VA awards $2.5M contract to UPS for small package shipping, highlighting delivery service needs

Contract Overview

Contract Amount: $2,506,228 ($2.5M)

Contractor: United Parcel Service CO.

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-04-01

End Date: 2027-03-31

Contract Duration: 1,094 days

Daily Burn Rate: $2.3K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: SMALL PACKAGE SHIPPING

Place of Performance

Location: WEST HAVEN, NEW HAVEN County, CONNECTICUT, 06516

State: Connecticut Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $2.5 million to UNITED PARCEL SERVICE CO. for work described as: SMALL PACKAGE SHIPPING Key points: 1. Contract leverages established carrier for predictable delivery services. 2. Sole award suggests limited market alternatives or strategic sourcing. 3. Fixed-price structure aims to control costs for predictable services. 4. Delivery order mechanism allows for flexible call-offs within the contract period. 5. Focus on essential logistics supports agency operations and veteran services.

Value Assessment

Rating: good

The contract value of $2.5 million for small package shipping over approximately three years appears reasonable given the scale of operations for a federal agency like the VA. Benchmarking against similar contracts for express delivery services would provide a more precise value-for-money assessment. However, utilizing a well-established provider like UPS suggests a degree of confidence in their pricing and service delivery capabilities, likely reflecting negotiated rates for government use.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition after exclusion of sources, indicating that multiple vendors were likely solicited, but specific circumstances led to the exclusion of some. The fact that it resulted in a single award to UPS suggests that UPS was the most advantageous offer received based on the evaluation criteria. The level of competition, while appearing limited to one awardee, was initiated broadly, which should have encouraged competitive pricing.

Taxpayer Impact: The competitive process, even with a single award, aims to secure the best value for taxpayers by ensuring that the chosen vendor's pricing and service offerings are superior to other potential solutions.

Public Impact

Benefits federal agencies, particularly the Department of Veterans Affairs, by ensuring timely delivery of essential supplies and mail. Supports the efficient operation of VA facilities nationwide through reliable courier and express delivery services. Impacts the broader federal logistics network by utilizing established commercial delivery infrastructure. Potentially impacts the workforce indirectly through the continued reliance on commercial delivery services rather than in-house logistics.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases in future contract renewals if competition remains limited.
Dependence on a single large commercial carrier could be a vulnerability if service disruptions occur.

Positive Signals

Leverages a well-established and reliable logistics provider with a proven track record.
Fixed-price contract provides cost certainty for the duration of the delivery order.
Utilizes existing commercial infrastructure, reducing the need for government investment in logistics.

Sector Analysis

The couriers and express delivery services sector is a critical component of the federal supply chain, facilitating the movement of goods and information. This contract falls within the broader logistics and transportation industry, which is characterized by significant private sector investment and competition. Federal spending in this area supports agency operations and ensures the timely delivery of goods, from office supplies to critical medical equipment. Benchmarks for similar services often depend on volume, speed, and geographic coverage, with large carriers like UPS, FedEx, and USPS being major players.

Small Business Impact

This contract was awarded to a large business (UPS) and does not appear to have a small business set-aside component. There is no explicit information provided regarding subcontracting plans for small businesses. The award to a major commercial carrier suggests that the primary focus was on leveraging existing, large-scale logistics networks rather than specifically promoting small business participation in this particular delivery service contract.

Oversight & Accountability

Oversight for this contract would typically reside with the contracting officer and the relevant program managers within the Department of Veterans Affairs. Performance monitoring would likely involve tracking delivery times, service quality, and adherence to contract terms. Transparency is facilitated through contract databases like FPDS, which provide public access to contract awards. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract is suspected.

Related Government Programs

Federal Express Corporation Contracts
US Postal Service Contracts
Logistics and Supply Chain Management Services
Department of Defense Shipping Contracts

Risk Flags

Potential for limited future competition
Dependency on a single provider

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $2.5 million to UNITED PARCEL SERVICE CO.. SMALL PACKAGE SHIPPING

Who is the contractor on this award?

The obligated recipient is UNITED PARCEL SERVICE CO..

