DoD's $52M contract for air freight services awarded to Federal Express Corporation

Contract Overview

Contract Amount: $52,162,771 ($52.2M)

Contractor: Federal Express Corporation

Awarding Agency: Department of Defense

Start Date: 2008-10-01

End Date: 2009-09-30

Contract Duration: 364 days

Daily Burn Rate: $143.3K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 30

Pricing Type: FIXED PRICE

Sector: Transportation

Official Description: FY09 - FIXED BUY

Place of Performance

Location: MEMPHIS, SHELBY County, TENNESSEE, 38118

State: Tennessee Government Spending

Plain-Language Summary

Department of Defense obligated $52.2 million to FEDERAL EXPRESS CORPORATION for work described as: FY09 - FIXED BUY Key points: 1. Contract value of $52.16 million over one year. 2. Services provided by Federal Express Corporation, a well-established logistics provider. 3. Awarded under full and open competition. 4. Fixed-price contract type suggests predictable costs. 5. Delivery order issued against a larger indefinite-delivery/indefinite-quantity contract. 6. Performance period spans FY09, indicating a short-term operational need.

Value Assessment

Rating: good

The contract value of $52.16 million for one year of nonscheduled chartered freight air transportation appears reasonable given the provider and the nature of the service. Benchmarking against similar USTRANSCOM contracts for air cargo would provide a more precise value assessment. However, Federal Express is a major carrier, and their pricing is generally competitive for such services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating a competitive process was utilized. While the specific number of bidders is not provided, this designation suggests that multiple qualified vendors had the opportunity to submit proposals. This level of competition is generally favorable for price discovery and ensuring the government receives competitive pricing.

Taxpayer Impact: A competitive award process helps ensure taxpayer dollars are used efficiently by driving down costs through market forces.

Public Impact

Benefits the Department of Defense by ensuring timely and reliable air freight transportation. Supports military logistics and operational readiness. Services are likely utilized across various DoD components requiring rapid cargo movement. Impacts the air cargo industry by providing significant business to the awarded contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific bidder count limits full assessment of competitive intensity.
Potential for price fluctuations if market conditions change significantly during the contract period, despite fixed-price structure.

Positive Signals

Award to a reputable and experienced carrier like Federal Express suggests reliability.
Fixed-price contract type provides cost certainty for the government.
Full and open competition generally leads to better value.

Sector Analysis

This contract falls within the broader transportation and logistics sector, specifically focusing on air cargo services. The market for government air freight is substantial, with agencies like the Department of Defense being major consumers. Federal Express operates within a competitive landscape that includes other major air cargo carriers and specialized freight forwarders. The value of this contract is a fraction of the overall DoD transportation spending.

Small Business Impact

The data does not indicate any specific small business set-aside provisions for this contract. As a delivery order against a larger contract, the prime contractor, Federal Express, is a large business. Subcontracting opportunities for small businesses may exist within Federal Express's supply chain, but this is not explicitly detailed in the provided information.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of USTRANSCOM's contracting and program management offices. As a fixed-price delivery order, the primary accountability measure is the successful delivery of the contracted freight services. Transparency is generally maintained through contract databases like FPDS-NG. Inspector General involvement would be triggered by specific allegations of fraud, waste, or abuse.

Related Government Programs

USTRANSCOM Global Freight Management
DoD Air Mobility Command Contracts
Expedited Freight Services
Logistics and Transportation Services

Risk Flags

Potential for cost overruns if market conditions change unfavorably for the contractor.
Risk of service disruption if the contractor faces operational challenges.
Limited transparency on the number of bidders in the competitive process.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $52.2 million to FEDERAL EXPRESS CORPORATION. FY09 - FIXED BUY

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 $52.2 million.

What is the period of performance?

Start: 2008-10-01. End: 2009-09-30.

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 (DoD) has varied significantly year over year, influenced by operational tempo, global deployments, and specific mission requirements. For instance, during periods of heightened conflict or major logistical operations, spending can surge. Conversely, in more stable periods, spending may decrease as more routine or scheduled services are utilized. Data from FPDS-NG indicates that DoD consistently spends hundreds of millions annually on various air freight services, with fixed-price contracts being common for predictable needs. The $52.16 million for FY09 represents a notable, but not unprecedented, expenditure within this category, reflecting the ongoing demand for rapid, flexible cargo delivery capabilities.

How does the pricing of this Federal Express contract compare to other similar air freight contracts awarded by USTRANSCOM?

Direct comparison of the per-unit cost for this specific Federal Express contract to other USTRANSCOM air freight contracts is challenging without detailed service metrics (e.g., cost per ton-mile, cost per shipment by weight/volume, specific routes). However, Federal Express is a major player in the commercial air cargo market, known for its extensive network and service offerings. Contracts awarded to such large, established carriers often reflect premium pricing due to reliability, speed, and global reach. USTRANSCOM likely benchmarks pricing against commercial rates and potentially against bids from other major carriers like UPS or DHL. The 'full and open competition' aspect suggests that the awarded price was deemed competitive among the bidders, implying it was a fair market price at the time of award, though potentially higher than contracts awarded through less competitive means or to smaller, specialized providers.

What are the primary risks associated with this type of fixed-price air freight contract?

The primary risks associated with this fixed-price air freight contract, despite its cost certainty, include potential for the government to overpay if market rates decrease significantly after the contract is awarded, or if the contractor inflates costs knowing the price is fixed. Conversely, the contractor bears the risk of cost overruns due to unforeseen fuel price spikes, operational disruptions (weather, mechanical issues), or increased demand that strains capacity, potentially leading to service quality issues if the contractor attempts to cut corners. For a delivery order against an IDIQ, the risk is also tied to the overall ceiling and scope of the parent contract. Furthermore, reliance on a single carrier, even if competitively selected, carries a risk of service disruption if that carrier faces internal issues.

What is the track record of Federal Express Corporation in performing government air freight contracts?

Federal Express Corporation (FedEx) has a long and extensive track record of performing air freight and logistics services for the U.S. government, including the Department of Defense (DoD) and USTRANSCOM. They are a major global logistics provider with significant infrastructure and experience in handling diverse cargo, including time-sensitive and high-value shipments. Historically, FedEx has been a reliable partner for government transportation needs, often winning contracts through competitive bidding processes. While specific performance metrics for every contract are not publicly detailed, their continued success in securing large government contracts suggests a generally positive performance history. Any significant performance issues would typically be documented through contract performance evaluations and could impact future awards.

How does the $52.16 million contract value compare to the total annual spending on air transportation by USTRANSCOM?

The $52.16 million contract value represents a significant portion of USTRANSCOM's annual spending on nonscheduled chartered freight air transportation for FY09, but it is likely a component of a much larger overall transportation budget. USTRANSCOM manages a vast global logistics network, and its total annual spending on all modes of transportation—including scheduled airlift, sealift, land transport, and various types of charter services—can run into billions of dollars. This specific contract addresses a particular need for flexible, on-demand air freight. While substantial, it should be viewed within the context of the broader DoD logistics enterprise and USTRANSCOM's mission to provide global mobility support.

Industry Classification

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

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: 30

Pricing Type: FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Fedex Corp

Address: 3131 DEMOCRAT RD BLDG D, MEMPHIS, TN, 38118

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $52,162,771

Exercised Options: $52,162,771

Current Obligation: $52,162,771

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HTC71108D5001

IDV Type: IDC

Timeline