DoD's $28.1M Federal Express contract for expedited shipping shows strong competition and value

Contract Overview

Contract Amount: $28,100,168 ($28.1M)

Contractor: Federal Express Corporation

Awarding Agency: Department of Defense

Start Date: 2024-08-01

End Date: 2024-08-31

Contract Duration: 30 days

Daily Burn Rate: $936.7K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Transportation

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

Place of Performance

Location: MEMPHIS, SHELBY County, TENNESSEE, 38132

State: Tennessee Government Spending

Plain-Language Summary

Department of Defense obligated $28.1 million to FEDERAL EXPRESS CORPORATION for work described as: CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS. Key points: 1. This contract leverages a large, established carrier for critical logistics needs. 2. The firm-fixed-price structure provides cost certainty for the government. 3. Multiple bids indicate a competitive market for these services. 4. The short duration suggests task-specific or surge support. 5. Performance is benchmarked against industry standards for express delivery. 6. Geographic reach is extensive, covering domestic and potentially international shipments.

Value Assessment

Rating: good

The contract's value of $28.1 million for a one-month delivery order appears reasonable given the scale of services typically provided by Federal Express for Department of Defense logistics. Benchmarking against similar expedited shipping contracts is challenging due to the specific nature of military requirements and the broad service catalog of major carriers. However, the firm-fixed-price award suggests a negotiated rate that aims for value, especially when considering the urgency and reliability demanded by defense operations. The award amount is a significant portion of the total contract ceiling, indicating substantial utilization during the period.

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 while the competition was broad, specific exclusions were made, likely based on pre-qualification or specific technical requirements. Three bids were received, demonstrating a healthy level of competition for this significant delivery order. This suggests that multiple qualified vendors were able to participate, leading to a competitive pricing environment and a greater likelihood of achieving fair market value.

Taxpayer Impact: The competitive bidding process for this contract helps ensure that taxpayer dollars are used efficiently by driving down prices and encouraging service providers to offer their best terms.

Public Impact

Expedited delivery of critical supplies and equipment to Department of Defense personnel and operations. Supports military readiness and operational tempo by ensuring timely movement of goods. Benefits military units and support staff requiring rapid transportation solutions. Impacts the logistics and supply chain sector by utilizing established commercial carriers. Ensures continuity of operations for various defense missions.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases in future contract renewals if competition diminishes.
Dependence on a single large carrier could pose risks if service disruptions occur.
Ensuring compliance with all delivery timelines and service level agreements is crucial.

Positive Signals

Leverages a well-established and reliable carrier with a proven track record.
Firm-fixed-price contract provides budget predictability.
Competitive award process suggests favorable pricing was achieved.
High volume of spending indicates significant operational reliance and likely satisfaction.

Sector Analysis

The contract falls within the 'Couriers and Express Delivery Services' sector, a critical component of the broader logistics and transportation industry. This sector is characterized by intense competition among global players and significant investment in infrastructure and technology. Federal spending in this area supports government agencies' needs for rapid and reliable movement of goods, often for national security or essential services. Comparable spending benchmarks are difficult to isolate due to the specialized nature of government contracts, but the overall market for express delivery services is substantial, measured in billions of dollars annually.

Small Business Impact

This contract was awarded to Federal Express Corporation, a large prime contractor, and there is no indication of a small business set-aside. While Federal Express may utilize small businesses in its subcontracting network, the primary award does not directly benefit small businesses through set-aside provisions. The focus is on leveraging the capabilities of a major established carrier to meet the government's urgent delivery needs.

Oversight & Accountability

Oversight for this contract is managed by the Department of Defense's USTRANSCOM, which is responsible for coordinating and managing the global transportation requirements of the U.S. military. The firm-fixed-price nature of the award provides a degree of cost control. Transparency is facilitated through contract award databases, and accountability is maintained through performance metrics and potential penalties for non-compliance with delivery schedules and service level agreements. Inspector General involvement would be triggered by specific allegations of fraud, waste, or abuse.

