking at alternative business models. In this case they didn't...