VA awards $17.9M contract to Federal Express for nationwide delivery services

Contract Overview

Contract Amount: $17,948,706 ($17.9M)

Contractor: Federal Express Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-10-01

End Date: 2025-09-30

Contract Duration: 364 days

Daily Burn Rate: $49.3K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: NGDS SHIPPING

Place of Performance

Location: LANCASTER, DALLAS County, TEXAS, 75134

State: Texas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $17.9 million to FEDERAL EXPRESS CORPORATION for work described as: NGDS SHIPPING Key points: 1. Contract leverages established courier network for efficient delivery. 2. Competition was open, suggesting potential for competitive pricing. 3. Fixed-price contract limits cost escalation risks. 4. Delivery services are critical for VA operations and patient care. 5. Performance period aligns with typical annual service needs. 6. Contract value is moderate within the broader federal logistics spend.

Value Assessment

Rating: good

The contract value of $17.9 million for a one-year period appears reasonable for nationwide express delivery services. Benchmarking against similar contracts for courier and express delivery services by agencies like HHS or DoD would provide a more precise value-for-money assessment. However, given the scale of operations for the VA, this price point suggests a competitive rate, especially considering the firm-fixed-price nature which transfers risk to the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition after exclusion of sources, indicating that multiple vendors were likely solicited and evaluated. The presence of four bidders (no=4) suggests a healthy level of competition for this service. This competitive environment generally leads to better price discovery and potentially more favorable terms for the government.

Taxpayer Impact: A competitive award means taxpayer dollars are likely being used more efficiently, as the government secured services from the most advantageous offer received.

Public Impact

Veterans will benefit from timely delivery of medical supplies, prescriptions, and other essential items. The contract ensures the continuity of critical logistics services for the Department of Veterans Affairs nationwide. Services will impact all states and territories within the VA's operational footprint. The contract supports jobs within the courier and logistics industry, primarily through Federal Express's workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for service disruptions if contractor faces unforeseen operational challenges.
Reliance on a single large contractor for critical logistics could pose a risk if not managed closely.
Ensuring consistent service quality across all delivery locations requires robust oversight.

Positive Signals

Use of a well-established and experienced provider with a proven track record in logistics.
Firm-fixed-price contract structure provides cost certainty.
Full and open competition indicates a robust selection process.
Contract duration of one year allows for periodic reassessment of needs and performance.

Sector Analysis

The federal spending on couriers and express delivery services (NAICS 492110) is a significant component of the government's logistics and supply chain operations. Agencies across the government rely on these services for everything from mail and packages to critical medical supplies. This contract with Federal Express fits within this broader category, representing a portion of the government's investment in maintaining efficient and reliable delivery networks, comparable to spending by other large agencies with distributed operations.

Small Business Impact

This contract does not appear to have a small business set-aside (ss=false, sb=false). While the primary award is to a large corporation, Federal Express may utilize small businesses for subcontracting opportunities within its extensive network. However, the direct award does not specifically target small business participation.

Oversight & Accountability

Oversight will likely be managed by the contracting officer and contract specialists within the Department of Veterans Affairs. Performance monitoring, delivery confirmations, and issue resolution will be key accountability measures. Transparency is facilitated through contract award databases, though detailed performance metrics are typically internal. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Federal Express contracts with other agencies
VA medical supply chain management
Government logistics and transportation services
Express delivery services contracts

Risk Flags

Potential for service level degradation
Over-reliance on a single large provider
Ensuring nationwide service equity

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $17.9 million to FEDERAL EXPRESS CORPORATION. NGDS SHIPPING

Who is the contractor on this award?

The obligated recipient is FEDERAL EXPRESS CORPORATION.

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 $17.9 million.

What is the period of performance?

Start: 2024-10-01. End: 2025-09-30.

What is Federal Express Corporation's track record with the Department of Veterans Affairs and other federal agencies for similar delivery services?

