DoD's $77M Federal Express contract for air cargo services awarded under full and open competition

Contract Overview

Contract Amount: $76,970,724 ($77.0M)

Contractor: Federal Express Corporation

Awarding Agency: Department of Defense

Start Date: 2006-10-01

End Date: 2007-09-30

Contract Duration: 364 days

Daily Burn Rate: $211.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 33

Pricing Type: FIRM FIXED PRICE

Sector: Transportation

Official Description: CRAF AIRLIFT

Place of Performance

Location: MEMPHIS, SHELBY County, TENNESSEE, 38118

State: Tennessee Government Spending

Plain-Language Summary

Department of Defense obligated $77.0 million to FEDERAL EXPRESS CORPORATION for work described as: CRAF AIRLIFT Key points: 1. Contract awarded for nonscheduled chartered freight air transportation, indicating a need for flexible and on-demand cargo delivery. 2. The firm fixed-price contract type suggests a predictable cost structure for the government. 3. Awarded to Federal Express Corporation, a major player in the logistics industry, implying a reliance on established providers for critical services. 4. The contract duration of 364 days suggests a short-term or interim need for these services. 5. The contract was awarded under full and open competition, suggesting a robust bidding process. 6. The contract was awarded by USTRANSCOM, highlighting its role in supporting military logistics and transportation needs.

Value Assessment

Rating: good

The contract value of approximately $77 million for a year of nonscheduled chartered freight air transportation appears reasonable given the nature of the service. While specific per-flight costs are not detailed, the firm fixed-price structure provides cost certainty. Benchmarking against similar ad-hoc air cargo contracts would be necessary for a definitive value assessment, but the scale suggests a significant operational requirement.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The presence of 33 bids suggests a competitive marketplace for these air charter services. A high number of bidders generally leads to better price discovery and potentially lower costs for the government.

Taxpayer Impact: The robust competition for this contract likely resulted in a more favorable price for taxpayers compared to a sole-source or limited competition award.

Public Impact

Military personnel and equipment benefit from timely and reliable air cargo delivery, supporting global operations. The service ensures the movement of critical supplies and materiel to various locations as needed. The contract supports the operational readiness of the U.S. military by providing essential transportation capabilities. The geographic impact is potentially global, depending on where USTRANSCOM requires airlift support.

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 large carrier could pose risks if service disruptions occur.
Ensuring consistent service quality across all chartered flights requires diligent oversight.

Positive Signals

Awarded through full and open competition, maximizing potential for competitive pricing.
Utilizes a well-established and experienced logistics provider (Federal Express Corporation).
Firm fixed-price contract provides cost predictability for the government.

Sector Analysis

The air transportation sector, particularly for government logistics, is characterized by a mix of large established carriers and specialized charter providers. This contract falls within the broader defense logistics and transportation market, which is a significant area of federal spending. USTRANSCOM's reliance on such contracts highlights the critical role of private sector air cargo capabilities in supporting military readiness and global operations. Benchmarks for similar charter services vary widely based on aircraft type, route, and urgency.

Small Business Impact

The data indicates this contract was not set aside for small businesses, and there is no explicit mention of subcontracting requirements for small businesses. Given the nature of large-scale air cargo operations, it is likely that the prime contractor, Federal Express Corporation, would manage the majority of the service delivery. Further investigation into subcontracting plans would be needed to assess the impact on the small business ecosystem.

Oversight & Accountability

The contract is subject to standard federal procurement oversight mechanisms. USTRANSCOM, as the awarding agency, is responsible for contract administration and performance monitoring. The firm fixed-price nature of the contract simplifies some aspects of financial oversight. Transparency regarding specific performance metrics and any disputes would be available through agency reporting and potentially Inspector General reviews if issues arise.

Related Government Programs

Military Sealift Command (MSC) contracts
Air Mobility Command (AMC) airlift services
Department of Defense transportation contracts
Federal Aviation Administration (FAA) oversight

Risk Flags

Potential for service disruption
Price escalation risk in future renewals
Dependence on single provider

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $77.0 million to FEDERAL EXPRESS CORPORATION. CRAF AIRLIFT

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 $77.0 million.

