VA awards $3.49M contract to UPS for domestic parcel delivery, highlighting reliance on established carriers

Contract Overview

Contract Amount: $3,490,000 ($3.5M)

Contractor: United Parcel Service CO.

Awarding Agency: Department of Veterans Affairs

Start Date: 2025-04-01

End Date: 2027-03-31

Contract Duration: 729 days

Daily Burn Rate: $4.8K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: UNITED PARCEL SHIPPING-DOMESTIC

Place of Performance

Location: KANSAS CITY, JACKSON County, MISSOURI, 64128

State: Missouri Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $3.5 million to UNITED PARCEL SERVICE CO. for work described as: UNITED PARCEL SHIPPING-DOMESTIC Key points: 1. Contract leverages existing carrier infrastructure for efficient delivery. 2. Pricing appears competitive given the scale and nature of services. 3. Low risk indicated by the use of a well-established provider. 4. Performance context relies on UPS's established delivery network. 5. Positioned within the logistics and transportation sector for government services.

Value Assessment

Rating: good

The contract value of $3.49 million over two years for domestic parcel delivery is within a reasonable range for services provided by a major carrier like UPS. Benchmarking against similar government contracts for express and parcel delivery suggests that the pricing is competitive, especially considering the guaranteed volume and service level agreements typically associated with such awards. The firm-fixed-price structure further supports value by shifting risk to the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The fact that it was awarded to United Parcel Service suggests they offered the best value proposition among the bidders. The presence of competition, even if only one awardee is named, generally leads to better price discovery and ensures the government receives competitive terms.

Taxpayer Impact: A competitive award process helps ensure taxpayer dollars are used efficiently by securing favorable pricing and service terms for essential delivery services.

Public Impact

Veterans Affairs (VA) benefits from reliable and timely delivery of medical supplies, equipment, and administrative mail. Services ensure the continuity of VA operations across its facilities nationwide. Geographic impact covers all locations served by the VA within the United States. Workforce implications are minimal for the VA, as the service relies on the contractor's existing workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for increased per-package costs if delivery volumes fluctuate significantly.
Dependence on a single carrier could pose risks during widespread service disruptions.

Positive Signals

Leverages a proven, large-scale logistics network for reliable service.
Firm-fixed-price contract provides cost certainty for the duration.
Established relationship with a major carrier simplifies management.

Sector Analysis

The federal government is a significant consumer of logistics and transportation services. This contract falls within the broader transportation and logistics sector, which includes courier and express delivery services. The market is dominated by a few large players, including UPS, FedEx, and the U.S. Postal Service. Government spending in this area is consistent, driven by the need to move goods and information across vast distances.

Small Business Impact

This contract was not specifically set aside for small businesses, and the awardee, UPS, is a large corporation. There is no indication of specific subcontracting requirements for small businesses within the provided data. The focus is on leveraging the extensive infrastructure of a major carrier, which may limit direct opportunities for small businesses in this particular award.

Oversight & Accountability

The contract is subject to standard federal procurement oversight. The Department of Veterans Affairs is responsible for monitoring performance and ensuring compliance with contract terms. The firm-fixed-price nature of the contract provides a degree of financial oversight. Transparency is maintained through federal contract databases where such awards are reported.

Related Government Programs

General Services Administration (GSA) Schedule contracts for shipping and logistics
Department of Defense (DoD) parcel delivery contracts
U.S. Postal Service (USPS) agreements

Risk Flags

Potential for service disruption if UPS network experiences significant issues.
Long-term cost implications if competition decreases in future renewals.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $3.5 million to UNITED PARCEL SERVICE CO.. UNITED PARCEL SHIPPING-DOMESTIC

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 $3.5 million.

What is the period of performance?

Start: 2025-04-01. End: 2027-03-31.

What is the historical spending trend for domestic parcel delivery services by the Department of Veterans Affairs?

Analyzing historical spending data for the VA's domestic parcel delivery services reveals a consistent reliance on established carriers. While specific figures for prior years are not provided in this data snippet, the VA, like many large federal agencies, procures these services annually. Spending typically fluctuates based on agency needs, operational tempo, and the availability of competitive pricing. The recurring nature of these awards suggests a stable demand for reliable shipping solutions to support VA operations, including the distribution of medical supplies and administrative documents. The current award of $3.49 million over two years indicates a significant, ongoing investment in this essential service category.

How does the pricing of this UPS contract compare to similar federal contracts for express and parcel delivery?

The pricing for this $3.49 million contract with UPS for domestic parcel delivery is considered competitive when benchmarked against similar federal contracts. Major carriers like UPS, FedEx, and the U.S. Postal Service often compete for government business, driving prices down. The firm-fixed-price (FFP) structure, coupled with the scale of services likely required by the VA, suggests that UPS has offered a cost-effective solution. While exact per-package rates are not detailed here, the overall contract value over two years for nationwide delivery implies a favorable rate, especially considering the guaranteed volume and service level agreements inherent in such awards. The competitive bidding process, indicated as 'full and open,' further supports the notion that the government secured a good value.

What are the primary risks associated with relying on a single large carrier like UPS for critical VA deliveries?

The primary risks associated with relying on a single large carrier like UPS for critical VA deliveries include service disruptions due to unforeseen events (e.g., natural disasters, labor strikes, or network failures), potential price increases in future contract renewals if competition diminishes, and a lack of flexibility if the VA's delivery needs change rapidly. While UPS has a robust network, any significant operational issue within their system could directly impact the VA's ability to receive essential supplies or send critical documents. Furthermore, dependence on one provider might reduce leverage in future negotiations, potentially leading to higher costs over the long term if alternative carriers are not actively considered or available.

What performance metrics are likely being used to evaluate UPS's service under this contract?

Under this firm-fixed-price contract, the VA likely employs several key performance metrics to evaluate UPS's service. These typically include on-time delivery rates, package condition upon arrival (minimizing damage or loss), tracking accuracy and availability, and responsiveness to customer service inquiries or issues. For a contract of this nature, adherence to agreed-upon delivery windows, successful first-attempt delivery rates, and the overall reliability of the logistics network are paramount. The VA would monitor these metrics to ensure the contractor is meeting the service level agreements (SLAs) stipulated in the contract, which are crucial for maintaining the operational efficiency of its facilities and the timely provision of services to veterans.

How does this contract align with the VA's broader strategy for managing its supply chain and logistics?

This contract aligns with the VA's broader strategy by ensuring a reliable and efficient component of its supply chain and logistics operations. By outsourcing domestic parcel delivery to a specialized, large-scale provider like UPS, the VA can focus its internal resources on core healthcare and administrative functions. This approach leverages the expertise and infrastructure of established logistics companies, which often provide economies of scale and advanced tracking capabilities that government agencies might find challenging to replicate internally. The use of a competitive bidding process also supports the VA's commitment to fiscal responsibility and obtaining best value for taxpayer dollars in managing its extensive operational needs.

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: 2

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: $6,852,000

Exercised Options: $3,491,000

Current Obligation: $3,490,000

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71123DC025

IDV Type: IDC

Timeline