Federal Express Corporation has a long-standing relationship with the federal government, including the Department of Veterans Affairs, providing a wide range of logistics and delivery services. A review of federal procurement data indicates numerous past awards to Federal Express for express delivery, mail services, and specialized transportation across various agencies such as the Department of Defense, Postal Service, and Health and Human Services. These contracts often involve firm-fixed-price agreements for nationwide or regional delivery networks. While specific performance metrics for each contract are not publicly detailed, the continued awarding of significant contracts suggests a generally satisfactory performance history and capability to meet federal requirements. The VA, in particular, relies heavily on dependable delivery for medical supplies and pharmaceuticals, making contractor reliability a key factor in their procurement decisions.

How does the awarded price of $17.9 million compare to market rates for similar nationwide express delivery services?

Benchmarking the $17.9 million contract value against precise market rates for nationwide express delivery is complex due to the variability in service levels, volumes, and negotiated discounts. However, considering Federal Express's position as a major carrier, this price likely reflects a combination of standard service rates and volume-based discounts negotiated through the competitive bidding process. For a one-year contract covering extensive nationwide delivery for a large agency like the VA, the cost appears competitive. Industry analyses suggest that large-volume government contracts often achieve rates below published list prices but above the lowest possible spot rates. The firm-fixed-price nature further suggests that the contractor has factored in anticipated costs and risks, aiming for a profitable margin within the set price, which is a common practice in government contracting.

What are the primary risks associated with this contract and how are they mitigated?

The primary risks associated with this contract include potential service disruptions due to unforeseen events (e.g., weather, labor disputes, operational failures), inconsistent service quality across diverse geographic locations, and potential cost overruns if the firm-fixed-price model does not adequately account for all variables. Mitigation strategies are embedded within the contract and agency oversight. The firm-fixed-price structure shifts much of the financial risk to Federal Express. The contract's one-year duration allows the VA to reassess performance and needs annually. Robust oversight by the contracting officer, including performance monitoring, tracking delivery metrics, and a clear process for addressing service failures or disputes, is crucial. Furthermore, the use of a well-established provider like Federal Express, with its extensive infrastructure and contingency planning, inherently reduces the likelihood of major disruptions compared to a less experienced vendor.

How effective is the 'full and open competition after exclusion of sources' method in ensuring value for taxpayers in this case?

The 'full and open competition after exclusion of sources' method is generally effective in ensuring value for taxpayers because it allows the government to solicit bids from all responsible prospective contractors while potentially excluding specific sources for defined reasons (though in this case, it seems to imply a broad solicitation followed by a specific award). The key is that it opens the field to multiple bidders, fostering price competition. With four bidders participating, as indicated, the VA had a basis for comparing offers and selecting the most advantageous one, likely based on a combination of price and technical factors. This competitive pressure incentivizes bidders to offer their best pricing and service terms, thereby maximizing the value received for taxpayer funds. The alternative, such as sole-source or limited competition, typically results in higher prices due to reduced market pressure.

What are the historical spending patterns for similar courier and express delivery services by the Department of Veterans Affairs?

Historical spending patterns for courier and express delivery services by the Department of Veterans Affairs typically show consistent annual expenditures, reflecting the ongoing need for these services to support healthcare delivery, supply chain management, and administrative functions. The VA's vast network of facilities and its reliance on timely delivery of pharmaceuticals, medical equipment, and patient records necessitate significant investment in logistics. Annual spending can fluctuate based on specific program needs, changes in service requirements, and the competitive landscape influencing contract pricing. Examining past contract awards for similar services reveals a pattern of utilizing large, established carriers like Federal Express, UPS, and others, often through multi-year agreements or multiple task orders against larger indefinite-delivery/indefinite-quantity (IDIQ) contracts. The $17.9 million awarded here represents a substantial, but not necessarily anomalous, portion of the VA's annual spend in this category.

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: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Fedex Corp

Address: 2003 CORPORATE PLZ, MEMPHIS, TN, 38132

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

Financial Breakdown

Contract Ceiling: $17,948,706

Exercised Options: $17,948,706

Current Obligation: $17,948,706

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71123DC023

IDV Type: IDC

Timeline