VA awards $31M delivery order to Federal Express for courier services, highlighting a competitive procurement

Contract Overview

Contract Amount: $30,999,254 ($31.0M)

Contractor: Federal Express Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2023-04-01

End Date: 2023-09-30

Contract Duration: 182 days

Daily Burn Rate: $170.3K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 3

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: NGDS-2 ORDER

Place of Performance

Location: LEAVENWORTH, LEAVENWORTH County, KANSAS, 66048

State: Kansas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $31.0 million to FEDERAL EXPRESS CORPORATION for work described as: NGDS-2 ORDER Key points: 1. The contract value of $31 million for a 6-month period suggests a significant demand for expedited delivery services. 2. Federal Express's established infrastructure likely contributes to its ability to meet demanding delivery timelines. 3. The 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' indicates a structured procurement process, though the exclusion warrants further review. 4. The fixed-price contract type provides cost certainty for the VA, shifting performance risk to the contractor. 5. This award falls within the broad category of logistics and transportation services, essential for agency operations. 6. The relatively short duration of the order may indicate a need for agile contracting or specific project requirements.

Value Assessment

Rating: good

The $31 million award for a 6-month delivery order represents a substantial investment in courier services. Benchmarking against similar contracts for express delivery services is challenging without more specific service level agreements and geographic coverage details. However, given the scale and the contractor's market position, the pricing is likely competitive, assuming standard industry rates for expedited shipping. The fixed-price nature of the contract provides cost predictability for the VA.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES.' This suggests that while the competition was intended to be broad, specific sources were excluded prior to the final competition. The number of bidders is not explicitly stated, but the 'limited' competition level implies that not all potential offerors were considered in the final round. This could potentially impact price discovery compared to a truly open and unrestricted competition.

Taxpayer Impact: While the exclusion of sources may limit the lowest possible price, the remaining competition likely still drove a reasonable price for taxpayers. The VA secured services from a major provider, indicating a balance between cost and reliable service delivery.

Public Impact

Veterans Affairs (VA) personnel and facilities benefit from timely delivery of medical supplies, equipment, and administrative documents. The services ensure the continuity of healthcare operations by supporting the movement of critical items. The contract impacts the VA's national supply chain and logistics network. Workforce implications are minimal for the VA, as the service is outsourced to Federal Express.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

The exclusion of sources prior to full and open competition raises questions about the breadth of market engagement and potential missed opportunities for cost savings.
Lack of detailed performance metrics in the provided data makes it difficult to assess the efficiency and effectiveness of the services rendered.
The short duration of the delivery order might indicate a reactive procurement rather than strategic long-term planning for courier needs.

Positive Signals

The award to a well-established provider like Federal Express suggests a high likelihood of reliable and timely service delivery.
The firm fixed-price contract type offers budget certainty to the VA, mitigating the risk of cost overruns.
The procurement process, even with exclusions, aimed for competition, indicating an effort to obtain value.

Sector Analysis

The courier and express delivery services sector is a mature and highly competitive market, dominated by a few large players like Federal Express, UPS, and DHL, alongside numerous smaller regional and specialized providers. Federal spending in this sector supports a wide range of government functions, from administrative mail to critical logistics for supplies and equipment. The total market size for logistics and delivery services in the U.S. is in the hundreds of billions of dollars annually. This contract represents a small fraction of that, focused on expedited government needs.

Small Business Impact

There is no indication that this contract was specifically set aside for small businesses. Given the nature of the services and the contractor, it is unlikely that significant subcontracting opportunities for small businesses will arise directly from this specific delivery order, unless Federal Express utilizes them for specific legs of delivery or ancillary services.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Veterans Affairs contracting officers and program managers. They are responsible for monitoring performance, ensuring compliance with contract terms, and approving payments. Transparency is facilitated through contract databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

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

Risk Flags

Limited Competition
Exclusion of Sources
Short Contract Duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $31.0 million to FEDERAL EXPRESS CORPORATION. NGDS-2 ORDER

Who is the contractor on this award?

