VA awards $27.2M delivery order to UPS for courier services, exceeding benchmark by 74% for a single contract

Contract Overview

Contract Amount: $27,207,830 ($27.2M)

Contractor: United Parcel Service CO.

Awarding Agency: Department of Veterans Affairs

Start Date: 2019-10-01

End Date: 2020-09-30

Contract Duration: 365 days

Daily Burn Rate: $74.5K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Transportation

Official Description: SHIPPING/TRANSPORTATION

Place of Performance

Location: LEAVENWORTH, LEAVENWORTH County, KANSAS, 66048

State: Kansas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $27.2 million to UNITED PARCEL SERVICE CO. for work described as: SHIPPING/TRANSPORTATION Key points: 1. The contract value of $27.2 million represents a significant investment in express delivery services. 2. Competition was full and open after exclusion of sources, suggesting a deliberate selection process. 3. The contract's duration of 365 days indicates a need for ongoing, consistent delivery support. 4. The primary contractor, United Parcel Service Co., is a major player in the logistics industry. 5. The service falls under the 'Couriers and Express Delivery Services' NAICS code, highlighting its specific function. 6. The contract was awarded as a Firm Fixed Price, which helps in budget predictability. 7. The award was made in Kansas, potentially indicating a regional focus for these services.

Value Assessment

Rating: questionable

The awarded amount of $27.2 million for a single delivery order appears high when benchmarked against the provided figure of $7,454,200. This suggests a potential overpayment or a scope of services significantly larger than typical contracts in this category. Further analysis is needed to understand the specific services rendered and if they justify this expenditure compared to market rates or similar government contracts.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES.' This specific procurement method implies that while the competition was intended to be broad, certain sources were intentionally excluded. The exact reasons for exclusion are not detailed, but it suggests a more controlled competitive environment rather than a completely open bid process. The number of bidders is not specified, making it difficult to fully assess the impact on price discovery.

Taxpayer Impact: The exclusion of sources, even within a full and open competition framework, may limit the potential for the most competitive pricing, potentially leading to higher costs for taxpayers if the excluded sources could have offered better value.

Public Impact

Beneficiaries include Department of Veterans Affairs (VA) personnel and potentially veterans relying on timely delivery of medical supplies or documents. Services delivered are express courier and delivery, crucial for the efficient operation of VA facilities. The geographic impact is centered in Kansas, where the contract was awarded and likely services were primarily rendered. Workforce implications include support for UPS's delivery network and potentially administrative roles within the VA managing the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

High contract value for a single delivery order raises concerns about cost-effectiveness.
The 'exclusion of sources' in competition limits transparency and potential for broader cost savings.
Lack of detailed performance metrics makes it difficult to assess the true value and efficiency of the services provided.

Positive Signals

Award to a well-established provider like UPS ensures a high level of service reliability.
Firm Fixed Price contract provides budget certainty for the VA.
The contract supports critical logistical needs for the Department of Veterans Affairs.

Sector Analysis

The contract falls within the Transportation and Logistics sector, specifically focusing on courier and express delivery services. This is a mature market with significant private sector players like UPS, FedEx, and DHL. Government spending in this area is essential for maintaining operational efficiency across various agencies. Benchmarking against industry standards for similar delivery volumes and service levels would be crucial for assessing value for money.

Small Business Impact

There is no indication that this contract involved small business set-asides. As a delivery order awarded to a large corporation like UPS, it is unlikely to have direct subcontracting opportunities for small businesses unless UPS opts to engage them within its broader supply chain. The primary impact is on the large prime contractor rather than the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically reside with the contracting officers and program managers within the Department of Veterans Affairs. Accountability measures are inherent in the Firm Fixed Price structure, requiring UPS to deliver services as agreed. Transparency could be enhanced by making detailed performance reports and justifications for the contract's value publicly available.

Related Government Programs

Federal Express Corporation contracts
DHL Express contracts
US Postal Service contracts
General Services Administration (GSA) Schedule contracts for shipping

Risk Flags

High contract value compared to benchmark
Ambiguous competition details ('exclusion of sources')
Lack of detailed performance metrics

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $27.2 million to UNITED PARCEL SERVICE CO.. SHIPPING/TRANSPORTATION

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 $27.2 million.

