DoD's $42M Fleet Fuel Card Services contract awarded to U.S. Bancorp shows fair value with 2 bids

Contract Overview

Contract Amount: $42,164,928 ($42.2M)

Contractor: U.S. Bancorp

Awarding Agency: Department of Defense

Start Date: 2018-06-14

End Date: 2028-11-29

Contract Duration: 3,821 days

Daily Burn Rate: $11.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: FLEET FUEL CARD SERVICES

Place of Performance

Location: MINNEAPOLIS, HENNEPIN County, MINNESOTA, 55402

State: Minnesota Government Spending

Plain-Language Summary

Department of Defense obligated $42.2 million to U.S. BANCORP for work described as: FLEET FUEL CARD SERVICES Key points: 1. The contract's value appears reasonable given the scope of providing fleet fuel card services across the Department of Defense. 2. Full and open competition was utilized, indicating a broad market search and potential for competitive pricing. 3. The fixed-price contract type helps mitigate cost overrun risks for the government. 4. The contract duration extends over a decade, suggesting a need for long-term, stable service provision. 5. The award was made by the Defense Logistics Agency, a key procurement entity for military logistics. 6. The North American Industry Classification System (NAICS) code 522110 points to commercial banking activities.

Value Assessment

Rating: fair

The contract's total value of $42.16 million over its potential duration suggests a moderate annual spend. Benchmarking against similar government-wide fleet card programs indicates that pricing is generally competitive, though specific per-transaction fees would be needed for a precise comparison. The firm fixed-price structure provides cost certainty, which is a positive indicator for value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, meaning all responsible sources were permitted to submit offers. Two bids were received, which, while not a large number, suggests some level of market interest and competition. The presence of multiple bidders generally aids in price discovery and ensures the government receives offers reflecting market conditions.

Taxpayer Impact: The competitive nature of this award, even with two bidders, likely resulted in a more favorable price for taxpayers compared to a sole-source or limited competition scenario.

Public Impact

Military personnel and government fleet operators benefit from convenient and secure fuel purchasing capabilities. The services delivered ensure the operational readiness of government vehicles across various DoD components. The contract supports the logistical needs of the Department of Defense nationwide. This contract has implications for the financial services sector supporting government contracts.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in due to the long contract duration.
Reliance on a single provider for critical fleet fuel services could pose a risk if service levels degrade.
The limited number of bids (2) might indicate potential barriers to entry or a concentrated market.

Positive Signals

Firm fixed-price contract type limits the government's exposure to cost increases.
Full and open competition suggests a robust effort to solicit offers from the market.
The Defense Logistics Agency's involvement indicates procurement expertise and established processes.

Sector Analysis

The commercial banking sector, specifically financial transaction processing and card services, is a significant area of government spending. This contract falls within the broader financial services industry, which supports numerous government operations by facilitating payments and managing financial transactions. Comparable spending benchmarks for fleet management and payment processing services vary widely based on scope and volume, but a $42 million contract over a decade for fuel cards is substantial.

Small Business Impact

There is no indication that this contract included small business set-asides. Given the nature of financial services and the size of the award, it is likely that larger financial institutions were the primary participants. Subcontracting opportunities for small businesses may exist within the vendor's broader operations, but are not explicitly detailed in the award information.

Oversight & Accountability

The Defense Logistics Agency (DLA) is responsible for the oversight of this contract. As a major procurement agency, DLA has established procedures for contract management and performance monitoring. Transparency is generally maintained through contract award databases, and accountability is enforced through the terms of the firm fixed-price agreement and DLA's oversight mechanisms. Inspector General jurisdiction would apply in cases of fraud or mismanagement.

Related Government Programs

Government Travel Charge Card Program
GSA Fleet Management Services
Defense Travel System
Federal Acquisition Service

Risk Flags

Long contract duration may limit future flexibility.
Limited competition (2 bidders) could indicate market concentration.
Reliance on a single vendor for critical services.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $42.2 million to U.S. BANCORP. FLEET FUEL CARD SERVICES

Who is the contractor on this award?

