USDA awards $2.6M delivery order to UPS for express shipping services, with potential to reach $625K annually

Contract Overview

Contract Amount: $2,636,265 ($2.6M)

Contractor: United Parcel Service CO.

Awarding Agency: Department of Agriculture

Start Date: 2023-03-28

End Date: 2027-03-31

Contract Duration: 1,464 days

Daily Burn Rate: $1.8K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: NASS EXPRESS SHIPPING. THE BASE PERIOD OF PERFORMANCE IS FROM 4/1/2023 TO 3/31/2024, WITH OPTION YEARS UNTIL 2028, NTE $625,000.00.

Place of Performance

Location: LOUISVILLE, JEFFERSON County, KENTUCKY, 40223

State: Kentucky Government Spending

Plain-Language Summary

Department of Agriculture obligated $2.6 million to UNITED PARCEL SERVICE CO. for work described as: NASS EXPRESS SHIPPING. THE BASE PERIOD OF PERFORMANCE IS FROM 4/1/2023 TO 3/31/2024, WITH OPTION YEARS UNTIL 2028, NTE $625,000.00. Key points: 1. Value for money assessed against market rates for express shipping. 2. Competition dynamics indicate a full and open competition after exclusion of sources. 3. Risk indicators include contract duration and reliance on a single provider. 4. Performance context is delivery services for the Agricultural Research Service. 5. Sector positioning within the couriers and express delivery services industry.

Value Assessment

Rating: good

The contract's total value of $2,636,264.61 over its potential duration needs to be benchmarked against industry standards for express shipping. Given the nature of the service, pricing is likely competitive, but a detailed cost breakdown would be necessary for a more precise value assessment. The firm fixed-price structure provides cost certainty 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,' suggesting that while the competition was broad, specific sources may have been excluded for defined reasons. The number of bidders is not specified, but the 'full and open' designation implies a robust competitive process was intended, which generally aids in price discovery.

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

Public Impact

Benefits the Department of Agriculture's Agricultural Research Service by ensuring timely delivery of critical materials. Services delivered include express shipping and courier services. Geographic impact is nationwide, supporting ARS operations across various locations. Workforce implications are minimal for the government, with the service provided by the contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases in future option years if not re-competed.
Dependence on a single contractor for critical shipping needs could pose a risk if service disruptions occur.

Positive Signals

Award to a well-established and reputable provider (UPS) suggests reliability.
Firm Fixed Price contract provides budget predictability.
Long-term contract potential allows for consistent service delivery.

Sector Analysis

The couriers and express delivery services sector is a mature and highly competitive market dominated by a few major players. This contract falls within the logistics and transportation industry, which is essential for government operations. Benchmarking against similar government contracts for express shipping would provide further insight into the value proposition.

Small Business Impact

The contract was awarded to United Parcel Service Co., a large business. There is no indication of small business set-asides or subcontracting requirements in the provided data. This suggests that the primary focus was on securing reliable express shipping services from a major provider, rather than specifically promoting small business participation.

Oversight & Accountability

Oversight would typically be managed by the contracting officer's representative (COR) within the Agricultural Research Service. Accountability measures are inherent in the firm fixed-price contract terms, requiring UPS to meet delivery standards. Transparency is facilitated by the Federal Procurement Data System (FPDS), where contract awards are publicly reported.

Related Government Programs

General Services Administration (GSA) Schedule Contracts
Department of Defense Shipping Contracts
US Postal Service Contracts

Risk Flags

Potential for price increases in option years.
Dependence on a single provider.
Competition level requires further scrutiny if 'exclusion of sources' was significant.

Frequently Asked Questions

What is this federal contract paying for?

Department of Agriculture awarded $2.6 million to UNITED PARCEL SERVICE CO.. NASS EXPRESS SHIPPING. THE BASE PERIOD OF PERFORMANCE IS FROM 4/1/2023 TO 3/31/2024, WITH OPTION YEARS UNTIL 2028, NTE $625,000.00.

Who is the contractor on this award?

