Federal Express awarded $107.7M for air transportation services, highlighting a competitive market for critical logistics

Contract Overview

Contract Amount: $107,660,587 ($107.7M)

Contractor: Federal Express Corporation

Awarding Agency: Department of Defense

Start Date: 2016-01-01

End Date: 2016-09-30

Contract Duration: 273 days

Daily Burn Rate: $394.4K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 13

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: IGF::OT::IGF CIVIL RESERVE AIR FLEET - AIR TRANSPORTATION SERVICES

Plain-Language Summary

Department of Defense obligated $107.7 million to FEDERAL EXPRESS CORPORATION for work described as: IGF::OT::IGF CIVIL RESERVE AIR FLEET - AIR TRANSPORTATION SERVICES Key points: 1. Strong competition indicates potential for favorable pricing and service quality. 2. The contract's fixed-price nature shifts performance risk to the contractor. 3. Delivery order structure suggests flexibility in meeting fluctuating demand. 4. The duration of the contract provides a stable operational baseline. 5. This award is a significant component of the DoD's strategic airlift capabilities. 6. Federal Express's established presence suggests reliable execution.

Value Assessment

Rating: good

The contract value of $107.7 million over 273 days for air transportation services appears reasonable given the scope and the contractor's established capabilities. Benchmarking against similar large-scale air cargo contracts is challenging without more granular data on specific routes, cargo types, and service level agreements. However, the firm fixed-price structure suggests that the government has secured a defined cost, with the contractor absorbing potential cost overruns. The number of bids received (13) also suggests a competitive environment that likely contributed to a fair price.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, with 13 bids received. This indicates a robust bidding process where multiple qualified vendors had the opportunity to compete for the business. A high number of bidders generally suggests a healthy market and can lead to more competitive pricing and innovative solutions as contractors vie for the award. The level of competition here is a positive signal for price discovery and value for money.

Taxpayer Impact: The extensive competition for this contract is beneficial for taxpayers as it likely drove down the overall cost of air transportation services, ensuring that federal funds were used efficiently.

Public Impact

The Department of Defense benefits from reliable and timely air transportation for critical cargo and personnel. Services delivered include scheduled and unscheduled air cargo transport, supporting global military operations. The geographic impact is global, enabling rapid deployment and logistical support across various theaters of operation. Workforce implications include support for Federal Express's operational staff, pilots, and logistical personnel.

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 a significant portion of airlift capacity could pose a risk if performance issues arise.

Positive Signals

Award to a well-established carrier with a proven track record in global logistics.
Firm fixed-price contract shifts cost overrun risk to the contractor.
Full and open competition ensures market forces are leveraged for best value.
Multiple bids received indicate a healthy and competitive market for these services.

Sector Analysis

The air transportation services sector is a critical component of the defense industrial base, providing essential logistical support for military operations worldwide. This contract falls within the broader category of government contracting for transportation and logistics. The market is characterized by a mix of large, established carriers and specialized providers. Spending in this sector is often driven by geopolitical events and the need for rapid global deployment capabilities. Comparable spending benchmarks would typically involve analyzing other large-scale government airlift contracts and commercial freight rates.

Small Business Impact

This contract was awarded to Federal Express Corporation, a large business. There is no indication of small business set-asides or subcontracting requirements being a primary focus for this specific award. The scale of the contract likely favors large, established carriers with extensive global networks and fleet capacity. Future opportunities for small businesses might exist in supporting roles or through subcontracting if specified in subsequent solicitations or contract modifications.

Oversight & Accountability

Oversight for this contract would primarily reside with the U.S. Transportation Command (USTRANSCOM), the contracting agency. Mechanisms likely include performance monitoring, delivery verification, and financial audits. Accountability is ensured through the contract terms, including the firm fixed-price structure and potential penalties for non-performance. Transparency is facilitated through contract award databases and reporting requirements, though specific operational details may remain sensitive.

Related Government Programs

Civil Reserve Air Fleet (CRAF)
Department of Defense Airlift Services
Global Logistics Support Contracts
Air Cargo Transportation Services

Risk Flags

Contract Duration
Contract Value
Contractor Performance History
Competition Level
Service Type

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $107.7 million to FEDERAL EXPRESS CORPORATION. IGF::OT::IGF CIVIL RESERVE AIR FLEET - AIR TRANSPORTATION SERVICES

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 $107.7 million.