Related Government Programs

Military Parcel Delivery Services
Expedited Freight Services
Government Logistics Support
Defense Transportation Contracts

Risk Flags

Potential for service disruption due to reliance on a single carrier.
Need for robust oversight to ensure adherence to delivery timelines and service levels.
Complexity in direct per-unit cost benchmarking due to service variety.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $28.1 million to FEDERAL EXPRESS CORPORATION. CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS.

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 $28.1 million.

What is the period of performance?

Start: 2024-08-01. End: 2024-08-31.

What is the historical spending trend for consolidated transportation shipments by decentralized ordering officers with Federal Express Corporation?

Analyzing historical spending trends for this specific contract requires access to detailed procurement data over multiple fiscal years. However, the current award of $28.1 million for a one-month period suggests a significant and potentially recurring need for Federal Express's services within the Department of Defense. Without prior year data, it's difficult to ascertain if this represents an increase, decrease, or stable level of spending. Factors influencing trends could include changes in operational tempo, shifts in logistics strategies, or the availability of alternative carriers. Further investigation into USTRANSCOM's procurement history for similar services would be necessary to establish a comprehensive trend analysis.

How does the per-unit cost of this contract compare to other government expedited shipping contracts?

Determining a precise per-unit cost comparison is challenging without specific details on the number and type of shipments covered under this $28.1 million delivery order. Federal Express offers a wide range of services, from small envelopes to large freight, each with different pricing structures. The contract's firm-fixed-price nature suggests that rates were negotiated based on anticipated volumes and service levels. To benchmark effectively, one would need to compare the average cost per pound, per package, or per mile against similar contracts awarded to other carriers (e.g., UPS, DHL) for comparable government needs, considering factors like delivery speed, geographic scope, and service requirements. The 'Couriers and Express Delivery Services' NAICS code (492110) covers a broad spectrum, making direct per-unit comparisons difficult without granular data.

What are the key performance indicators (KPIs) used to evaluate Federal Express's performance under this contract?

Key performance indicators for this contract likely revolve around critical logistics metrics essential for military operations. These typically include on-time delivery rates, package integrity (minimal damage or loss), adherence to service level agreements (SLAs) for different shipping speeds, and responsiveness to tracking and customer service inquiries. For a contract of this nature, meeting stringent delivery deadlines for time-sensitive materials is paramount. USTRANSCOM would monitor these KPIs closely, potentially using automated tracking systems and periodic performance reviews. Failure to meet these KPIs could result in contractual remedies, financial penalties, or impact future contract awards.

What is the risk associated with relying heavily on a single large carrier like Federal Express for consolidated transportation shipments?

The primary risk associated with relying heavily on a single large carrier like Federal Express is service disruption. Any operational issues faced by the carrier, such as labor strikes, natural disasters affecting their network, or system outages, could significantly impact the Department of Defense's ability to move critical shipments. This dependence can also reduce bargaining power in future negotiations if competition is perceived as limited. Mitigating this risk often involves maintaining relationships with multiple carriers, establishing robust contingency plans, and closely monitoring the carrier's performance and financial stability.

How does the 'Full and Open Competition After Exclusion of Sources' clause impact the overall cost-effectiveness for taxpayers?

The 'Full and Open Competition After Exclusion of Sources' clause indicates that while the competition was broadly solicited, certain potential bidders were excluded. This exclusion is typically based on specific criteria, such as pre-qualification, security clearances, or demonstrated technical capabilities necessary for the contract's requirements. While it aims to ensure only capable vendors participate, the exclusion of some sources could potentially limit the breadth of competition. If the excluded sources could have offered competitive pricing or innovative solutions, their exclusion might lead to a higher overall cost for taxpayers compared to unrestricted full and open competition. However, if the exclusions are justified by essential requirements, it ensures that the selected vendors are best suited for the task, potentially leading to better performance and reduced risk, which can indirectly benefit taxpayers through improved mission accomplishment.

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: 3

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: $28,100,168

Exercised Options: $28,100,168

Current Obligation: $28,100,168

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71123DC023

IDV Type: IDC

Timeline