What is the period of performance?

Start: 2019-10-01. End: 2020-09-30.

What specific services were included in this $27.2 million delivery order, and how do they differ from standard courier services to justify the high cost?

The provided data does not detail the specific services rendered under this $27.2 million delivery order beyond the general classification of 'Couriers and Express Delivery Services.' To justify such a significant expenditure, the order likely encompassed a high volume of time-sensitive deliveries, specialized handling requirements, extensive geographic coverage, or premium service levels not typically associated with standard mail or basic package delivery. Without a detailed statement of work or service level agreement, it is challenging to ascertain the precise nature of the services. However, the substantial difference between the awarded amount and the benchmark ($27.2M vs. $7.45M) suggests either a scope far exceeding typical needs or a significant pricing disparity that warrants further investigation into the necessity and efficiency of the procured services.

How does the benchmark of $7,454,200 compare to the awarded amount of $27,207,830, and what does this discrepancy suggest?

The benchmark of $7,454,200 is significantly lower than the awarded amount of $27,207,830 for this delivery order, representing a difference of over $19.7 million. This substantial discrepancy suggests that either the benchmark is not directly comparable (e.g., it represents a different service level, volume, or time period) or that this specific delivery order was exceptionally large in scope or priced at a premium. It could indicate that the VA required a much more extensive or urgent set of services than what the benchmark reflects, or it might point to a potential issue with the pricing strategy or the competitive process if the benchmark is indeed representative of similar services. Further context on the benchmark's origin and applicability is crucial for a definitive assessment.

What are the implications of 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' for cost savings and contractor performance?

The procurement method 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' presents a mixed bag for cost savings and performance. On one hand, 'full and open competition' theoretically allows any responsible source to submit an offer, fostering a competitive environment that should drive down prices and encourage innovation. However, the 'exclusion of sources' clause indicates that specific potential bidders were deliberately prevented from participating. The implications depend heavily on the justification for these exclusions. If valid reasons exist (e.g., security, specialized capabilities), the competition among the remaining sources might still yield good results. If exclusions were arbitrary, it could limit the competitive pool, potentially leading to higher prices and reduced pressure on the winning contractor to perform optimally. The impact on cost savings is thus uncertain without knowing who was excluded and why.

Given UPS's market position, what is the likelihood of this contract being a sole-source or limited competition scenario in practice, despite the 'full and open' designation?

While the contract is officially designated as 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' the practical reality of competing for large-scale logistics services with a dominant player like UPS means competition might be limited. UPS possesses extensive infrastructure, established delivery networks, and significant economies of scale that can be difficult for smaller competitors to match. If the 'exclusion of sources' targeted potential competitors or if the specific requirements of the VA delivery order inherently favored UPS's capabilities, the effective competition could be reduced. This doesn't automatically make it a sole-source situation, but it suggests that the number of truly viable and competitive bidders might have been narrow, potentially influencing the final price and service terms.

What is the historical spending pattern for courier and express delivery services by the Department of Veterans Affairs, and how does this $27.2M order fit in?

The provided data only includes details for this single $27.2 million delivery order. To assess historical spending patterns, one would need access to VA's procurement history for similar services over multiple fiscal years. Analyzing past contracts, including their values, durations, awarded contractors, and competition levels, would reveal trends. If the VA typically awards multiple smaller contracts or fewer large ones, this $27.2 million order could represent a significant shift towards consolidating services or a response to a specific, large-scale need. Without historical data, it's impossible to determine if this order is an anomaly, an escalation, or a standard practice for the VA's logistics requirements.

Industry Classification

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

Product/Service Code: TRANSPORT, TRAVEL, RELOCATION › TRANSPORTATION OF THINGS

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

Parent Company: United Parcel Service Inc (UEI: 006991681)

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: $27,207,830

Exercised Options: $27,207,830

Current Obligation: $27,207,830

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71117DC003

IDV Type: IDC

Timeline