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $2.5 million.

What is the period of performance?

Start: 2024-04-01. End: 2027-03-31.

What is the historical spending pattern for small package shipping services by the Department of Veterans Affairs?

Analyzing historical spending data for small package shipping by the VA would reveal trends in contract awards, total expenditure, and the primary service providers over time. This contract, valued at $2.5 million, represents a specific instance of VA's reliance on commercial carriers. Understanding past spending can help identify whether this award is consistent with previous patterns, if there's an increasing or decreasing trend in spending for these services, and if the VA has historically favored specific providers or contract types. Without access to detailed historical data, it's difficult to provide precise figures, but such analysis would be crucial for assessing the long-term strategic sourcing of logistics services by the VA and identifying potential opportunities for cost savings or consolidation.

How does the pricing of this UPS contract compare to other federal agencies' agreements for similar shipping services?

Benchmarking the pricing of this $2.5 million UPS contract against similar agreements across other federal agencies is essential for evaluating value for money. Factors such as volume discounts, service levels (e.g., express vs. standard), geographic coverage, and contract duration significantly influence per-unit costs. While specific pricing details are not provided, a comprehensive comparison would involve examining publicly available contract data for other agencies procuring express delivery services from UPS or comparable carriers. If this contract's rates are higher than average for comparable services, it could indicate a need for renegotiation or exploring alternative competitive solicitations. Conversely, if the rates are competitive or lower, it suggests effective price negotiation or favorable market conditions for the VA in this instance.

What are the specific performance metrics and service level agreements (SLAs) associated with this contract?

The performance metrics and Service Level Agreements (SLAs) are critical components of this contract, defining the expected standards for delivery speed, package handling, tracking accuracy, and customer service. While the provided data does not detail these SLAs, they would typically be outlined in the contract's statement of work. For a contract of this nature, common metrics might include on-time delivery rates (e.g., 95% for express shipments), package damage rates (e.g., less than 0.1%), and response times for inquiries or issues. The VA would monitor UPS's adherence to these SLAs, with potential penalties or incentives tied to performance. Robust SLAs are crucial for ensuring the government receives the quality of service it pays for and for holding the contractor accountable.

What is the risk associated with relying on a single large commercial carrier for essential delivery services?

Relying on a single large commercial carrier like UPS for essential delivery services presents several risks. Firstly, there's a dependency risk; any disruption to UPS's operations, whether due to labor disputes, natural disasters, or network issues, could significantly impact the VA's ability to receive critical supplies or send important documents. Secondly, a lack of robust competition in future solicitations could lead to price escalation, as the incumbent carrier may face less pressure to offer competitive rates. Thirdly, while UPS is a reputable company, the absence of alternative providers means the VA has limited recourse if service quality degrades significantly, beyond potentially terminating the contract, which itself would create an immediate service gap. Mitigating these risks often involves building strong performance monitoring, maintaining good communication, and exploring options for diversifying providers in future contract cycles.

How does the 'full and open competition after exclusion of sources' clause impact the competitive landscape and pricing?

The 'full and open competition after exclusion of sources' clause indicates that the solicitation was initially intended for broad competition, but certain potential offerors were excluded based on specific criteria outlined in the solicitation (e.g., inability to meet technical requirements, past performance issues, or specific regulatory exclusions). This approach aims to ensure that while competition is broad, it is also focused on qualified and capable vendors. The impact on the competitive landscape and pricing can be nuanced. If the exclusions were justified and based on objective criteria, it could lead to a more manageable number of highly qualified bidders, potentially resulting in strong competition among those remaining. However, if the exclusions were overly restrictive or perceived as favoring certain types of vendors, it could inadvertently limit competition and potentially lead to less favorable pricing for the government compared to truly unrestricted full and open competition.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1400 N HURSTBOURNE PKWY, LOUISVILLE, KY, 40223

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

Financial Breakdown

Contract Ceiling: $4,401,847

Exercised Options: $2,506,228

Current Obligation: $2,506,228

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71123DC025

IDV Type: IDC

Timeline