DoD's $43M Civil Reserve Air Fleet Contract with FedEx Faces Scrutiny for Potential Overpricing

Contract Overview

Contract Amount: $42,971,811 ($43.0M)

Contractor: Federal Express Corporation

Awarding Agency: Department of Defense

Start Date: 2022-10-01

End Date: 2024-09-30

Contract Duration: 730 days

Daily Burn Rate: $58.9K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 10

Pricing Type: FIRM FIXED PRICE

Sector: Transportation

Official Description: CIVIL RESERVE AIR FLEET - AIR TRANSPORTATION SERVICES

Place of Performance

Location: MEMPHIS, SHELBY County, TENNESSEE, 38118

State: Tennessee Government Spending

Plain-Language Summary

Department of Defense obligated $43.0 million to FEDERAL EXPRESS CORPORATION for work described as: CIVIL RESERVE AIR FLEET - AIR TRANSPORTATION SERVICES Key points: 1. The contract awarded to Federal Express Corporation for air transportation services is a significant expenditure. 2. Competition was full and open after exclusion of sources, but the specific rationale for exclusion needs review. 3. Potential risks include overpricing given the benchmark and the impact of excluding certain sources. 4. The sector is air transportation, a critical component of defense logistics.

Value Assessment

Rating: questionable

The contract's total award value of $42.97M over two years, with a benchmark of $58.87M, suggests potential overpricing. The per-unit cost is not directly calculable without more detailed delivery information, but the overall award is significantly below the benchmark.

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.' While competition was sought, the exclusion of specific sources warrants further investigation to ensure it did not unduly limit price discovery or lead to a less competitive outcome.

Taxpayer Impact: The potential for overpricing, even with a benchmark suggesting savings, means taxpayers may not be receiving the best possible value for these essential air transportation services.

Public Impact

Ensures critical air transport capacity for national defense needs. Supports a major logistics provider, Federal Express Corporation. Potential for taxpayer savings if pricing is optimized. Highlights the complexity of defense contracting and source exclusion.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential overpricing relative to benchmark.
Lack of clarity on source exclusion rationale.
Limited visibility into per-unit cost effectiveness.

Positive Signals

Contract awarded under full and open competition.
Award value is below the benchmark.
Long-term contract provides stability for critical services.

Sector Analysis

This contract falls within the air transportation sector, specifically for charter services supporting the Civil Reserve Air Fleet. Spending in this area is crucial for military readiness, and benchmarks are often established to ensure cost-effectiveness against market rates.

Small Business Impact

The data indicates the awardee is Federal Express Corporation, a large business. There is no explicit mention of small business participation in this specific contract award, suggesting limited direct impact or subcontracting opportunities for small businesses.

Oversight & Accountability

The contract is managed by USTRANSCOM, a component of the Department of Defense responsible for global logistics. Oversight would involve monitoring performance, delivery, and adherence to contract terms, with potential for audits to ensure fiscal responsibility.

Related Government Programs

Nonscheduled Chartered Passenger Air Transportation
Department of Defense Contracting
USTRANSCOM Programs

Risk Flags

Potential for overpricing despite award being below benchmark.
Lack of transparency regarding source exclusion.
Need for detailed per-unit cost analysis.
Limited direct small business involvement.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $43.0 million to FEDERAL EXPRESS CORPORATION. CIVIL RESERVE AIR FLEET - AIR TRANSPORTATION SERVICES

Who is the contractor on this award?

The obligated recipient is FEDERAL EXPRESS CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Defense (USTRANSCOM).

What is the total obligated amount?

The obligated amount is $43.0 million.

What is the period of performance?

Start: 2022-10-01. End: 2024-09-30.

What specific factors led to the exclusion of certain sources in this 'full and open competition after exclusion of sources' scenario, and how did this impact the final pricing?

The rationale for excluding sources needs detailed examination. Typically, exclusions might be based on security, capability, or specific performance requirements. However, without transparency, it's difficult to ascertain if these exclusions were justified or if they inadvertently limited competition, potentially leading to less favorable pricing for the government and taxpayers.

How does the actual per-unit cost of these air transportation services compare to industry standards or historical government rates, considering the total award value is below the benchmark?

While the total award value is below the benchmark, a true assessment of value requires analyzing the per-unit cost against comparable services. Factors like flight distance, cargo type, and urgency influence pricing. A detailed breakdown of deliveries and associated costs is needed to determine if the firm fixed price adequately reflects the service provided or if there's room for optimization.

What mechanisms are in place to ensure the effectiveness and efficiency of these air transportation services, particularly given the long-term nature of the contract and the potential for evolving ope

Effectiveness is likely monitored through performance metrics related to on-time delivery, cargo integrity, and fleet availability. The long-term nature suggests a need for contract flexibility to adapt to changing geopolitical or operational demands. Regular performance reviews and potential contract modifications would be key oversight tools to ensure continued effectiveness and value.

Industry Classification

NAICS: Transportation and Warehousing › Nonscheduled Air Transportation › Nonscheduled Chartered Passenger Air Transportation

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: 10

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Fedex Corp

Address: 2955 REPUBLICAN DR FL 1, MEMPHIS, TN, 38118

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

Financial Breakdown

Contract Ceiling: $42,971,811

Exercised Options: $42,971,811

Current Obligation: $42,971,811

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71118DCC37

IDV Type: IDC

Timeline