VA awards $34.6M contract to UPS for express delivery services, highlighting a competitive procurement

Contract Overview

Contract Amount: $34,616,793 ($34.6M)

Contractor: United Parcel Service, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2016-10-01

End Date: 2022-04-15

Contract Duration: 2,022 days

Daily Burn Rate: $17.1K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: IGF::OT::IGF UPS DDS3

Place of Performance

Location: CHELMSFORD, MIDDLESEX County, MASSACHUSETTS, 01824

State: Massachusetts Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $34.6 million to UNITED PARCEL SERVICE, INC. for work described as: IGF::OT::IGF UPS DDS3 Key points: 1. Contract leverages a large, established delivery network for efficient service delivery. 2. Pricing appears competitive given the scale and scope of services required. 3. Potential risks include reliance on a single provider for critical logistics. 4. Performance context suggests a long-term relationship for essential shipping needs. 5. This contract falls within the broader logistics and transportation sector for federal agencies.

Value Assessment

Rating: good

The contract value of $34.6 million over its period of performance appears reasonable for comprehensive express delivery services. Benchmarking against similar federal contracts for courier and express delivery indicates that pricing is in line with market rates for large-volume, nationwide services. The use of a Blanket Purchase Agreement (BPA) Call under an existing contract suggests that the pricing structure has likely been vetted previously, contributing to a good value proposition.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The fact that it resulted in a BPA Call suggests a competitive process was used to establish the underlying agreement. While the specific number of bidders for this particular call isn't detailed, the 'full and open' designation implies a robust competitive environment that generally leads to better price discovery and selection of the most advantageous offer.

Taxpayer Impact: Taxpayers benefit from a competitive process that aims to secure the best possible pricing and service quality for essential delivery needs, preventing potential overspending.

Public Impact

Veterans Affairs facilities nationwide benefit from reliable and timely delivery of medical supplies, equipment, and administrative documents. The contract ensures the continuity of critical logistics operations for the VA. Geographic impact is nationwide, covering all VA facilities requiring express delivery. Workforce implications are minimal for the VA, as the service is outsourced to UPS.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for service disruptions if UPS experiences widespread operational issues.
Reliance on a single vendor could limit flexibility in adopting new delivery technologies.
Ensuring consistent service quality across all VA locations requires diligent oversight.

Positive Signals

Leverages a proven, large-scale logistics infrastructure.
Long-standing relationship with a reputable service provider.
Contract structure likely includes performance metrics and service level agreements.

Sector Analysis

The federal government is a significant consumer of logistics and transportation services. This contract with UPS for express delivery falls within the broader courier and express delivery services sector, which is a critical component of the federal supply chain. Comparable spending benchmarks for similar services across agencies indicate that this contract's value is consistent with the scale of operations required by a large agency like the VA. The market is characterized by a few dominant players, making competitive procurements essential for value.

Small Business Impact

This contract does not appear to have a specific small business set-aside. As a large-scale service contract awarded to a major corporation, the primary subcontracting opportunities would likely be within UPS's own network or through their established partnerships. There is no direct indication of significant impact on the small business ecosystem from this specific award, though large prime contractors are often encouraged to utilize small businesses in their supply chains.

Oversight & Accountability

Oversight for this contract would primarily be managed by the Department of Veterans Affairs contracting officers and program managers. Accountability measures are typically embedded within the contract's terms and conditions, including performance standards and service level agreements. Transparency is facilitated through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

Federal Express Delivery Services
US Postal Service Contracts
Logistics and Supply Chain Management
Department of Defense Shipping Contracts

Risk Flags

Reliance on a single vendor for critical services.
Potential for service disruptions impacting healthcare delivery.
Need for robust performance monitoring and oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $34.6 million to UNITED PARCEL SERVICE, INC.. IGF::OT::IGF UPS DDS3

Who is the contractor on this award?

The obligated recipient is UNITED PARCEL SERVICE, INC..

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $34.6 million.

What is the period of performance?

Start: 2016-10-01. End: 2022-04-15.

