DoD's $51.8M Federal Express Contract for Air Cargo Transportation Awarded to Single Vendor

Contract Overview

Contract Amount: $51,842,650 ($51.8M)

Contractor: Federal Express Corporation

Awarding Agency: Department of Defense

Start Date: 2007-12-27

End Date: 2008-09-30

Contract Duration: 278 days

Daily Burn Rate: $186.5K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIXED PRICE

Sector: Transportation

Official Description: CHANNEL CARGO

Place of Performance

Location: MEMPHIS, SHELBY County, TENNESSEE, 38118

State: Tennessee Government Spending

Plain-Language Summary

Department of Defense obligated $51.8 million to FEDERAL EXPRESS CORPORATION for work described as: CHANNEL CARGO Key points: 1. The contract awarded to Federal Express Corporation for nonscheduled chartered freight air transportation represents a significant expenditure. 2. Competition details are limited, but the contract was awarded under 'FULL AND OPEN COMPETITION'. 3. The primary risk lies in the potential for uncompetitive pricing due to the nature of chartered services. 4. This spending falls within the broader Transportation sector.

Value Assessment

Rating: fair

The contract value of $51.8M for a 278-day duration suggests a substantial per-diem cost. Without specific service level agreements or benchmarks for chartered air cargo, a precise value assessment is difficult. However, the fixed-price nature provides some cost certainty.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

Awarded under full and open competition, this method aims to ensure the government receives the best value. However, the specific nature of chartered air freight may limit the number of viable bidders, potentially impacting the breadth of price discovery.

Taxpayer Impact: Taxpayers are impacted through the direct expenditure of $51.8M for essential transportation services. The competitive award process aims to mitigate excessive costs.

Public Impact

Ensures critical cargo movement for the Department of Defense. Supports logistical operations for military readiness. Provides employment opportunities within the air cargo industry.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited visibility into specific performance metrics.
Potential for price escalation in future contract renewals.
Dependence on a single vendor for critical transport.

Positive Signals

Awarded through a competitive process.
Fixed-price contract offers cost predictability.
Supports essential government operations.

Sector Analysis

This contract falls under the Transportation sector, specifically air cargo. Government spending in this area is crucial for logistical support and national security. Benchmarks for chartered air freight can vary widely based on demand, route, and aircraft type.

Small Business Impact

The data does not indicate any specific set-asides for small businesses. Federal Express Corporation is a large business, suggesting that small business participation may have been limited in this specific contract award.

Oversight & Accountability

The award process under 'FULL AND OPEN COMPETITION' suggests adherence to standard procurement regulations. Oversight would focus on contract performance, delivery timelines, and adherence to the fixed-price terms by USTRANSCOM.

Related Government Programs

Nonscheduled Chartered Freight Air Transportation
Department of Defense Contracting
USTRANSCOM Programs

Risk Flags

Potential for uncompetitive pricing due to specialized service.
Dependence on a single large vendor.
Lack of specific performance metrics in provided data.
Limited information on small business participation.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $51.8 million to FEDERAL EXPRESS CORPORATION. CHANNEL CARGO

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 $51.8 million.

What is the period of performance?

Start: 2007-12-27. End: 2008-09-30.

What specific metrics were used to evaluate the 'best value' during the full and open competition for this air cargo service?

The evaluation of 'best value' in a full and open competition typically involves a combination of technical factors, past performance, and price. For chartered air cargo, this could include aircraft availability, delivery speed, reliability, safety records, and the overall cost proposal. The specific weighting of these factors would be detailed in the solicitation documents.

What is the potential risk associated with the fixed-price contract type for chartered air freight, given fluctuating fuel costs and demand?

While fixed-price contracts offer cost certainty to the government, they can expose the contractor to risks if costs exceed projections. For chartered air freight, fluctuating fuel prices and unpredictable demand can significantly impact operational costs. If these factors are not adequately accounted for in the initial pricing, Federal Express might incur losses or seek to renegotiate terms, potentially impacting future pricing.

How effective was this contract in ensuring timely and secure delivery of Department of Defense cargo compared to alternative transportation methods?

Effectiveness is best measured by comparing delivery times, cargo condition upon arrival, and mission success rates against contract requirements. Without post-award performance data, it's difficult to definitively assess effectiveness. However, the contract's duration and value suggest a sustained need for this service, implying a degree of effectiveness in meeting DoD's logistical requirements.

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

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

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, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $51,842,650

Exercised Options: $51,842,650

Current Obligation: $51,842,650

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71107D0021

IDV Type: IDC

Timeline