What is the period of performance?

Start: 2016-01-01. End: 2016-09-30.

What is the historical spending trend for air transportation services by USTRANSCOM?

Historical spending data for air transportation services by USTRANSCOM reveals a consistent and significant investment in maintaining robust airlift capabilities. While specific figures fluctuate year-to-year based on operational tempo and global requirements, USTRANSCOM has historically allocated substantial funds to ensure the availability of both organic and commercial air transport. This contract, valued at approximately $107.7 million, represents a notable portion of annual spending in this category. Analysis of past contracts indicates a reliance on both full and open competition and, at times, specific set-asides or sole-source awards for specialized needs. The trend generally shows a sustained need for flexible and responsive air cargo and passenger movement, underscoring the strategic importance of these services to national defense.

How does the price per ton-mile for this contract compare to industry benchmarks?

Determining an exact price per ton-mile for this Federal Express contract is challenging without detailed data on the specific routes, cargo weight, and flight durations. However, given the firm fixed-price nature and the award to a major carrier under full and open competition, it is reasonable to infer that the pricing is competitive within the industry. General industry benchmarks for long-haul air cargo can range significantly, often between $0.50 to $2.00 per ton-mile, depending on factors like fuel costs, aircraft type, and service urgency. Federal Express, as a large commercial operator, likely benefits from economies of scale. The competitive bidding process suggests the negotiated rate is likely at the lower end of this spectrum for comparable services, providing good value for the government.

What is Federal Express's track record with similar government contracts?

Federal Express Corporation has a long and extensive track record of performing large-scale air transportation and logistics contracts for the U.S. government, including the Department of Defense. They are a key participant in the Civil Reserve Air Fleet (CRAF) program, providing critical airlift capacity during national emergencies and military operations. Their history includes numerous awards for domestic and international cargo delivery, often under competitive solicitations. While specific performance metrics for every contract are not publicly detailed, Federal Express's continued selection for significant government contracts suggests a consistent ability to meet demanding logistical requirements, including timeliness, reliability, and capacity. Their established infrastructure and experience are significant assets in fulfilling such agreements.

What are the potential risks associated with relying on a single contractor for this service?

Relying on a single contractor, even for a defined period, introduces several potential risks. Firstly, there's a risk of contractor performance degradation over time, where service quality might decline due to complacency or unforeseen operational challenges. Secondly, if unforeseen circumstances lead to the contractor's inability to perform (e.g., financial distress, major operational disruptions), the government could face significant gaps in critical airlift capabilities, potentially impacting national security operations. Thirdly, during future re-competition, if the market landscape has shifted or fewer bidders emerge, the government might face less favorable pricing or terms. Finally, a sole reliance can reduce leverage in negotiating contract modifications or addressing emergent needs.

How does this contract contribute to the overall readiness of the Civil Reserve Air Fleet (CRAF)?

This contract is a direct contribution to the operational readiness and capability of the Civil Reserve Air Fleet (CRAF). CRAF is a program managed by the U.S. Transportation Command (USTRANSCOM) that allows the military to tap into commercial airliners during national emergencies or conflicts. By awarding contracts like this one to major carriers such as Federal Express, the DoD ensures that these commercial assets are maintained, utilized, and integrated into logistical planning. This sustained engagement keeps the carriers' fleets and personnel ready for rapid activation, familiarizes them with military requirements, and provides a baseline level of operational activity that supports their readiness for CRAF activation. It essentially pre-positions critical airlift capacity.

Industry Classification

NAICS: Transportation and Warehousing › Nonscheduled Air Transportation › Nonscheduled Chartered Freight Air Transportation

Product/Service Code: TRANSPORT, TRAVEL, RELOCATION › TRAVEL, LODGING, RECRUITMENT SVCS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Solicitation ID: HTC71115RC001

Offers Received: 13

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Fedex Corp

Address: 2955 REPUBLICAN, MEMPHIS, TN, 38118

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

Financial Breakdown

Contract Ceiling: $107,660,587

Exercised Options: $107,660,587

Current Obligation: $107,660,587

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HTC71116DCC10

IDV Type: IDC

Timeline