Federal Express awarded $85.6M for air transportation, highlighting significant defense logistics needs

Contract Overview

Contract Amount: $85,599,978 ($85.6M)

Contractor: Federal Express Corporation

Awarding Agency: Department of Defense

Start Date: 2012-10-12

End Date: 2013-09-30

Contract Duration: 353 days

Daily Burn Rate: $242.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 28

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: CIVIL RESERVE AIR FLEET - AIR TRANSPORTATION SERVICES

Plain-Language Summary

Department of Defense obligated $85.6 million to FEDERAL EXPRESS CORPORATION for work described as: CIVIL RESERVE AIR FLEET - AIR TRANSPORTATION SERVICES Key points: 1. Contract value represents a substantial investment in critical air transport capabilities. 2. Sole provider for this specific delivery order indicates potential for concentrated market power. 3. Fixed-price contract structure aims to control costs, but requires careful monitoring of service delivery. 4. Performance period of over a year suggests a need for sustained and reliable logistical support. 5. This award falls within the broader context of national defense readiness and global reach. 6. The absence of small business participation warrants further investigation into subcontracting opportunities.

Value Assessment

Rating: good

The contract value of $85.6 million for air transportation services appears reasonable given the scope and duration. Benchmarking against similar large-scale air charter contracts is challenging without more specific service details. However, the fixed-price nature suggests an attempt to establish clear cost expectations. The number of offers received (242,493) is unusually high and likely represents a broad solicitation response rather than distinct competing entities for this specific delivery order, which requires further clarification.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating a broad solicitation process. The high number of offers (242,493) suggests significant market interest, though the actual number of responsive bidders for this specific delivery order is not detailed. This level of competition is generally favorable for price discovery and ensuring the government receives competitive pricing.

Taxpayer Impact: A full and open competition process is beneficial for taxpayers as it encourages multiple vendors to bid, driving down costs and increasing the likelihood of securing services at a fair market price.

Public Impact

The primary beneficiaries are the Department of Defense and its personnel, who rely on timely and efficient air transport. Services delivered include nonscheduled chartered passenger air transportation, crucial for troop movement and logistical support. The geographic impact is likely global, supporting military operations and deployments worldwide. Workforce implications include employment for pilots, crew, and support staff within Federal Express and its partners.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of transparency on the specific number of responsive bidders beyond the initial high offer count.
Potential for price escalation if service requirements change significantly from the initial contract scope.
Dependence on a single contractor for critical air transport services could pose a risk if performance issues arise.

Positive Signals

Awarded under full and open competition, suggesting a competitive bidding process.
Fixed-price contract type helps to control costs and provides budget certainty.
Long-term performance period indicates a need for reliable and sustained service delivery.

Sector Analysis

The air transportation sector is vital for global logistics and defense operations. This contract for nonscheduled chartered passenger air transportation fits within the broader market for specialized aviation services. The defense sector relies heavily on such contracts to maintain operational readiness and deploy assets globally. Comparable spending benchmarks would depend on the specific routes, aircraft types, and service levels required, but the scale of this award suggests a significant operational requirement.

Small Business Impact

The contract indicates that small business participation was not a primary consideration, as indicated by 'sb': false. There is no explicit mention of small business set-asides or subcontracting plans. This suggests that the prime contractor, Federal Express, is expected to fulfill the requirements directly or through its own resources, potentially limiting opportunities for small businesses within the subcontracting ecosystem for this specific award.

Oversight & Accountability

Oversight for this contract would typically fall under the purview of USTRANSCOM and the Department of Defense's contracting and financial management offices. Accountability measures are embedded in the firm fixed-price structure, which incentivizes performance within budget. Transparency is generally maintained through contract award databases, though specific performance metrics and detailed oversight reports may not always be publicly accessible. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

Military Sealift Command (MSC) Contracts
Air Mobility Command (AMC) Operations
Defense Logistics Agency (DLA) Support
Global Contingency Support Contracts

Risk Flags

Potential for cost overruns if market conditions change significantly.
Dependence on a single contractor for critical services.
Need for clear performance metrics and oversight.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $85.6 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 $85.6 million.

What is the period of performance?

Start: 2012-10-12. End: 2013-09-30.

What is the specific breakdown of services provided under this $85.6 million contract for Federal Express?

This contract, valued at $85,599,977.98, specifically covers nonscheduled chartered passenger air transportation services. This implies the provision of flights on demand, rather than on a fixed schedule, for transporting personnel. The 'DELIVERY ORDER' designation suggests it was part of a larger indefinite-delivery/indefinite-quantity (IDIQ) contract or a similar framework, allowing for specific task orders to be issued as needed. The duration of 353 days indicates a significant period of service provision, likely supporting ongoing military operations, exercises, or personnel rotations.

How does the $85.6 million award to Federal Express compare to historical spending on similar air transportation services by the Department of Defense?

Comparing this $85.6 million award requires context regarding the specific nature of the services (passenger vs. cargo, scheduled vs. unscheduled, routes, aircraft type) and the period. However, the Department of Defense consistently spends billions annually on air transportation, including charter services, to support global operations. Large-scale contracts like this are not uncommon for major logistical needs. Historical data from USTRANSCOM and other defense agencies would reveal trends in pricing and volume for similar charter services, but this single award represents a substantial, albeit potentially episodic, expenditure for critical passenger movement.

What are the primary risks associated with a firm fixed-price contract for air transportation services, and how are they mitigated?

The primary risk with a firm fixed-price (FFP) contract is that the contractor (Federal Express) bears the risk of cost overruns. If operating costs increase unexpectedly (e.g., fuel prices, maintenance), their profit margin shrinks, potentially impacting service quality or leading to requests for modification. Conversely, the government risks paying a premium if the contractor's costs are lower than anticipated. Mitigation strategies include thorough initial cost analysis, clear performance standards, and robust oversight to ensure service delivery meets requirements. The government also benefits from cost certainty, as the price is fixed unless scope changes.

Given the 'full and open competition' designation, what does the unusually high number of offers (242,493) signify for this contract?

The figure of 242,493 offers is exceptionally high and likely represents the total number of entities registered or having expressed interest in broad solicitations related to air transportation services, rather than distinct, qualified bidders for this specific delivery order. Federal procurement systems often aggregate interest broadly. For a specific delivery order under a larger contract, the number of actual proposals submitted by qualified bidders is typically much smaller. This high number suggests a very wide initial reach for the solicitation but doesn't necessarily indicate intense competition among a few highly qualified providers for this particular task.

What is the strategic importance of securing air transportation services like those provided by Federal Express for USTRANSCOM?

USTRANSCOM (United States Transportation Command) is responsible for providing " thống nhất, hiệu quả, và kịp thời " (unified, effective, and timely) global transportation, acquisition, and logistics services. Securing reliable air transportation, especially unscheduled charter services, is critical for rapid deployment of personnel, contingency operations, and supporting military readiness worldwide. This contract enables USTRANSCOM to fulfill its mission by ensuring personnel can be moved efficiently to where they are needed, regardless of fixed airline schedules, which is vital for national security and projecting military power.

Industry Classification

NAICS: Transportation and Warehousing › Nonscheduled Air Transportation › Nonscheduled Chartered Passenger 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: 28

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: $85,599,978

Exercised Options: $85,599,978

Current Obligation: $85,599,978

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HTC71113DCC02

IDV Type: IDC

Timeline