DoD's $52.9M Federal Express contract for consolidated transportation shipments shows fair value with 9 bidders

Contract Overview

Contract Amount: $52,910,170 ($52.9M)

Contractor: Federal Express Corp

Awarding Agency: Department of Defense

Start Date: 2011-07-31

End Date: 2011-07-31

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 9

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT

Sector: Other

Official Description: CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS.

Place of Performance

Location: HOUSTON, HARRIS County, TEXAS, 77002

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $52.9 million to FEDERAL EXPRESS CORP for work described as: CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS. Key points: 1. The contract achieved fair value, evidenced by a competitive bidding process involving nine distinct offers. 2. Competition dynamics suggest a healthy market for courier and express delivery services within the defense sector. 3. Risk indicators appear low, with a fixed-price contract structure and a single delivery order. 4. Performance context is limited to a single delivery order, making long-term assessment challenging. 5. This contract positions within the broader logistics and transportation services sector, supporting critical defense operations.

Value Assessment

Rating: good

The contract's value appears reasonable given the competitive nature of the bidding process, which saw nine offers. While specific cost breakdowns are not available, the fixed-price structure with economic price adjustment suggests an attempt to manage cost fluctuations. Benchmarking against similar large-scale transportation contracts would provide further insight, but the presence of multiple bidders generally indicates a market-driven price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The participation of nine bidders suggests a robust level of competition within the market for these services. This broad competition is generally favorable for price discovery and ensuring the government receives competitive pricing.

Taxpayer Impact: The high number of bidders in this full and open competition likely resulted in a more favorable price for taxpayers compared to a sole-source or limited competition scenario.

Public Impact

The Department of Defense benefits from efficient and consolidated transportation of goods. Services delivered include express courier and delivery for consolidated shipments. The contract's geographic impact is national, supporting decentralized ordering officers across various locations. Workforce implications are primarily within the logistics and transportation sector, supporting Federal Express employees.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited performance data beyond a single delivery order makes it difficult to assess long-term contractor performance.
The fixed-price with economic price adjustment structure carries some risk of cost escalation if market conditions change significantly.

Positive Signals

Awarded under full and open competition with nine bidders, indicating a competitive market.
The contract utilized a fixed-price structure, which generally provides cost certainty.
The contractor, Federal Express Corp, is a well-established entity in the logistics industry.

Sector Analysis

This contract falls within the broader Information Technology and Courier and Express Delivery Services sector, specifically NAICS code 492110. This sector is characterized by high competition and significant investment in infrastructure and technology. Federal Express operates as a major player in this market, competing with other large logistics providers. Government spending in this area supports the efficient movement of goods and materials essential for agency operations.

Small Business Impact

The data indicates this contract was not set aside for small businesses, and there is no explicit information regarding subcontracting plans. As a large contract awarded to a major carrier, it is unlikely to have significant direct subcontracting opportunities for small businesses unless specified in the contract terms, which are not detailed here.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of USTRANSCOM and the Department of Defense's contracting officers. Accountability measures are inherent in the contract terms, including delivery schedules and service level agreements. Transparency is facilitated through contract databases like FPDS, though detailed performance metrics are not publicly available.

Related Government Programs

Defense Logistics Agency (DLA) Transportation Services
General Services Administration (GSA) Schedule 711 - Transportation, Delivery, and Related Services
Other Department of Defense transportation contracts

Risk Flags

Limited performance data
Potential for cost escalation due to economic price adjustment

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $52.9 million to FEDERAL EXPRESS CORP. CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS.

Who is the contractor on this award?

The obligated recipient is FEDERAL EXPRESS CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (USTRANSCOM).

What is the total obligated amount?

The obligated amount is $52.9 million.

What is the period of performance?

Start: 2011-07-31. End: 2011-07-31.

What is the historical spending trend for consolidated transportation shipments by the Department of Defense?

Analyzing historical spending trends for consolidated transportation shipments by the Department of Defense requires access to comprehensive contract data over multiple fiscal years. While this specific contract represents a $52.9 million award, understanding the broader trend involves examining annual obligations for similar services, including those awarded through different contract vehicles and to various carriers. Factors influencing these trends include changes in military operations, deployment levels, inventory management strategies, and the adoption of new logistics technologies. A detailed analysis would involve identifying all relevant contracts, aggregating spending, and looking for patterns of increase or decrease, potentially correlated with geopolitical events or strategic shifts within the DoD. Without access to a broader dataset, it's difficult to provide a definitive trend beyond this single contract's value.

How does the per-unit cost of this Federal Express contract compare to market rates for similar courier services?

Determining the precise per-unit cost for this Federal Express contract is challenging without detailed information on the specific services rendered (e.g., weight, volume, distance, speed of delivery for each shipment). The contract value of $52.9 million covers consolidated transportation shipments made by decentralized ordering officers, which is a broad description. To compare with market rates, one would need to break down the total value by the number and type of shipments. Federal Express operates in a competitive market, and its pricing is generally influenced by factors such as service level, network reach, and volume discounts. Benchmarking would involve comparing the effective per-shipment cost against published rates or rates from similar government contracts awarded to competitors like UPS or DHL, considering the specific service parameters.

What is Federal Express Corp's track record with Department of Defense contracts?

Federal Express Corporation (FedEx) has a significant track record of performing contracts for the Department of Defense and other federal agencies, primarily in the realm of logistics and express delivery services. They are a major player in the transportation industry, known for their extensive global network and reliable service. DoD contracts with FedEx typically involve the movement of mail, packages, and time-sensitive materials supporting military operations worldwide. While specific performance metrics for individual contracts are not always publicly detailed, FedEx's continued awards from the DoD suggest a generally satisfactory performance history. However, like any large contractor, there may be instances of performance issues or contract disputes that are not widely publicized but are managed through contract administration processes.

What are the primary risks associated with this type of transportation services contract?

The primary risks associated with this type of transportation services contract include potential cost overruns due to economic price adjustments, especially if fuel or labor costs increase unexpectedly. Service disruptions caused by weather events, labor strikes, or unforeseen logistical challenges could impact delivery timelines, which is critical for military operations. There's also a risk of performance degradation if the contractor's network capacity is exceeded or if service quality declines over time. Furthermore, security risks related to the transportation of sensitive materials and compliance risks associated with international shipping regulations or customs can arise. Ensuring robust oversight and clear performance standards is key to mitigating these risks.

How does the level of competition (9 bidders) impact the overall value for taxpayers?

A high level of competition, such as the nine bidders in this contract, generally translates to better value for taxpayers. When multiple qualified vendors vie for a contract, they are incentivized to offer competitive pricing and favorable terms to win the award. This scenario allows the government to leverage market forces to secure services at or near the lowest possible cost while maintaining required quality standards. The presence of numerous bidders suggests that the market is not dominated by a single provider, fostering a dynamic environment where innovation and efficiency are rewarded. Consequently, taxpayers benefit from reduced expenditure compared to what might be charged in a less competitive or sole-source situation.

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

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: HTC71107R0003

Offers Received: 9

Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)

Evaluated Preference: NONE

Contractor Details

Parent Company: Fedex Corp (UEI: 003141970)

Address: 900 7TH ST NW STE 550, WASHINGTON, DC, 20001

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $52,910,170

Exercised Options: $52,910,170

Current Obligation: $52,910,170

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71108D0009

IDV Type: IDC

Timeline