The obligated recipient is U.S. BANCORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Logistics Agency).

What is the total obligated amount?

The obligated amount is $42.2 million.

What is the period of performance?

Start: 2018-06-14. End: 2028-11-29.

What is the historical spending pattern for fleet fuel card services by the Department of Defense?

Historical spending on fleet fuel card services by the Department of Defense has been substantial, reflecting the vast size of its vehicle fleet. While specific figures for fuel cards fluctuate annually based on operational tempo and fleet size, the DoD consistently invests significant resources in maintaining its mobility capabilities. This $42.16 million contract awarded to U.S. Bancorp represents a portion of that ongoing investment. Previous contracts for similar services have also been awarded through competitive processes, often to large financial institutions. Analyzing year-over-year spending trends would reveal the DoD's commitment to efficient fuel management and the evolution of its procurement strategies in this area, potentially showing shifts towards more integrated fleet management solutions.

How does the pricing of this contract compare to other federal fleet fuel card contracts?

Direct comparison of pricing for this U.S. Bancorp contract to other federal fleet fuel card contracts is challenging without access to detailed pricing structures, such as per-transaction fees, interchange rates, and service charges. However, the fact that it was awarded under full and open competition with two bidders suggests that the pricing is likely competitive within the market for such services. Government-wide contracts, like those managed by GSA, often aim to achieve volume discounts and standardized pricing. The firm fixed-price nature of this award provides cost certainty, which is a positive indicator of value. Benchmarking against similar large-scale contracts awarded by agencies like the GSA or other military branches would provide a more robust comparison, but generally, competitive awards tend to align with market rates.

What are the primary risks associated with this fleet fuel card services contract?

The primary risks associated with this fleet fuel card services contract include potential vendor lock-in due to the long contract duration (potentially up to 10 years), which could limit future flexibility or the adoption of newer technologies. A significant risk is the reliance on a single provider for a critical operational service; any degradation in service quality, system outages, or security breaches by U.S. Bancorp could severely impact the DoD's fleet operations and readiness. Furthermore, the limited number of bids received (two) might suggest a concentrated market or potential barriers to entry for other providers, which could, in the long run, reduce competitive pressure. Ensuring robust performance monitoring and contingency planning is crucial to mitigate these risks.

What is the track record of U.S. Bancorp in providing similar services to the federal government?

U.S. Bancorp has a significant track record of providing financial services, including government charge cards and fleet card programs, to the federal government. They are a known entity in managing large-scale payment solutions for government agencies. Their experience includes managing programs for other large federal entities, often through competitive solicitations. While specific performance metrics for this particular DoD contract are not detailed here, U.S. Bancorp's continued success in securing and performing on government contracts suggests a generally positive track record in terms of reliability, security, and service delivery. Their established presence in the government contracting space indicates familiarity with federal regulations and requirements.

How effective is the Defense Logistics Agency in managing large financial services contracts?

The Defense Logistics Agency (DLA) is a primary procurement agency for the Department of Defense and has extensive experience managing a wide array of complex contracts, including large financial services agreements. DLA's mission involves ensuring the efficient and effective delivery of logistics support, which inherently includes managing the financial mechanisms that enable these operations. Their established procurement processes, dedicated contracting officers, and oversight mechanisms are designed to ensure that contracts like this fleet fuel card services agreement are managed effectively. The agency's long-standing role in supporting military operations suggests a high degree of competence in overseeing contracts to meet operational needs while seeking value for taxpayer dollars.

Industry Classification

NAICS: Finance and Insurance › Depository Credit Intermediation › Commercial Banking

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: SPE60018R0201

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 800 NICOLLET MALL, MINNEAPOLIS, MN, 55402

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

Financial Breakdown

Contract Ceiling: $42,164,928

Exercised Options: $42,164,928

Current Obligation: $42,164,928

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: GS36FGA001

IDV Type: IDC

Timeline