Federal Express awarded $66.5M for air transportation, with 5 bids received under full and open competition

Contract Overview

Contract Amount: $66,474,773 ($66.5M)

Contractor: Federal Express Corporation

Awarding Agency: Department of Defense

Start Date: 2010-04-30

End Date: 2010-12-31

Contract Duration: 245 days

Daily Burn Rate: $271.3K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 5

Pricing Type: FIRM FIXED PRICE

Sector: Transportation

Official Description: CIVIL RESERVE AIR FLEET - AIR TRANSPORTATION SERVICES

Place of Performance

Location: MEMPHIS, SHELBY County, TENNESSEE, 38118

State: Tennessee Government Spending

Plain-Language Summary

Department of Defense obligated $66.5 million to FEDERAL EXPRESS CORPORATION for work described as: CIVIL RESERVE AIR FLEET - AIR TRANSPORTATION SERVICES Key points: 1. Contract value of $66.5M represents significant investment in critical air cargo logistics. 2. Competition dynamics indicate a healthy market with multiple bidders vying for the contract. 3. Risk indicators appear low given the established nature of the contractor and service. 4. Performance context suggests a need for reliable, on-demand air freight for defense needs. 5. Sector positioning places this contract within the broader defense logistics and transportation industry.

Value Assessment

Rating: good

The contract value of $66.5M for air transportation services appears reasonable given the scope and duration. Benchmarking against similar large-scale air cargo contracts awarded by the Department of Defense would provide further insight into its value-for-money. The firm-fixed-price structure suggests that cost risks are largely borne by the contractor, which can be beneficial for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition after exclusion of sources, indicating that multiple potential bidders were considered. The fact that 5 bids were received suggests a competitive environment where price discovery was likely effective. This approach generally leads to better pricing for the government.

Taxpayer Impact: A competitive bidding process ensures that taxpayer funds are used efficiently by driving down costs through market forces.

Public Impact

The primary beneficiaries are the Department of Defense and its operational units requiring rapid and reliable air transport of goods. Services delivered include nonscheduled chartered freight air transportation, crucial for logistical support. Geographic impact is national, supporting military operations across various theaters. Workforce implications include employment for pilots, ground crew, and logistics personnel within Federal Express.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for increased demand on specific routes impacting civilian cargo availability.
Dependence on a single contractor could pose risks if unforeseen operational issues arise.

Positive Signals

Federal Express is a well-established and experienced provider of air cargo services.
The firm-fixed-price contract structure provides cost certainty for the government.
Multiple bids indicate a robust competitive landscape for this type of service.

Sector Analysis

This contract falls within the air transportation and logistics sector, a critical component of national defense infrastructure. The market for government air cargo services is substantial, with significant spending allocated to ensure rapid deployment and supply chain resilience. Comparable spending benchmarks would involve analyzing other large-scale air charter contracts awarded to major carriers by various government agencies.

Small Business Impact

The data indicates this contract was not specifically set aside for small businesses, nor does it appear to have explicit subcontracting requirements for small businesses mentioned. Federal Express, as a large corporation, is likely to fulfill the primary contract, with potential for smaller businesses to be involved indirectly through their supply chain, though this is not guaranteed by the contract terms.

Oversight & Accountability

Oversight for this contract would typically be managed by USTRANSCOM, with performance metrics and delivery schedules monitored to ensure compliance. Accountability measures are inherent in the firm-fixed-price contract, penalizing non-performance. Transparency is facilitated through contract award databases, though detailed operational oversight specifics are usually internal.

Related Government Programs

Military Sealift Command (MSC) Contracts
Air Mobility Command (AMC) Contracts
Logistics and Transportation Services
Department of Defense Freight and Cargo Services

Risk Flags

Contract duration and potential for follow-on work
Dependence on a single large provider for critical services

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $66.5 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 $66.5 million.

What is the period of performance?

Start: 2010-04-30. End: 2010-12-31.

What is the historical spending pattern for air transportation services by USTRANSCOM with Federal Express?

Analyzing historical spending data for USTRANSCOM's air transportation services with Federal Express reveals a consistent reliance on the company for critical logistical support. While this specific contract is valued at approximately $66.5 million, a broader review of past awards would indicate if this represents an increase, decrease, or steady level of expenditure. Understanding these patterns is crucial for forecasting future budget needs and assessing the long-term cost-effectiveness of the partnership. It also helps identify any trends in contract duration, scope, or pricing that might warrant further investigation into market dynamics or contractor performance.

How does the per-unit cost of this contract compare to similar government air cargo charters?

A direct per-unit cost comparison for this contract is challenging without specific details on the volume and type of cargo transported, as well as the routes covered. However, the total value of $66.5 million for nonscheduled chartered freight air transportation over its duration suggests a significant operational scale. Benchmarking would involve comparing the average cost per flight hour, per ton-mile, or per shipment against other similar contracts awarded by the Department of Defense or other federal agencies. Given the firm-fixed-price nature, the government has a degree of cost certainty, but assessing true value requires detailed operational metrics and comparison with market rates for comparable services.

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

Key performance indicators for this air transportation contract likely focus on critical aspects of logistical support, such as on-time delivery rates, cargo security and integrity, flight schedule adherence, and response times for charter requests. Given the nature of military logistics, reliability and rapid deployment are paramount. Performance would also be assessed against contractual obligations regarding aircraft type, capacity, and operational readiness. Failure to meet these KPIs could result in penalties or impact future contract awards, ensuring accountability for Federal Express in fulfilling its vital role.

What is the potential impact of this contract on small business participation in the defense logistics sector?

This contract, awarded to Federal Express, a large incumbent, does not appear to have specific small business set-aside provisions. Consequently, its direct impact on small business participation might be limited unless Federal Express actively engages small businesses as subcontractors. The primary benefit to small businesses would likely stem from indirect opportunities within Federal Express's broader supply chain, such as maintenance, catering, or specialized support services. However, without explicit subcontracting goals, the direct contribution to the small business ecosystem through this specific award is not guaranteed and may be minimal.

Are there any identified risks associated with Federal Express's track record in fulfilling similar government contracts?

Federal Express has a long-standing and generally robust track record in fulfilling complex logistical and air transportation contracts for government agencies, including the Department of Defense. While specific performance issues or disputes on past contracts could exist, they are not immediately apparent from the provided data. The company's extensive experience and established infrastructure suggest a low probability of significant performance failures. However, as with any large-scale contract, ongoing monitoring for adherence to delivery schedules, cargo safety, and regulatory compliance remains essential to mitigate any potential risks.

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 AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 5

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

Financial Breakdown

Contract Ceiling: $66,474,773

Exercised Options: $66,474,773

Current Obligation: $66,474,773

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: HTC71109D5005

IDV Type: IDC

Timeline