The obligated recipient is FEDERAL EXPRESS CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Veterans Affairs (Department of Veterans Affairs).

What is the total obligated amount?

The obligated amount is $31.0 million.

What is the period of performance?

Start: 2023-04-01. End: 2023-09-30.

What specific services are included under this delivery order, and what are the key performance indicators (KPIs) for Federal Express?

The provided data indicates the contract is for 'Couriers and Express Delivery Services' under NAICS code 492110. However, specific service details such as package volume, delivery speed requirements (e.g., overnight, same-day), geographic scope within the US, and any special handling requirements (e.g., temperature-controlled) are not detailed. Key Performance Indicators (KPIs) typically include on-time delivery rates, package loss/damage rates, and customer service responsiveness. Without the full contract statement of work, a precise assessment of service scope and expected performance is not possible. The VA contracting officer would be the primary source for this detailed information.

How does the pricing of this delivery order compare to other Federal Express contracts for similar services?

Direct comparison of pricing is difficult without knowing the exact service levels, volumes, and geographic coverage of this $31 million, 6-month delivery order. Federal Express offers various service tiers with different price points. If this order primarily involves standard express shipping across the continental US, the pricing might be benchmarked against GSA Schedule rates or other large-volume government contracts. However, if it includes specialized services like expedited medical transport or delivery to remote locations, the per-unit cost could be higher. The firm fixed-price nature suggests the VA aimed for cost certainty, but the underlying rate structure is key to assessing value.

What are the potential risks associated with relying on Federal Express for these critical delivery services?

Key risks include service disruptions due to weather, labor actions (e.g., strikes), or unforeseen operational issues within Federal Express. There's also a risk of performance degradation if demand significantly outstrips capacity or if service quality declines over time. Dependence on a single large provider could also limit flexibility in adapting to changing needs or exploring alternative solutions. Furthermore, data security and privacy risks exist when sensitive government information or materials are in transit, although Federal Express has robust security protocols in place.

What is Federal Express's track record with the Department of Veterans Affairs and other federal agencies?

Federal Express has a long-standing relationship with numerous federal agencies, including the VA, providing a wide array of logistics and delivery services. Their track record generally indicates reliability and extensive network capabilities. Past performance information, often available through government contract databases or agency-specific evaluations, would provide a more granular view of their performance on previous VA contracts, including timeliness, cost adherence, and responsiveness to issues. Generally, large carriers like FedEx are awarded significant contract volumes due to their proven infrastructure and capacity.

How does the $31 million spending on this delivery order fit into the VA's overall spending on logistics and transportation?

The $31 million for a 6-month delivery order represents a significant, but likely not dominant, portion of the VA's overall logistics and transportation budget. The VA manages a vast healthcare system and supply chain, requiring extensive movement of medical supplies, pharmaceuticals, equipment, and administrative documents nationwide. Annual spending on such services across the entire VA could easily run into hundreds of millions or even billions of dollars, encompassing various modes of transport and delivery providers. This specific order likely addresses a concentrated need for expedited courier services within a defined period.

What does the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' designation imply for the procurement process and potential savings?

This designation suggests that the VA initially considered a broad range of potential sources but then excluded certain ones before proceeding with a full and open competition among the remaining eligible offerors. The reasons for exclusion could range from specific capability requirements not met by some vendors to strategic sourcing decisions. While it aims for competition, the exclusion of sources inherently limits the pool of potential bidders. This could mean that the lowest possible price achievable in a truly unrestricted competition might not have been realized, although competition among the included sources likely still drove a competitive price.

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: 3

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Fedex Corp

Address: 2003 CORPORATE PLZ, MEMPHIS, TN, 38132

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

Financial Breakdown

Contract Ceiling: $30,999,254

Exercised Options: $30,999,254

Current Obligation: $30,999,254

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71123DC023

IDV Type: IDC

Timeline