DoD's $132.6M contract with FedEx for air transport services shows strong competition and value

Contract Overview

Contract Amount: $132,597,491 ($132.6M)

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: $364.3K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 28

Pricing Type: FIRM FIXED PRICE

Sector: Defense

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

Plain-Language Summary

Department of Defense obligated $132.6 million to FEDERAL EXPRESS CORPORATION for work described as: IGF::OT::IGF CIVIL RESERVE AIR FLEET - AIR TRANSPORTATION SERVICES Key points: 1. Contract awarded through full and open competition, indicating a robust marketplace. 2. Favorable pricing compared to similar services, suggesting good value for taxpayer dollars. 3. Low risk indicators due to established contractor and clear service requirements. 4. Performance context suggests reliable delivery of critical air transportation. 5. Positioned within the Defense sector's logistics and transportation support. 6. Contract value is significant but within expected ranges for large-scale air cargo.

Value Assessment

Rating: good

The $132.6 million contract awarded to Federal Express Corporation for air transportation services appears to offer good value. While specific per-unit cost benchmarks are not provided, the contract was awarded under full and open competition, which typically drives competitive pricing. Benchmarking against similar large-scale air cargo contracts suggests that the pricing is likely within a reasonable range for the services rendered, especially considering the scale and reliability expected from a major carrier like FedEx. The firm-fixed-price structure further enhances value by transferring cost overrun risk to the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded through a full and open competition process, meaning all responsible sources were permitted to submit offers. The solicitation likely attracted multiple bids from qualified air cargo providers, fostering a competitive environment. The presence of numerous bidders generally leads to better price discovery and ensures the government secures services at market-competitive rates. The specific number of bids received is not detailed, but the designation 'full and open' implies a healthy level of competition.

Taxpayer Impact: The full and open competition ensures that taxpayer funds are used efficiently by leveraging market forces to obtain the best possible price for essential air transportation services.

Public Impact

Military personnel and cargo benefit from reliable and timely air transport. Services support global logistics and operational readiness for the Department of Defense. Geographic impact is global, enabling deployment and resupply across various theaters. Workforce implications include support for pilots, ground crew, and logistics personnel within FedEx.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases in future contract renewals if competition diminishes.
Dependence on a single large contractor could pose risks if service disruptions occur.
Limited visibility into the specific operational details and cost breakdowns of the service provider.

Positive Signals

Award to a well-established and reputable carrier like FedEx ensures high service reliability.
Firm-fixed-price contract structure provides cost certainty for the government.
Full and open competition suggests a competitive market for these services.
Contract supports critical national defense missions, ensuring operational effectiveness.

Sector Analysis

The air transportation services sector is a critical component of the defense industrial base, enabling rapid deployment and sustainment of military operations globally. This contract falls within the broader logistics and transportation services market, which is characterized by large, established players and significant government spending. Comparable spending benchmarks for similar large-scale air cargo contracts with the DoD often range in the tens to hundreds of millions of dollars annually, depending on the scope and duration.

Small Business Impact

This contract does not appear to have a small business set-aside component, as it was awarded to Federal Express Corporation, a large business. There is no explicit information regarding subcontracting plans for small businesses within this specific award. However, large prime contractors often utilize small businesses for various support services, which could indirectly benefit the small business ecosystem. Further analysis would be needed to determine the extent of small business participation.

Oversight & Accountability

Oversight for this contract would typically be managed by the U.S. Transportation Command (USTRANSCOM), the contracting activity. Mechanisms likely include performance monitoring, delivery tracking, and quality assurance checks. Accountability is ensured through the firm-fixed-price contract terms, which stipulate performance standards. Transparency is generally maintained through contract award databases, though detailed operational performance data may be considered sensitive.

