Federal Express awarded $92.5M for air transportation services, highlighting significant defense logistics needs

Contract Overview

Contract Amount: $92,463,495 ($92.5M)

Contractor: Federal Express Corporation

Awarding Agency: Department of Defense

Start Date: 2013-10-01

End Date: 2014-09-30

Contract Duration: 364 days

Daily Burn Rate: $254.0K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 28

Pricing Type: FIRM FIXED PRICE

Sector: Transportation

Official Description: IGF::OT::IGF CIVIL RESERVE AIR FLEET - AIR TRANSPORTATION SERVICES

Place of Performance

Location: WILMINGTON, CLINTON County, OHIO, 45177

State: Ohio Government Spending

Plain-Language Summary

Department of Defense obligated $92.5 million to FEDERAL EXPRESS CORPORATION for work described as: IGF::OT::IGF CIVIL RESERVE AIR FLEET - AIR TRANSPORTATION SERVICES Key points: 1. Contract value represents a substantial investment in maintaining critical air transport capabilities. 2. The award to a single, large incumbent suggests a mature market for these specialized services. 3. Performance period of one year indicates a need for agile and responsive logistical support. 4. Fixed-price contract structure shifts performance risk to the contractor. 5. The use of a delivery order under a larger contract vehicle points to established procurement processes. 6. Geographic scope in Ohio suggests regional operational focus for this specific award.

Value Assessment

Rating: good

The $92.5 million award for air transportation services appears reasonable given the nature of the contract, which involves scheduled and unscheduled airlifts. Benchmarking against similar large-scale logistics contracts within the Department of Defense indicates that pricing is generally competitive for specialized, on-demand services. The firm fixed-price structure provides cost certainty for the government, although it relies on the contractor's efficiency to ensure value.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors were eligible to bid. The presence of 28 bids suggests a robust competitive environment for this type of service. This level of competition is generally favorable for price discovery and ensuring the government receives competitive offers.

Taxpayer Impact: A high number of bidders in a full and open competition typically translates to better pricing and service options for taxpayers, as contractors vie to win the award.

Public Impact

The Department of Defense benefits from reliable and flexible air transportation for personnel and cargo. Services delivered include scheduled and unscheduled air transportation, crucial for logistical operations. The geographic impact is centered in Ohio, suggesting a specific regional operational requirement. Workforce implications include support for pilots, ground crew, and logistics personnel within Federal Express.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for increased costs if fuel prices or operational demands exceed contractor projections under a fixed-price contract.
Dependence on a single large contractor could pose risks if unforeseen issues impact Federal Express's ability to perform.

Positive Signals

Award to a well-established carrier like Federal Express suggests a high likelihood of reliable service delivery.
The firm fixed-price contract provides budget certainty for the government.
Full and open competition with 28 bidders indicates a healthy market and competitive pricing.

Sector Analysis

The air transportation services sector is critical for national defense, enabling rapid deployment and logistical support. This contract fits within the broader defense logistics and transportation market, which is characterized by large, established players capable of meeting stringent government requirements. Spending in this area is often driven by operational tempo and global reach needs.

Small Business Impact

This contract was awarded under full and open competition and does not appear to have a specific small business set-aside. While Federal Express is a large business, there may be opportunities for small businesses to participate as subcontractors, depending on the specific service requirements and Federal Express's subcontracting strategy.

Oversight & Accountability

The contract is subject to standard government oversight mechanisms, including performance monitoring by USTRANSCOM. As a firm fixed-price contract, oversight will focus on ensuring timely delivery and adherence to service level agreements. Transparency is maintained through contract award databases and reporting requirements.

Related Government Programs

Military Sealift Command (MSC) Contracts
Air Mobility Command (AMC) Contracts
Logistics and Readiness Support Services

Risk Flags

Potential for cost increases if fuel prices rise significantly.
Dependence on a single large contractor for critical services.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $92.5 million to FEDERAL EXPRESS CORPORATION. IGF::OT::IGF 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 $92.5 million.

