DOJ's $2.7M FedEx contract for senseaware subscription lacks competition, raising value concerns

Contract Overview

Contract Amount: $273,600 ($273.6K)

Contractor: Federal Express Corporation

Awarding Agency: Department of Justice

Start Date: 2024-06-01

End Date: 2027-05-31

Contract Duration: 1,094 days

Daily Burn Rate: $250/day

Competition Type: NOT COMPETED UNDER SAP

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: FEDEX SENSEAWARE SUBSCRIPTION

Place of Performance

Location: WASHINGTON, DISTRICT OF COLUMBIA County, DISTRICT OF COLUMBIA, 20001

State: District of Columbia Government Spending

Plain-Language Summary

Department of Justice obligated $273,600 to FEDERAL EXPRESS CORPORATION for work described as: FEDEX SENSEAWARE SUBSCRIPTION Key points: 1. The contract was not competed under simplified acquisition procedures, suggesting potential missed opportunities for cost savings. 2. A sole-source award for a subscription service may indicate limited market options or a lack of proactive market research. 3. The firm-fixed-price structure shifts risk to the contractor, but without competition, the price may not reflect true market value. 4. The duration of the contract (nearly 3 years) necessitates careful monitoring to ensure continued necessity and fair pricing. 5. The service category, 'Couriers and Express Delivery Services,' is broad, and the specific utility of 'senseaware' needs further justification. 6. The absence of small business set-aside flags suggests this contract did not prioritize small business participation.

Value Assessment

Rating: questionable

Benchmarking the value of a specific subscription service like FedEx SenseAware is challenging without detailed usage metrics and comparable offerings. However, the lack of competition for a $2.7 million contract is a significant red flag. Typically, competitive bidding drives down prices and ensures fair market value. Without this process, the government risks overpaying. The firm-fixed-price nature means the government is committed to the stated price, regardless of actual usage, which could be inefficient if utilization is low. Further analysis would require understanding the specific features and benefits of SenseAware compared to alternative tracking and logistics management solutions.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded as a sole-source procurement, meaning it was not competed. The data indicates it was 'NOT COMPETED UNDER SAP,' which is unusual for a contract of this value. Typically, sole-source awards are justified when only one responsible source can provide the required goods or services. For a subscription service like this, it raises questions about whether adequate market research was conducted to identify potential alternatives or if there are unique proprietary aspects to FedEx's SenseAware that preclude competition. The lack of bidders means there was no price discovery through a competitive process.

Taxpayer Impact: Taxpayers may be paying a premium due to the absence of competitive pressure. Without competing the requirement, the Department of Justice may not have secured the most cost-effective solution available in the market.

Public Impact

The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) is the primary beneficiary, likely using the service for enhanced tracking and management of assets or shipments. The service provides real-time visibility and data related to the movement and condition of goods, improving logistical efficiency and security. The geographic impact is likely national, given the ATF's operational scope across the United States. There are no direct workforce implications mentioned, as this is a service subscription rather than a labor-intensive contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition for a significant dollar amount raises concerns about potential overpayment and missed value.
The sole-source nature requires strong justification regarding market research and the uniqueness of the service.
Firm-fixed-price without competition could lead to inefficient spending if actual service utilization is lower than anticipated.

Positive Signals

The firm-fixed-price contract structure clearly defines costs and shifts performance risk to the contractor.
The contract duration is defined, providing a clear period of performance for the service.
The service is provided by a well-established logistics company (FedEx), suggesting a degree of reliability.

Sector Analysis

The Couriers and Express Delivery Services sector is a mature and competitive market. While specialized tracking and sensor technology like FedEx's SenseAware can offer unique value, the overall industry is characterized by numerous providers. The market size for logistics and tracking solutions is substantial, driven by e-commerce and global supply chains. This contract represents a small portion of federal spending within this sector, but its sole-source nature warrants scrutiny against industry benchmarks for similar tracking and sensor-based logistics management services.

Small Business Impact

There is no indication that this contract included a small business set-aside. The award to FedEx, a large corporation, suggests that small businesses were not specifically targeted or considered for this requirement. Subcontracting opportunities for small businesses are unlikely unless FedEx voluntarily engages them for specific components or services not directly related to the core SenseAware platform.