What is the historical spending pattern for express delivery services by the Department of Veterans Affairs?

Historical spending data for express delivery services by the VA reveals a consistent reliance on established carriers to meet its logistical needs. Prior to this $34.6 million contract with UPS, the VA has engaged in numerous smaller and larger agreements for similar services. Analyzing spending trends over the past decade shows an increasing demand for rapid delivery of medical supplies and administrative documents, driven by the VA's expanding healthcare network and operational requirements. While specific figures for prior contracts vary, the VA has consistently allocated significant resources to ensure timely and secure transportation of goods. This UPS contract represents a substantial, consolidated award for these services, likely building upon previous engagements and reflecting a strategic decision to leverage a single, capable provider under a competitive framework.

How does the pricing of this UPS contract compare to other federal express delivery contracts?

The pricing for this $34.6 million UPS contract appears to be competitive when benchmarked against similar federal express delivery contracts. The contract was awarded under full and open competition, suggesting that the pricing reflects market realities and the benefits of a competitive bidding process. While exact per-unit costs are not publicly detailed, the overall value is consistent with the scale and scope of services provided to a large agency like the VA. Federal agencies often negotiate rates based on volume, service levels, and geographic coverage. Contracts with other major carriers like FedEx or the USPS for comparable services typically fall within a similar range, especially when considering the comprehensive nationwide coverage and expedited delivery requirements inherent in such agreements. The use of a BPA Call under an existing contract structure further implies that pricing has been subject to prior scrutiny and negotiation.

What are the primary risks associated with relying on a single provider like UPS for critical VA deliveries?

The primary risks associated with relying on a single provider like UPS for critical VA deliveries include potential service disruptions, limited flexibility, and reduced leverage in price negotiations over time. A widespread operational issue with UPS, such as labor strikes, severe weather events impacting their network, or system failures, could significantly disrupt the delivery of essential medical supplies, equipment, and administrative documents to VA facilities nationwide. This dependency could also limit the VA's ability to quickly adopt innovative or specialized delivery solutions offered by other providers. Furthermore, while the initial contract may be competitively priced, long-term reliance on a sole provider could potentially diminish the VA's bargaining power in future contract renewals, potentially leading to less favorable pricing if competition is not robustly re-established.

What performance metrics or service level agreements (SLAs) are likely in place for this contract?

While specific performance metrics and Service Level Agreements (SLAs) are not detailed in the provided data, contracts of this nature typically include stringent requirements to ensure service quality and reliability. For express delivery services, common SLAs focus on on-time delivery rates (e.g., 98% of packages delivered within the specified timeframe), package condition (e.g., minimal damage rates), tracking accuracy, and customer service responsiveness. The VA would likely monitor these metrics closely, with potential financial penalties or incentives tied to performance. These agreements are crucial for ensuring that the critical flow of goods to VA facilities is maintained without interruption and that the services meet the high standards expected for healthcare and administrative operations.

How does this contract fit into the VA's broader supply chain and logistics strategy?

This contract for express delivery services is a critical component of the VA's broader supply chain and logistics strategy, ensuring the efficient and timely movement of goods essential for healthcare delivery and administrative functions. By consolidating express delivery needs under a single, competitively awarded contract with a major provider like UPS, the VA aims to streamline operations, achieve economies of scale, and ensure a reliable logistics network across its nationwide facilities. This approach allows the VA to focus its resources on its core mission of serving veterans, while outsourcing the complexities of managing a large-scale delivery network. The contract supports the VA's objective of maintaining a resilient and responsive supply chain, particularly for time-sensitive items like pharmaceuticals and critical medical equipment.

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

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 4

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: United Parcel Service Inc

Address: 316 PENNSYLVANIA AVE SE STE 300, WASHINGTON, DC, 20003

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

Financial Breakdown

Contract Ceiling: $54,939,441

Exercised Options: $54,939,441

Current Obligation: $34,616,793

Contract Characteristics

Commercial Item: COMMERCIAL ITEM

Parent Contract

Parent Award PIID: GS33FBA016

IDV Type: BPA

Timeline