The obligated recipient is UNITED PARCEL SERVICE CO..

Which agency awarded this contract?

Awarding agency: Department of Agriculture (Agricultural Research Service).

What is the total obligated amount?

The obligated amount is $2.6 million.

What is the period of performance?

Start: 2023-03-28. End: 2027-03-31.

What is the historical spending pattern for express shipping services by the Agricultural Research Service?

Historical spending data for express shipping by the Agricultural Research Service is not directly available in the provided snippet. However, the current award of $2,636,264.61 with a potential annual ceiling of $625,000.00 suggests a significant and ongoing need for these services. To understand historical patterns, one would need to analyze past contract awards for similar services by ARS or the broader USDA. This would involve searching procurement databases for previous delivery orders or contracts with companies like FedEx, DHL, or other courier services used by the agency over the past several years. Analyzing trends in spending, contract duration, and pricing would reveal if this current award represents an increase, decrease, or stable level of expenditure for these essential logistics.

How does the pricing of this UPS contract compare to other federal express shipping contracts?

Direct comparison of pricing for this specific UPS contract against other federal express shipping contracts is challenging without access to detailed pricing structures and service level agreements for those other contracts. However, UPS is a major carrier, and its pricing is generally considered competitive within the industry. The 'Full and Open Competition' award suggests that the government sought competitive bids, implying the price achieved is likely favorable relative to market rates. To perform a robust comparison, one would need to benchmark the per-package rates, zone charges, and any surcharges against similar contracts awarded by agencies like GSA or DoD, considering factors like volume discounts, service speed, and geographic coverage. The firm fixed-price nature provides cost certainty, but the ultimate value depends on the actual utilization and negotiated rates.

What are the primary risks associated with this contract for the USDA?

The primary risks associated with this contract for the USDA revolve around service reliability and potential cost escalation. Dependence on a single provider, even a reputable one like UPS, carries the risk of service disruptions due to unforeseen events such as labor strikes, natural disasters, or logistical failures, which could impede the critical operations of the Agricultural Research Service. While the contract is firm fixed-price for the base period, option years could see price adjustments if not carefully managed or re-competed. Another risk is the potential for the government to pay above market rates if the competitive process was not sufficiently robust or if market conditions change unfavorably. Ensuring clear performance standards and robust oversight is crucial to mitigate these risks.

What is the track record of United Parcel Service Co. (UPS) as a federal contractor?

United Parcel Service Co. (UPS) has a substantial track record as a federal contractor, frequently awarded contracts across various government agencies for logistics and shipping services. Their extensive experience in the private sector translates to a well-established infrastructure and operational expertise that government agencies rely on. Historically, UPS has demonstrated its capability to handle large-scale delivery requirements, often competing successfully in full and open solicitations. While specific performance metrics for all past federal contracts are not detailed here, their continued success in securing government business suggests a generally positive performance record. Agencies typically evaluate past performance as a key factor in contract awards, and UPS's consistent presence indicates they meet or exceed required standards.

How does the contract duration impact the overall value and risk for the government?

The contract duration, spanning from April 1, 2023, to March 31, 2027 (including option years), impacts the overall value and risk for the government in several ways. A longer duration can provide stability and ensure consistent service delivery, potentially leading to better-established working relationships and economies of scale for the contractor, which could translate into more favorable pricing over time. However, it also increases the risk of the government being locked into a contract that may become less cost-effective or technologically outdated if market conditions or service needs evolve significantly. The firm fixed-price nature mitigates budget uncertainty for the base period, but option years require careful review. A longer duration also reduces the frequency of re-competition, which is a key mechanism for ensuring ongoing value and incorporating new market innovations.

Industry Classification

NAICS: Transportation and Warehousing › Couriers and Express Delivery Services › Couriers and Express Delivery Services

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: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 1400 N HURSTBOURNE PKWY, LOUISVILLE, KY, 40223

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $2,918,765

Exercised Options: $2,636,265

Current Obligation: $2,636,265

Actual Outlays: $1,496,309

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71123DC025

IDV Type: IDC

Timeline