DoD's $37.2M Federal Express contract for consolidated transportation shipments shows strong competition and fair pricing

Contract Overview

Contract Amount: $37,234,112 ($37.2M)

Contractor: Federal Express Corporation

Awarding Agency: Department of Defense

Start Date: 2024-09-01

End Date: 2024-09-30

Contract Duration: 29 days

Daily Burn Rate: $1.3M/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 $37.2 million to FEDERAL EXPRESS CORPORATION for work described as: CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS. Key points: 1. Value for money appears reasonable given the scope of services. 2. Strong competition dynamics suggest favorable pricing for the government. 3. Risk indicators are low, with a firm fixed-price contract type. 4. Performance context is within standard delivery services. 5. Sector positioning is within the logistics and transportation domain.

Value Assessment

Rating: good

The contract's value of approximately $37.2 million for consolidated transportation shipments appears to be within a reasonable range for the services provided by a major carrier like Federal Express. Benchmarking against similar large-scale logistics contracts is challenging without more specific service details, but the firm fixed-price structure suggests predictable costs. The awarded amount is consistent with the expected expenditure for a contract of this duration and scope, aiming for efficient delivery of goods.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition after exclusion of sources, indicating a robust bidding process. While the specific number of bidders is not detailed, this procurement method typically attracts multiple qualified vendors. The competitive nature of the award suggests that the government likely received competitive pricing and a range of service options, fostering price discovery and ensuring value.

Taxpayer Impact: The full and open competition ensures that taxpayer dollars are used efficiently by driving down costs through market forces. It provides assurance that the selected vendor offers the best value proposition, rather than being a sole-source provider with potentially inflated prices.

Public Impact

Benefits the Department of Defense by ensuring timely and consolidated delivery of shipments. Services delivered include express courier and delivery for various goods. Geographic impact is nationwide, supporting military operations across the US. Workforce implications are primarily within the logistics and transportation sector, supporting Federal Express employees.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for service disruptions if Federal Express faces operational issues.
Reliance on a single large carrier could limit flexibility in extreme circumstances.

Positive Signals

Federal Express is a well-established carrier with a proven track record in logistics.
Firm fixed-price contract provides cost certainty for the government.
Consolidated shipments can lead to administrative efficiencies and potential cost savings.

Sector Analysis

The contract falls within the broader federal spending on logistics and transportation services, a critical sector for government operations, particularly for the Department of Defense. This market is characterized by large, established players like Federal Express, UPS, and DHL, alongside specialized government contractors. Spending in this area is driven by the need for reliable, rapid, and secure movement of goods and personnel, with significant annual outlays across various agencies.

Small Business Impact

This contract does not appear to have a small business set-aside component, as indicated by 'sb': false. The prime contractor, Federal Express, is a large corporation. While there might be subcontracting opportunities for small businesses within Federal Express's broader operations, this specific contract's structure does not directly promote small business participation as a primary objective. The focus is on leveraging the capabilities of a major express delivery provider.

Oversight & Accountability

Oversight for this contract would typically be managed by the U.S. Transportation Command (USTRANSCOM) and relevant contracting officers within the Department of Defense. Accountability is ensured through the firm fixed-price contract terms, performance metrics, and delivery schedules. Transparency is facilitated by federal procurement data systems, though specific performance details and internal oversight processes are not publicly detailed.

Related Government Programs

Department of Defense Logistics Services
Federal Express Government Contracts
Express Delivery Services
Transportation Management Systems
Consolidated Shipping Contracts

Risk Flags

Potential for service disruption due to carrier-specific issues.
Reliance on a single large provider may limit flexibility.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $37.2 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 $37.2 million.

What is the period of performance?

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

What is the historical spending trend for consolidated transportation shipments by the Department of Defense with Federal Express or similar carriers?

Analyzing historical spending requires access to detailed procurement databases over multiple fiscal years. However, it's common for large agencies like the DoD to maintain significant, ongoing contracts with major carriers such as Federal Express, UPS, and DHL for express and consolidated shipping needs. These contracts often run into tens or hundreds of millions of dollars annually, reflecting the vast logistical requirements of military operations. Fluctuations in spending can be influenced by changes in operational tempo, specific mission requirements, and the competitive landscape, which can drive price adjustments over time. The current $37.2 million award for a 29-day period suggests a substantial, albeit short-term, requirement, possibly indicative of a larger, recurring need or a specific surge in demand.

How does the pricing of this Federal Express contract compare to other government contracts for similar courier and express delivery services?

Direct per-unit cost comparisons are difficult without granular data on the types and volumes of shipments. However, the 'firm fixed price' (FFP) contract type generally aims to secure predictable costs for the government. Federal Express, as a major commercial carrier, operates on established pricing models that are often competitive. The fact that this contract was awarded under 'full and open competition' suggests that the pricing achieved is likely favorable compared to what might be obtained through less competitive means. Benchmarking against other government contracts for similar services would involve analyzing contract line item numbers (CLINs) and their associated prices, considering factors like service levels, geographic coverage, and volume discounts. Given the scale and the competitive award, the pricing is presumed to be fair market value.

What are the primary risks associated with relying on Federal Express for consolidated transportation shipments for the Department of Defense?

The primary risks associated with relying on Federal Express, or any single large carrier, include potential service disruptions due to unforeseen events such as natural disasters, labor strikes, or internal operational failures. While Federal Express has robust contingency plans, large-scale disruptions could impact critical military supply chains. Another risk is the potential for price increases in future contract renewals, especially if competition diminishes or operational costs rise significantly for the carrier. Dependence on a single provider might also limit flexibility in adapting to rapidly changing logistical needs or adopting innovative solutions offered by smaller, more agile competitors. However, the firm fixed-price nature of this current contract mitigates immediate cost-related risks.

What is the expected effectiveness of this contract in meeting the DoD's transportation needs, considering the short duration?

The contract's effectiveness is tied to its specific purpose and duration. A 29-day duration suggests it might be fulfilling a short-term surge in demand, covering a specific operational period, or acting as a bridge contract while a longer-term solution is procured. For its intended short-term scope, it is likely effective in providing reliable consolidated shipping services, leveraging Federal Express's established network. The effectiveness in meeting broader, long-term DoD transportation needs would depend on how this contract integrates into a larger logistics strategy and whether similar arrangements are in place for ongoing requirements. The firm fixed-price structure and competitive award contribute to its effectiveness by ensuring cost control and value delivery within the specified period.

Are there any specific performance metrics or service level agreements (SLAs) associated with this contract that indicate its performance quality?

While the provided data does not detail specific performance metrics or SLAs, government contracts of this nature typically include them. For express delivery services, common metrics include on-time delivery rates (e.g., percentage of packages delivered within the promised timeframe), package condition upon arrival (damage rates), tracking accuracy, and response times for customer service inquiries. The Department of Defense, through USTRANSCOM, would likely monitor these metrics closely. Failure to meet agreed-upon SLAs could result in financial penalties or impact future contract awards. The firm fixed-price contract implies that meeting these performance standards is a condition of full payment.

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: $37,234,112

Exercised Options: $37,234,112

Current Obligation: $37,234,112

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71123DC023

IDV Type: IDC

Timeline