Treasury's $161M Next Generation Delivery Services contract awarded to UPS for courier and express delivery

Contract Overview

Contract Amount: $161,450 ($161.5K)

Contractor: United Parcel Service CO.

Awarding Agency: Department of the Treasury

Start Date: 2023-04-06

End Date: 2026-10-30

Contract Duration: 1,303 days

Daily Burn Rate: $124/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 4

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: NEXT GENERATION DELIVERY SERVICES (NGDS)

Place of Performance

Location: LOUISVILLE, JEFFERSON County, KENTUCKY, 40213

State: Kentucky Government Spending

Plain-Language Summary

Department of the Treasury obligated $161,450.25 to UNITED PARCEL SERVICE CO. for work described as: NEXT GENERATION DELIVERY SERVICES (NGDS) Key points: 1. Contract aims to modernize delivery services, potentially improving efficiency and reducing costs. 2. Awarded to a single, established provider, raising questions about competitive pressure on pricing. 3. Fixed-price contract structure shifts some performance risk to the contractor. 4. Long duration suggests a strategic, long-term need for these services. 5. Geographic focus on Kentucky may indicate a regional operational hub or specific service requirement. 6. Absence of small business set-aside warrants review of subcontracting opportunities.

Value Assessment

Rating: fair

The total contract value of $161.25 million over approximately 3.5 years represents a significant investment in delivery services. Benchmarking this against similar large-scale federal delivery contracts is challenging without more granular data on service levels and volumes. The firm fixed-price nature suggests that UPS bears the risk of cost overruns, which can be a positive for the government if managed effectively. However, the lack of explicit performance metrics or comparison points makes a definitive value assessment difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating a competitive process but with specific limitations. While competition occurred, the exclusion of certain sources might have narrowed the field. The presence of 4 bidders suggests some level of market interest, but the final award to a single entity means the government did not benefit from the lowest price among all potential offerors.

Taxpayer Impact: The limited competition may have resulted in a price higher than what could have been achieved in a truly open and unrestricted bidding environment. Taxpayers may have paid a premium due to the narrowed scope of the competition.

Public Impact

Federal agencies utilizing the Bureau of the Fiscal Service will benefit from modernized delivery capabilities. Services include essential courier and express delivery, supporting government operations. The primary geographic impact is noted in Kentucky (KY), suggesting a key operational area. Workforce implications are likely within UPS's existing delivery network, potentially leveraging current employees.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition could lead to suboptimal pricing for taxpayers.
Lack of detailed performance benchmarks makes assessing true value difficult.
Exclusion of sources in the competition process warrants further investigation.
Long contract duration may reduce flexibility to adapt to changing delivery needs.

Positive Signals

Firm fixed-price contract shifts cost risk to the contractor.
Award to an established provider like UPS suggests a focus on reliability.
Modernization of delivery services could lead to long-term efficiencies.

Sector Analysis

The courier and express delivery services sector is highly competitive, dominated by large players like UPS, FedEx, and USPS, alongside numerous smaller regional providers. Federal spending in this area supports the logistical backbone of government operations. This contract, valued at over $161 million, represents a significant portion of federal spending within the 'Couriers and Express Delivery Services' NAICS code (492110). It fits within the broader logistics and transportation sector, where efficiency, reliability, and cost-effectiveness are key drivers.

Small Business Impact

This contract does not appear to have a small business set-aside (SS=false, SB=false). The award to a large, established company like UPS suggests that small businesses were either not primary bidders or were not selected. Further analysis would be needed to determine if subcontracting opportunities exist for small businesses within the scope of this delivery order, and if so, whether they are adequately utilized.