What is the period of performance?

Start: 2013-10-01. End: 2014-09-30.

What is the historical spending trend for air transportation services by USTRANSCOM?

Historical spending data for air transportation services by USTRANSCOM reveals a consistent and significant investment in maintaining robust airlift capabilities. While specific figures fluctuate year-to-year based on operational demands and contract awards, the overall trend indicates a sustained reliance on both organic and contracted air assets. For instance, in fiscal years preceding and following this award, USTRANSCOM has consistently allocated tens to hundreds of millions of dollars annually for various air transportation needs, including charter services, scheduled flights, and specialized cargo transport. This particular $92.5 million award in FY2014 falls within the expected range for major contract actions supporting global logistics operations, reflecting the ongoing need for flexible and responsive air mobility solutions to support military deployments and sustainment.

How does the pricing of this Federal Express contract compare to other similar air charter awards?

Benchmarking the pricing of this $92.5 million Federal Express contract against similar air charter awards requires careful consideration of service scope, duration, and specific requirements. Generally, large-scale, on-demand air charter services for defense purposes command premium pricing due to the need for rapid response, specialized aircraft, and adherence to strict security and operational protocols. Awards of this magnitude to major carriers like Federal Express, often under firm fixed-price structures, suggest that the pricing reflects the comprehensive nature of the service, including operational readiness, crew availability, and logistical support. While direct per-flight-hour comparisons can be complex due to varying contract terms, the number of bids received (28) indicates a competitive market, suggesting that the awarded price is likely within a reasonable range for the services rendered, balancing cost with critical operational needs.

What are the primary risks associated with this firm fixed-price contract for air transportation?

The primary risks associated with this firm fixed-price contract for air transportation largely fall on the contractor, Federal Express, but can have implications for the government. For Federal Express, the main risk is cost overrun if operational expenses, such as fuel prices, maintenance, or unforeseen logistical challenges, exceed the contracted price. This could lead to reduced profit margins or, in extreme cases, financial strain. For the government, the risk is that the contractor might cut corners on service quality or maintenance to protect profitability, potentially impacting reliability or safety, although stringent performance standards and oversight mitigate this. Another government risk is the inflexibility of a fixed price if market conditions drastically change, making the contracted rate less competitive over time, though this is less of a concern for a one-year contract.

What is the track record of Federal Express in performing similar government contracts?

Federal Express has a long and extensive track record of performing complex logistics and transportation services for the U.S. government, including the Department of Defense. They are a major global logistics provider with significant experience in air cargo and passenger transport. Their history includes numerous contracts for moving personnel, equipment, and supplies, both domestically and internationally. Federal Express has demonstrated capabilities in meeting demanding delivery schedules, handling sensitive materials, and operating within diverse regulatory environments. While specific performance metrics for every contract are not publicly detailed, their continued selection for significant government contracts, including those with USTRANSCOM, suggests a consistent ability to meet performance requirements and maintain a satisfactory track record.

How does the competition level (28 bidders) impact the value for money in this contract?

The competition level of 28 bidders for this air transportation services contract is a strong positive indicator for value for money. A high number of bidders typically signifies a healthy and accessible market for the required services. This intense competition forces each bidding company, including Federal Express, to offer their most competitive pricing and service terms to win the contract. It reduces the likelihood of the government overpaying due to a lack of alternatives. Furthermore, a competitive process allows the government to select not only based on price but also on technical merit, past performance, and overall best value. Therefore, 28 bidders strongly suggests that the government secured a favorable price and a high-quality service offering, maximizing taxpayer value.

Industry Classification

NAICS: Transportation and Warehousing › Nonscheduled Air Transportation › Nonscheduled Chartered Passenger 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: 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: $92,463,495

Exercised Options: $92,463,495

Current Obligation: $92,463,495

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HTC71113DCC02

IDV Type: IDC

Timeline