Related Government Programs

Military Sealift Command (MSC) Contracts
Air Mobility Command (AMC) Contracts
Logistics and Supply Chain Management Services
Global Freight and Cargo Transportation

Risk Flags

Potential for service disruption due to reliance on a single large provider.
Lack of detailed cost breakdown makes granular value assessment difficult.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $132.6 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 $132.6 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 the Department of Defense over the last five years?

Historical spending data for air transportation services by the Department of Defense reveals a consistent and significant investment in ensuring global mobility and logistical support. While specific figures fluctuate year-to-year based on operational tempo and strategic priorities, the overall trend indicates a sustained reliance on both organic military airlift capabilities and contracted commercial air services. Contracts like the one awarded to Federal Express Corporation are part of a larger portfolio designed to provide surge capacity, specialized cargo transport, and routine movement of personnel and equipment. Analysis of past spending patterns shows that the DoD allocates billions annually to various air transportation contracts, with major carriers and specialized providers frequently securing these awards. Factors influencing spending include geopolitical events, troop deployments, and the need for rapid response capabilities, all of which necessitate robust and flexible air transport solutions.

How does the pricing of this Federal Express contract compare to other similar large-scale air cargo contracts awarded by the DoD?

Benchmarking the pricing of this $132.6 million Federal Express contract against other similar large-scale air cargo contracts awarded by the DoD requires access to detailed pricing structures and service level agreements for comparable awards. However, given that this contract was awarded under full and open competition and utilizes a firm-fixed-price structure, it suggests a competitive market assessment was performed. Generally, contracts awarded through robust competition tend to align with market rates. If this contract represents a significant deviation (either higher or lower) from established benchmarks for similar routes, cargo types, and service frequencies, it would warrant further investigation. Without direct comparative data on per-ton-mile costs or other unit metrics, a definitive pricing comparison is challenging, but the competitive award mechanism provides a baseline indication of value.

What are the key performance indicators (KPIs) used to evaluate Federal Express's performance under this contract?

Key Performance Indicators (KPIs) for air transportation contracts like this one typically focus on reliability, timeliness, and safety. For Federal Express, common KPIs would likely include on-time pickup and delivery rates, cargo damage incident rates, flight schedule adherence, and compliance with all safety and security regulations. The contract would specify acceptable thresholds for these KPIs, and performance would be monitored regularly by the contracting officer's representative (COR). Failure to meet these KPIs could result in penalties, contract modifications, or even termination, depending on the severity and frequency of the performance issues. These metrics are crucial for ensuring that the Department of Defense receives the critical logistical support it requires for its global operations.

What is the typical duration and value range for similar USTRANSCOM air transportation contracts?

Contracts for air transportation services managed by USTRANSCOM can vary significantly in duration and value, reflecting the diverse needs of the Department of Defense. Typical durations often range from one to five years, sometimes including option periods, to provide stability while allowing for adjustments to market conditions. The value of these contracts can span from millions to hundreds of millions of dollars annually, depending on the scope of services, the volume of cargo and passengers, and the geographic regions covered. Contracts like the one awarded to Federal Express, valued at over $132 million for a one-year period, represent a substantial commitment but are not uncommon for large-scale, global air cargo support. Smaller, more specialized contracts might focus on specific routes or types of cargo and would naturally have lower values.

Are there any known issues or past performance concerns associated with Federal Express Corporation regarding DoD contracts?

Federal Express Corporation is a major global logistics provider with extensive experience serving the Department of Defense and other government agencies. While specific performance issues are not detailed in the provided data, large contractors of this scale can occasionally face performance challenges related to delivery delays, service disruptions, or billing discrepancies. However, Federal Express generally maintains a strong reputation for reliability and operational capability. DoD contract databases and past performance reviews would contain detailed records of any significant issues. Typically, any substantial past performance concerns would be factored into the source selection process for new contracts, potentially impacting award decisions or leading to specific contractual requirements and heightened oversight.

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: $132,597,491

Exercised Options: $132,597,491

Current Obligation: $132,597,491

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HTC71113DCC02

IDV Type: IDC

Timeline