VA awards $99.5M contract for CMOP shipping to Federal Express, highlighting delivery services competition

Contract Overview

Contract Amount: $99,463,606 ($99.5M)

Contractor: Federal Express Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2023-10-01

End Date: 2024-09-30

Contract Duration: 365 days

Daily Burn Rate: $272.5K/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: CMOP SHIPPING

Place of Performance

Location: LEAVENWORTH, LEAVENWORTH County, KANSAS, 66048

State: Kansas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $99.5 million to FEDERAL EXPRESS CORPORATION for work described as: CMOP SHIPPING Key points: 1. Contract value represents significant investment in pharmaceutical logistics. 2. Federal Express's selection indicates strong performance in express delivery. 3. The contract's duration and fixed-price nature suggest cost predictability. 4. Competition dynamics are crucial for ensuring efficient service delivery. 5. Oversight will be key to monitoring performance and value. 6. This award impacts the broader courier and express delivery services market.

Value Assessment

Rating: good

The total award amount of $99.5 million over one year for CMOP shipping services appears to be within a reasonable range for large-scale logistics contracts. Benchmarking against similar federal contracts for express delivery services would provide a more precise value-for-money assessment. The firm fixed-price structure suggests that the government has negotiated a set rate, which can offer cost certainty, but it also places the risk of cost overruns on the contractor. Further analysis of the per-unit delivery costs compared to commercial rates would be beneficial.

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 while the competition was broad, specific circumstances led to the exclusion of certain potential bidders. The presence of 3 bidders suggests a moderate level of competition. A full and open competition typically aims to maximize the number of interested and capable offerors to drive down prices and improve service quality. The level of competition here likely contributed to achieving a competitive price, though understanding the reasons for source exclusion is important for a complete picture.

Taxpayer Impact: The competitive nature of this award is beneficial for taxpayers, as it likely resulted in a more favorable price than a sole-source or limited competition scenario. Ensuring a robust bidding process helps prevent overspending and encourages contractors to offer their best value.

Public Impact

Beneficiaries include veterans and active-duty military personnel receiving pharmaceuticals through the Consolidated Mail Outpatient Pharmacy (CMOP). Services delivered include the express shipping and delivery of prescription medications nationwide. The geographic impact is nationwide, covering all areas served by the VA's CMOP program. Workforce implications include support for Federal Express's delivery network and potentially VA logistics personnel overseeing the contract.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for increased delivery times if contractor faces unforeseen logistical challenges.
Reliance on a single large carrier could create vulnerabilities in service continuity.
Ensuring compliance with all VA regulations for pharmaceutical transport is critical.

Positive Signals

Federal Express is a well-established logistics provider with extensive infrastructure.
The firm fixed-price contract provides cost certainty for the VA.
The award was made after a competitive bidding process, suggesting value.
The contract duration allows for stable service provision over a year.

Sector Analysis

The contract falls within the 'Couriers and Express Delivery Services' sector, a critical component of the logistics industry. This sector is characterized by high volume, time-sensitive deliveries, and significant infrastructure investment. The market is competitive, with major players like Federal Express, UPS, and DHL, alongside numerous smaller regional and specialized carriers. Federal spending in this area is substantial, supporting government operations, supply chains, and essential services like healthcare delivery. This specific contract represents a significant portion of spending within the government's pharmaceutical logistics segment.

Small Business Impact

This contract was not set aside for small businesses, as indicated by 'ss': false and 'sb': false. The award to a large, established corporation like Federal Express suggests that the primary focus was on capability, capacity, and potentially price for a large-scale, critical service. While there are no direct small business set-aside provisions, Federal Express may utilize small businesses for subcontracting, particularly in last-mile delivery or regional logistics, though this is not explicitly detailed in the provided data. The impact on the small business ecosystem is likely indirect, focusing on competition among larger prime contractors.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of Veterans Affairs (VA). The VA's contracting officers and program managers are responsible for monitoring contractor performance, ensuring compliance with contract terms, and managing payments. Given the nature of pharmaceutical delivery, specific quality assurance surveillance plans (QASPs) would likely be in place to track delivery timeliness, package integrity, and adherence to any special handling requirements. Transparency is facilitated through contract award databases, but detailed performance metrics and oversight reports are typically internal to the agency.

