DoD's $23.6M Federal Express contract for expedited shipping shows strong competition and value

Contract Overview

Contract Amount: $23,592,100 ($23.6M)

Contractor: Federal Express Corporation

Awarding Agency: Department of Defense

Start Date: 2025-02-01

End Date: 2025-02-28

Contract Duration: 27 days

Daily Burn Rate: $873.8K/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 $23.6 million to FEDERAL EXPRESS CORPORATION for work described as: CONSOLIDATED TRANSPORTATION SHIPMENTS MADE BY DECENTRALIZED ORDERING OFFICERS. Key points: 1. Contract awarded through full and open competition, indicating a competitive market. 2. Pricing appears reasonable given the firm-fixed-price structure and short performance period. 3. High volume of delivery orders suggests consistent demand for urgent transportation. 4. Performance is limited to one month, reducing long-term risk exposure. 5. The contractor, Federal Express, is a well-established player in the logistics sector. 6. Spending is concentrated in Tennessee, potentially impacting regional logistics infrastructure.

Value Assessment

Rating: good

The contract's firm-fixed-price structure provides cost certainty for the Department of Defense. While a direct per-unit cost comparison is difficult without knowing the specific services rendered for each delivery order, the total award value of $23.6 million for a one-month period suggests a significant volume of expedited shipments. Benchmarking against similar consolidated transportation contracts would be necessary for a more precise value assessment, but the competitive award process implies a reasonable market price was achieved.

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 that multiple bidders were solicited and considered. The presence of three bidders (implied by 'no': 3) suggests a healthy level of competition for this expedited shipping service. This competitive environment is generally favorable for price discovery and ensures the government receives competitive offers.

Taxpayer Impact: The competitive nature of this award means taxpayers benefit from potentially lower prices due to multiple companies vying for the contract. It also suggests that the government is leveraging market forces to secure efficient delivery services.

Public Impact

Military personnel and agencies requiring urgent delivery of supplies and equipment benefit from this service. Expedited shipping services are delivered across various locations as needed by the Department of Defense. The primary geographic impact is within the United States, supporting domestic military operations. The contract supports the logistics and transportation workforce employed by Federal Express.

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 contractor for critical, time-sensitive shipments could pose a risk if service disruptions occur.

Positive Signals

Awarded through full and open competition, indicating a robust market.
Firm-fixed-price contract provides cost predictability.
Contractor is a reputable and experienced logistics provider.
Short performance period limits long-term commitment and risk.

Sector Analysis

The contract falls within the Couriers and Express Delivery Services sector, a critical component of the broader transportation and logistics industry. This sector is characterized by significant competition, technological advancements in tracking and delivery, and a strong reliance on efficient networks. The market size for federal logistics services is substantial, with agencies like the Department of Defense being major consumers of expedited shipping to maintain operational readiness and supply chain integrity.

Small Business Impact

This contract does not appear to have a small business set-aside (ss: false) and there is no indication of subcontracting requirements for small businesses (sb: false). Therefore, the direct impact on the small business ecosystem is likely minimal. However, Federal Express, as a large prime contractor, may engage small businesses as subcontractors for ancillary services not covered by this specific award.

Oversight & Accountability

Oversight for this contract would primarily reside with the U.S. Transportation Command (USTRANSCOM), the contracting agency. Accountability is ensured through the firm-fixed-price contract terms, requiring delivery of services as specified. Transparency is facilitated by the contract award data being publicly available. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Expedited Freight Services
Logistics and Supply Chain Management
Department of Defense Transportation Contracts
Federal Express Government Contracts

Risk Flags

Potential for service disruption due to reliance on a single provider for the contract duration.
Lack of specific performance metrics makes it difficult to assess efficiency beyond award value.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $23.6 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 $23.6 million.

What is the period of performance?

Start: 2025-02-01. End: 2025-02-28.

What is the historical spending pattern for consolidated transportation shipments by the Department of Defense with Federal Express?

Analyzing historical spending patterns for consolidated transportation shipments by the Department of Defense with Federal Express requires access to historical contract data beyond this single award. However, the current award of $23.6 million for a one-month period suggests a significant and potentially recurring need for expedited shipping services. If similar contracts have been awarded in previous years, it would indicate a consistent reliance on Federal Express for these critical logistics functions. Trends in award values, contract durations, and competition levels over time would provide a clearer picture of the government's evolving needs and the contractor's sustained role in fulfilling them. Without this historical context, it's difficult to ascertain if current spending represents an increase, decrease, or stable level of investment in these services.

How does the per-delivery cost of this contract compare to other federal express delivery contracts?

A precise per-delivery cost comparison for this Federal Express contract is challenging without detailed breakdowns of the services rendered for each of the delivery orders (no: 3). The total award is $23.6 million for a one-month period. To benchmark effectively, we would need to know the average number of deliveries made and the specific service levels (e.g., overnight, same-day) for each. Comparing this to other federal express delivery contracts would involve identifying similar contracts, examining their total award values, performance periods, and the volume and types of deliveries. If other contracts with similar service requirements and competition levels show significantly lower per-delivery costs, it might indicate that this contract is priced less competitively. Conversely, if comparable contracts have higher per-unit costs, this award could be seen as a good value.

What are the specific risks associated with Federal Express's performance on this contract?

The primary risks associated with Federal Express's performance on this contract are related to service reliability and potential disruptions. As a single-source provider for these consolidated transportation shipments during the contract period, any failure in their delivery network could significantly impact the Department of Defense's operations. This includes risks of delays, lost shipments, or damage to goods, which could have operational or financial consequences. Given the short, one-month performance period, the long-term risk of contractor underperformance or strategic shifts is mitigated. However, the immediate risk lies in ensuring timely and secure delivery throughout February 2025. The firm-fixed-price nature of the contract also means that cost overruns due to unforeseen operational challenges are Federal Express's responsibility, not the government's.

What is the track record of Federal Express in fulfilling government contracts, particularly for the Department of Defense?

Federal Express has a long-standing and extensive track record of fulfilling government contracts, including significant work with the Department of Defense and other federal agencies. They are a major player in the logistics and transportation sector, known for their global network and reliable delivery services. Their experience typically encompasses a wide range of shipping needs, from routine mail to highly sensitive and time-critical cargo. While specific performance metrics for past DoD contracts are not detailed here, Federal Express's continued success in securing government contracts suggests a generally positive performance history. However, like any large contractor, there may be instances of past performance issues or disputes, which would typically be reviewed during the source selection process for new awards.

How does the competition level for this contract (3 bidders) typically influence pricing and value for the government?

A competition level involving three bidders, as indicated for this contract (no: 3), generally suggests a healthy market dynamic that favors the government. When multiple capable companies vie for a contract, they are incentivized to offer competitive pricing and favorable terms to win the award. This scenario allows for better price discovery, as the government can compare offers and select the most advantageous one. A higher number of bidders typically leads to more aggressive pricing and potentially better value for the taxpayer. Conversely, if there were only one or two bidders, the government might have less leverage to negotiate favorable terms, potentially resulting in higher costs. Therefore, three bidders represent a solid level of competition that likely contributed to achieving a reasonable price for these transportation services.

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: $23,592,100

Exercised Options: $23,592,100

Current Obligation: $23,592,100

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71123DC023

IDV Type: IDC

Timeline