DoD's $145M Civil Reserve Air Fleet Contract with FedEx Faces Scrutiny Over Competition and Value

Contract Overview

Contract Amount: $145,222,423 ($145.2M)

Contractor: Federal Express Corporation

Awarding Agency: Department of Defense

Start Date: 2011-01-01

End Date: 2012-09-30

Contract Duration: 638 days

Daily Burn Rate: $227.6K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 29

Pricing Type: FIRM FIXED PRICE

Sector: Transportation

Official Description: CIVIL RESERVE AIR FLEET - AIR TRANSPORTATION SERVICES

Plain-Language Summary

Department of Defense obligated $145.2 million to FEDERAL EXPRESS CORPORATION for work described as: CIVIL RESERVE AIR FLEET - AIR TRANSPORTATION SERVICES Key points: 1. The contract awarded to Federal Express Corporation for air transportation services represents a significant expenditure. 2. Competition details are complex, involving 'full and open competition after exclusion of sources', raising questions about true market access. 3. Potential risks include ensuring fair pricing and optimal utilization of resources within the Civil Reserve Air Fleet program. 4. The sector is critical for national defense logistics, requiring efficient and cost-effective air transport solutions.

Value Assessment

Rating: fair

The contract's total award amount of $145.2 million over approximately 2 years suggests a substantial investment. Benchmarking against similar large-scale air cargo contracts is necessary to fully assess value, especially given the specific nature of charter services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The 'full and open competition after exclusion of sources' indicates a specific, potentially limited, competitive process. While aiming for openness, excluding certain sources may impact price discovery and the range of potential bidders, warranting a review of the exclusion criteria.

Taxpayer Impact: Taxpayer funds are utilized for critical defense logistics. Ensuring the most competitive pricing through robust competition is essential to maximize the value of this expenditure.

Public Impact

Ensures critical air transport capacity for national defense needs during emergencies. Supports the operational readiness of the U.S. military by providing flexible airlift capabilities. The contract's structure impacts the availability and cost of commercial air cargo services for government use. Potential for increased costs if competition is not fully optimized, impacting the defense budget.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition due to source exclusion.
Potential for overpayment if pricing is not benchmarked effectively.
Contract duration and scope may not align with evolving needs.

Positive Signals

Secures essential airlift capabilities for national security.
Utilizes established commercial carrier infrastructure.
Firm fixed price contract provides cost certainty.

Sector Analysis

This contract falls within the air transportation sector, crucial for defense logistics and rapid deployment. Spending benchmarks in this area are highly variable, depending on service type, duration, and geopolitical factors. The $145M award is significant for a two-year period.

Small Business Impact

The data indicates the award went to Federal Express Corporation, a large established carrier. There is no explicit information on small business participation or subcontracting within this specific award, suggesting it may not have directly targeted small business set-asides.

Oversight & Accountability

Oversight would typically involve USTRANSCOM monitoring performance, delivery, and adherence to contract terms. Accountability for cost and effectiveness rests with the contracting agency and the performance of the contractor.

Related Government Programs

Nonscheduled Chartered Freight Air Transportation
Department of Defense Contracting
USTRANSCOM Programs

Risk Flags

Potential for limited competition impacting price.
Need for robust cost analysis against industry standards.
Ensuring contractor performance meets critical defense needs.
Transparency in source exclusion criteria.
Long-term value assessment beyond initial award.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $145.2 million to FEDERAL EXPRESS CORPORATION. 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 $145.2 million.

What is the period of performance?

Start: 2011-01-01. End: 2012-09-30.

What specific criteria led to the exclusion of certain sources in the 'full and open competition after exclusion of sources' process, and how did this impact the final price?

The specific criteria for excluding sources are not detailed in the provided data. Typically, such exclusions might relate to security clearances, specific certifications, or geographic limitations necessary for the mission. A thorough review would be needed to determine if these exclusions unduly limited competition and potentially inflated the contract price beyond what a truly open market might yield.

How does the per-unit cost or service rate compare to industry benchmarks for similar unscheduled chartered freight air transportation services, particularly for a large volume provider like FedEx?

Without specific per-unit cost data (e.g., cost per ton-mile, cost per flight hour), a direct benchmark comparison is difficult. However, given the scale of the contract ($145M over ~2 years), the rates are expected to be competitive but also reflect the premium service and reliability offered by a major carrier like FedEx. Further analysis would require detailed rate schedules and comparison with publicly available data for similar government or commercial charters.

What is the demonstrated effectiveness of the Civil Reserve Air Fleet program under this contract in meeting surge requirements or supporting contingency operations?

The effectiveness of the CRAF program under this contract is measured by its ability to provide necessary airlift when activated for contingency operations or national emergencies. Data on actual activations, response times, and mission success rates would be required to assess effectiveness. The contract's existence implies a recognized need for this capability, but its performance in real-world scenarios is key to evaluating its true value.

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: 29

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, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $145,222,423

Exercised Options: $145,222,423

Current Obligation: $145,222,423

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HTC71111DC002

IDV Type: IDC

Timeline