DoD's $91.6M Air Cargo Contract with FedEx Faces Scrutiny Over Competition and Value
Contract Overview
Contract Amount: $91,557,148 ($91.6M)
Contractor: Federal Express Corporation
Awarding Agency: Department of Defense
Start Date: 2009-10-01
End Date: 2014-09-29
Contract Duration: 1,824 days
Daily Burn Rate: $50.2K/day
Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Number of Offers Received: 30
Pricing Type: FIRM FIXED PRICE
Sector: Transportation
Official Description: AIR TRANSPORTATION SERVICES - PASSENGER
Plain-Language Summary
Department of Defense obligated $91.6 million to FEDERAL EXPRESS CORPORATION for work described as: AIR TRANSPORTATION SERVICES - PASSENGER Key points: 1. Significant spending on air transportation services highlights reliance on private carriers. 2. The contract's value of $91.6M warrants a closer look at cost-effectiveness. 3. Competition method raises questions about potential price discovery limitations. 4. Lack of small business participation is noted. 5. The sector is critical for logistics but prone to price fluctuations.
Value Assessment
Rating: fair
The contract value of $91.6M over five years for air transportation services appears substantial. Benchmarking against similar Department of Defense (DoD) contracts for nonscheduled chartered freight air transportation is needed to assess if the pricing is competitive and reflects fair market value.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating a limited competition approach. This method may restrict the pool of potential bidders and could impact the government's ability to secure the most competitive pricing.
Taxpayer Impact: The limited competition may result in higher costs for taxpayers compared to a fully open bidding process, potentially leading to suboptimal resource allocation.
Public Impact
Taxpayers may be overpaying due to limited competition in securing air cargo services. The Department of Defense's reliance on a single large carrier for critical transport needs could pose a risk. Lack of small business involvement limits opportunities for smaller, potentially more agile, service providers.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Limited competition
- No small business participation
- Potential for overpayment
Positive Signals
- Established carrier
- Long-term contract provides stability
Sector Analysis
The air transportation sector is vital for government logistics, particularly for the Department of Defense. Spending benchmarks for similar services are often high due to operational demands and fuel costs, but competitive bidding is crucial to manage these expenses effectively.
Small Business Impact
This contract did not involve small businesses, as indicated by 'sb': false. This represents a missed opportunity to foster competition and potentially leverage the specialized capabilities of smaller firms within the air transportation sector.
Oversight & Accountability
The contract's award under limited competition warrants oversight to ensure fair pricing and performance. Tracking delivery orders against the base contract and comparing costs to market rates would be prudent accountability measures.
Related Government Programs
- Nonscheduled Chartered Freight Air Transportation
- Department of Defense Contracting
- USTRANSCOM Programs
Risk Flags
- Limited competition may lead to higher costs.
- Lack of small business participation.
- Potential for price gouging due to limited vendor pool.
- Dependence on a single provider carries inherent risk.
- Contract duration is lengthy, potentially locking in unfavorable terms.
Tags
nonscheduled-chartered-freight-air-trans, department-of-defense, delivery-order, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $91.6 million to FEDERAL EXPRESS CORPORATION. AIR TRANSPORTATION SERVICES - PASSENGER
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 $91.6 million.
What is the period of performance?
Start: 2009-10-01. End: 2014-09-29.
What was the justification for excluding other sources in the full and open competition?
The justification for excluding other sources in the full and open competition needs to be thoroughly reviewed. Typically, such exclusions are based on specific technical requirements, existing infrastructure, or unique capabilities that only a limited number of vendors possess. Understanding this rationale is key to determining if the exclusion was justified or if it unnecessarily limited competition and potentially inflated costs for the taxpayer.
How does the per-unit cost of this contract compare to industry benchmarks for similar air cargo services?
A detailed comparison of the per-unit cost against industry benchmarks for similar air cargo services is essential. Given the contract's value and the nature of the services provided, it's crucial to ascertain if the government is receiving competitive rates. Deviations from benchmarks could indicate either exceptional service justifying a premium or potential overspending that requires further investigation and corrective action.
What is the potential impact on mission effectiveness if FedEx's services were disrupted?
The potential impact on mission effectiveness if FedEx's services were disrupted is a significant risk factor. The Department of Defense relies heavily on timely and reliable transportation for critical supplies and personnel. A disruption could lead to mission delays, increased operational costs, and potential security vulnerabilities, underscoring the importance of robust contingency planning and potentially diversifying carrier options.
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 AFTER EXCLUSION OF SOURCES
Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY
Offers Received: 30
Pricing Type: FIRM 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: $91,557,148
Exercised Options: $91,557,148
Current Obligation: $91,557,148
Contract Characteristics
Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: HTC71109D5005
IDV Type: IDC
Timeline
Start Date: 2009-10-01
Current End Date: 2014-09-29
Potential End Date: 2014-09-29 00:00:00
Last Modified: 2023-08-11
More Contracts from Federal Express Corporation
- Civil Reserve AIR Fleet - AIR Transportation Services — $220.4M (Department of Defense)
- Civil Reserve AIR Fleet - AIR Transportation Services — $163.3M (Department of Defense)
- Civil Reserve AIR Fleet - AIR Transportation Services — $161.0M (Department of Defense)
- Civil Reserve AIR Fleet - AIR Transportation Services — $147.4M (Department of Defense)
- Civil Reserve AIR Fleet - AIR Transportation Services — $145.2M (Department of Defense)
Other Department of Defense Contracts
- Federal Contract — $51.3B (Humana Government Business Inc)
- Lrip LOT 12 Advance Acquisition Contract — $35.1B (Lockheed Martin Corporation)
- SSN 802 and 803 Long Lead Time Material — $34.7B (Electric Boat Corporation)
- 200204!008532!1700!AF600 !naval AIR Systems Command !N0001902C3002 !A!N! !N! !20011026!20120430!008016958!008016958!834951691!n!lockheed Martin Corporation !lockheed Blvd !fort Worth !tx!76108!27000!439!48!fort Worth !tarrant !texas !+000026000000!n!n!018981928201!ac15!rdte/Aircraft-Eng/Manuf Develop !a1a!airframes and Spares !2ama!jast/Jsf !336411!E! !3! ! ! ! ! !99990909!B! ! !A! !a!n!r!2!002!n!1a!a!n!z! ! !N!C!N! ! ! !a!a!a!a!000!a!c!n! ! ! !Y! !N00019!0001! — $34.2B (Lockheed Martin Corporation)
- KC-X Modernization Program — $32.0B (THE Boeing Company)