Oversight & Accountability

Oversight for this contract would primarily fall under the Department of Justice's contracting officers and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) program managers. Transparency is limited due to the sole-source nature, as there is no public justification document readily available. Accountability measures would involve monitoring service delivery, performance metrics, and adherence to the contract terms. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Federal Express Corporation contracts
Logistics and Transportation Services
Asset Tracking Systems
Supply Chain Management Solutions
Department of Justice Procurement

Risk Flags

Lack of Competition
Potential for Overpayment
Limited Transparency
Sole-Source Justification Required

Frequently Asked Questions

What is this federal contract paying for?

Department of Justice awarded $273,600 to FEDERAL EXPRESS CORPORATION. FEDEX SENSEAWARE SUBSCRIPTION

Who is the contractor on this award?

The obligated recipient is FEDERAL EXPRESS CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Justice (Bureau of Alcohol, Tobacco, Firearms and Explosives Acquisition and Property Management Division).

What is the total obligated amount?

The obligated amount is $273,600.

What is the period of performance?

Start: 2024-06-01. End: 2027-05-31.

What specific capabilities does FedEx SenseAware offer that justify a sole-source award?

FedEx SenseAware is a proprietary platform that provides real-time tracking and monitoring of shipments using advanced sensors. These sensors can collect data on location, temperature, humidity, light exposure, and shock/tilt. The 'senseaware' aspect implies a focus on environmental and condition monitoring beyond basic GPS tracking. A sole-source justification would typically need to demonstrate that only FedEx's specific technology and integrated platform can meet the ATF's unique requirements, perhaps due to existing infrastructure, specific data integration needs, or unique sensor capabilities not available from other providers. Without access to the detailed justification, it's difficult to ascertain the precise technical or operational reasons that precluded competition.

How does the $2.7 million price compare to similar tracking or sensor-based logistics services?

Directly comparing the $2.7 million price is difficult without knowing the exact scope, duration, number of devices/users, and specific sensor capabilities included in the ATF's FedEx SenseAware subscription. However, for a nearly three-year contract, this amount suggests a significant deployment or a high level of service. In a competitive market, similar services might range from hundreds to thousands of dollars per device/user per year, depending on features. A sole-source award means this price was not tested against market alternatives, raising the possibility that it is higher than what could have been achieved through competitive bidding. A thorough value assessment would require benchmarking against publicly available pricing for comparable enterprise-level logistics tracking and sensor solutions.

What are the primary risks associated with a sole-source contract of this nature?

The primary risks associated with this sole-source contract include potential overpayment due to the lack of competitive pricing, reduced incentive for the contractor to innovate or offer superior service (as there's no direct competition), and a potential lack of flexibility if the government's needs change. There's also a risk that the government may become locked into a specific technology or vendor, making future transitions costly. Furthermore, the absence of a competitive process limits transparency and makes it harder to independently verify that the government is receiving the best possible value for taxpayer dollars. The government must rely heavily on the contractor's representations and internal oversight to ensure fair pricing and adequate performance.

What is the historical spending pattern for similar services by the Department of Justice or ATF?

Analyzing historical spending patterns for similar services by the Department of Justice (DOJ) or the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) would provide crucial context. If the DOJ/ATF has previously procured similar tracking or sensor-based logistics solutions through competitive means and at significantly lower costs, this sole-source award would be more concerning. Conversely, if there's a history of sole-source awards for specialized, proprietary systems like SenseAware, it might suggest a pattern of limited market options or specific agency needs. Without access to historical procurement data for comparable services, it's difficult to establish a baseline for evaluating the reasonableness of this contract's value and procurement method.

What oversight mechanisms are in place to ensure the effectiveness and necessity of the SenseAware subscription?

Oversight mechanisms would typically involve the Contracting Officer's Representative (COR) within the ATF, who is responsible for monitoring the contractor's performance and ensuring the service meets the agreed-upon requirements. Regular performance reviews, service level agreement (SLA) tracking, and financial reviews would be standard oversight practices. Given the sole-source nature, there's an increased emphasis on the COR's diligence in verifying the ongoing necessity and value of the subscription. The contract's firm-fixed-price structure means oversight focuses more on performance and adherence to terms rather than price negotiation, but the COR should still assess if the service continues to be the most effective solution available.

Industry Classification

NAICS: Transportation and Warehousing › Couriers and Express Delivery Services › Couriers and Express Delivery Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED UNDER SAP

Solicitation Procedures: SIMPLIFIED ACQUISITION

Solicitation ID: 15A00024R00000043

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Fedex Corp

Address: 3610 HACKS CROSS RD, MEMPHIS, TN, 38125

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

Financial Breakdown

Contract Ceiling: $456,000

Exercised Options: $273,600

Current Obligation: $273,600

Actual Outlays: $152,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Timeline