What is the period of performance?

Start: 2006-10-01. End: 2007-09-30.

What is the historical spending pattern for nonscheduled chartered freight air transportation by the Department of Defense?

Historical spending on nonscheduled chartered freight air transportation by the Department of Defense can fluctuate significantly based on operational tempo, global deployments, and specific mission requirements. USTRANSCOM, as the primary logistics command, manages a substantial portion of this spending. While this specific contract represents a significant award of approximately $77 million for a one-year period, broader trends would involve analyzing aggregate spending across multiple fiscal years and various contract vehicles. Factors such as the increasing reliance on rapid global deployment and the need for specialized cargo transport contribute to sustained or growing demand in this category. Analyzing historical data would reveal periods of heightened activity, potentially linked to specific geopolitical events or military exercises, and the average duration and value of similar charter contracts.

How does the pricing of this Federal Express contract compare to other providers of similar air charter services?

Directly comparing the pricing of this Federal Express contract to other providers of similar air charter services is challenging without access to detailed pricing structures and specific service level agreements for comparable contracts. However, the fact that this contract was awarded under full and open competition with 33 bids suggests that the pricing achieved was likely competitive within the market. Federal Express is a major player in the logistics industry, and their pricing would reflect their operational scale and efficiency. To conduct a thorough benchmark, one would need to analyze the per-mile or per-ton-mile costs for similar charter flights, considering factors like aircraft type, payload, route distance, and urgency. The firm fixed-price nature of this contract provides cost certainty, but the underlying unit economics would need to be compared against market rates for similar services.

What are the key performance indicators (KPIs) used to evaluate the performance of Federal Express Corporation under this contract?

Key performance indicators (KPIs) for nonscheduled chartered freight air transportation contracts typically focus on timeliness, reliability, and cargo integrity. For Federal Express, specific KPIs would likely include on-time pickup and delivery rates, flight completion rates (minimizing cancellations or diversions), and the condition of cargo upon arrival (minimizing damage or loss). USTRANSCOM would monitor adherence to flight schedules, communication protocols, and compliance with all safety and security regulations. Performance metrics might also encompass the responsiveness of the carrier to changes in mission requirements or urgent requests. Regular performance reviews and potentially contractor scorecards would be used to track adherence to these KPIs throughout the contract duration.

What is the track record of Federal Express Corporation in performing similar large-scale government air cargo contracts?

Federal Express Corporation (FedEx) has a long-standing and extensive track record of performing large-scale air cargo transportation services for government agencies, including the Department of Defense. They are a primary provider for various express and freight delivery needs, leveraging their vast global network and fleet. FedEx has historically held significant contracts with agencies like USTRANSCOM and the U.S. Postal Service, demonstrating their capability to handle high volumes, meet stringent delivery timelines, and operate within complex regulatory environments. Their experience encompasses both routine logistics and rapid response scenarios, making them a reliable choice for critical government transportation requirements. Past performance evaluations and contract awards serve as strong indicators of their ability to meet the demands of contracts like this one.

What are the potential risks associated with relying on a single large carrier like Federal Express for critical air cargo needs?

Relying on a single large carrier like Federal Express for critical air cargo needs presents several potential risks. Firstly, there's a risk of service disruption due to unforeseen events affecting the carrier, such as labor disputes, natural disasters impacting their hubs, or fleet-wide mechanical issues. Secondly, a lack of ongoing competition could potentially lead to less favorable pricing in future contract renewals if the government becomes highly dependent on that specific provider. Thirdly, while FedEx is a large entity, the specific capacity or availability for highly specialized or urgent charter needs might still be constrained during peak demand periods across all their clients. Finally, ensuring consistent quality and adherence to specific military requirements across all chartered flights necessitates robust oversight, as the carrier may utilize various subcontractors or aircraft types.

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

Offers Received: 33

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Fedex Corp (UEI: 003141970)

Address: 3131 DEMOCRAT ROAD, BLDG D, MEMPHIS, TN, 09

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $76,970,724

Exercised Options: $76,970,724

Current Obligation: $76,970,724

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: FA442806D0006

IDV Type: IDC

Timeline