Oversight & Accountability

Oversight for this contract would primarily fall under the Bureau of the Fiscal Service within the Department of the Treasury. As a delivery order under a larger contract vehicle, specific oversight mechanisms would depend on the terms of the base contract. Transparency is facilitated by contract award databases, but detailed performance monitoring and accountability measures are internal to the agency and the contractor. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

General Services Administration (GSA) Federal Supply Schedule (FSS) contracts for logistics and transportation
Department of Defense (DoD) mail and package delivery services
US Postal Service (USPS) contracts for specific agency needs

Risk Flags

Limited competition may impact price.
Lack of detailed performance metrics hinders value assessment.
Exclusion of sources warrants further scrutiny.
Long contract duration could reduce future flexibility.

Frequently Asked Questions

What is this federal contract paying for?

Department of the Treasury awarded $161,450.25 to UNITED PARCEL SERVICE CO.. NEXT GENERATION DELIVERY SERVICES (NGDS)

Who is the contractor on this award?

The obligated recipient is UNITED PARCEL SERVICE CO..

Which agency awarded this contract?

Awarding agency: Department of the Treasury (Bureau of the Fiscal Service).

What is the total obligated amount?

The obligated amount is $161,450.25.

What is the period of performance?

Start: 2023-04-06. End: 2026-10-30.

What specific performance metrics are included in the NGDS contract to ensure service quality and efficiency?

The provided data does not detail the specific performance metrics within the Next Generation Delivery Services (NGDS) contract. Typically, such contracts would include metrics related to delivery timeliness, package integrity, tracking accuracy, and customer service response times. The firm fixed-price nature suggests that meeting these (often unstated in summary data) performance standards is crucial for the contractor, UPS, to achieve profitability. Without access to the full contract, it's impossible to quantify these metrics or assess how they are monitored and enforced by the Bureau of the Fiscal Service.

How does the pricing of this UPS contract compare to other federal delivery contracts or commercial rates?

Direct price comparison is difficult without knowing the exact services rendered (e.g., express vs. standard, weight, dimensions, distance) and the specific performance levels required. The $161.25 million value over approximately 3.5 years suggests a substantial volume of deliveries. While UPS is a major commercial provider, federal contracts can sometimes have different pricing structures due to competition, administrative overhead, and specific requirements. The 'limited' competition aspect suggests the price might not be the absolute lowest achievable in a fully open market. Benchmarking against GSA Schedule pricing for similar services would be a more appropriate next step for a detailed analysis.

What are the primary risks associated with this contract for the government and the contractor?

For the government, the primary risks include potential overpayment if the limited competition suppressed pricing, and the risk of service disruptions if UPS fails to meet performance expectations. The long duration also poses a risk of the services becoming outdated or less cost-effective over time. For the contractor, UPS, the main risks revolve around cost overruns under the firm fixed-price agreement, potential penalties for failing to meet performance standards, and the challenge of managing a large-scale delivery operation efficiently to maintain profitability. Reputational risk is also present if service quality declines.

What is the historical spending pattern for delivery services by the Bureau of the Fiscal Service or Treasury?

The provided data does not include historical spending patterns. To assess this, one would need to examine prior contracts for similar delivery services awarded by the Bureau of the Fiscal Service or the broader Department of the Treasury. Analyzing trends in spending volume, contract values, and awarded vendors over several fiscal years would reveal whether this $161.25 million NGDS contract represents an increase, decrease, or continuation of previous spending levels. It would also indicate if there's a pattern of relying on specific large providers or engaging in competitive procurements.

What does the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' designation imply about the procurement process?

This designation implies that the procurement was initially intended for full and open competition, meaning all responsible sources were permitted to submit offers. However, specific sources were later excluded from the competition. The reasons for exclusion are not provided but could be due to factors like specific technical requirements, past performance issues, or other criteria outlined in the solicitation. While competition occurred among the remaining bidders (4 in this case), the exclusion means the government may not have considered all potentially capable vendors, potentially impacting the final price and choice.

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: 4

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: $181,950

Exercised Options: $161,450

Current Obligation: $161,450

Actual Outlays: $117,627

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71123DC025

IDV Type: IDC

Timeline