Related Government Programs

VA Pharmacy Benefits Management
CMOP Operations
Federal Express Logistics Services
Government Shipping Contracts
Healthcare Supply Chain Management

Risk Flags

Potential for service disruptions
Ensuring pharmaceutical integrity during transit
Compliance with VA regulations
Dependence on a single large carrier

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $99.5 million to FEDERAL EXPRESS CORPORATION. CMOP SHIPPING

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 $99.5 million.

What is the period of performance?

Start: 2023-10-01. End: 2024-09-30.

What is the historical spending trend for CMOP shipping services by the Department of Veterans Affairs?

Analyzing historical spending on CMOP shipping requires accessing VA's procurement data over multiple fiscal years. Typically, such services are procured annually or through multi-year contracts. Spending can fluctuate based on prescription volume, changes in delivery network efficiency, and contract competition. For instance, if the VA previously used multiple regional carriers or a different national provider, the current $99.5 million award might represent an increase or decrease in overall expenditure. Understanding past contract values, durations, and awarded vendors would reveal trends in cost, service providers, and potential consolidation or expansion of the CMOP shipping program.

How does the per-package delivery cost under this contract compare to commercial rates or other federal agencies?

The provided data does not include a specific per-package delivery cost, making direct comparison difficult. However, the total award of $99.5 million for a 365-day period suggests an average daily spend of approximately $272,500. To estimate a per-package cost, one would need the projected number of packages shipped annually. If, hypothetically, 10 million packages were shipped, the average cost per package would be around $9.95. This figure could then be benchmarked against Federal Express's standard commercial rates for similar services (e.g., express overnight or 2-day shipping) and against rates paid by other federal agencies for comparable logistics support. Variations could be attributed to volume discounts, service level agreements, and specific government requirements.

What specific risks are associated with relying on Federal Express for nationwide pharmaceutical delivery, and how are they mitigated?

Key risks include potential delivery delays due to weather, logistical network disruptions, or unforeseen events impacting Federal Express's operations. There's also a risk related to the secure and temperature-controlled transport of medications, where failures could compromise drug efficacy and patient safety. Mitigation strategies likely involve stringent performance metrics within the contract, such as on-time delivery rates and package integrity standards. The VA would also have contingency plans, potentially involving backup carriers or alternative distribution methods for critical medications. Regular performance reviews and clear communication channels with Federal Express are essential for proactive risk management.

What is Federal Express Corporation's track record with the Department of Veterans Affairs and other federal agencies for similar logistics contracts?

Federal Express Corporation is a major global logistics provider with extensive experience serving government agencies, including the Department of Defense and various civilian departments. Their track record with the VA likely includes numerous contracts for shipping mail, medical supplies, and other critical items. Performance history, including past performance evaluations, on-time delivery rates, and any past disputes or contract modifications, would be crucial factors in the VA's decision-making process for awarding this significant CMOP shipping contract. A review of Federal Express's performance on similar large-scale, time-sensitive delivery contracts across the federal government would provide further context.

How does the 'full and open competition after exclusion of sources' classification impact the overall value and efficiency of this contract?

This classification implies that while the competition was broadly solicited, certain potential offerors were excluded based on specific criteria or circumstances defined by the agency. This could be due to reasons like past performance issues, inability to meet specific technical requirements, or national security considerations. The impact on value and efficiency depends heavily on the number and capability of the remaining bidders. If the exclusion process still resulted in robust competition among highly qualified vendors (as suggested by 3 bidders), it could still yield competitive pricing and efficient service. However, if the exclusion significantly limited the pool of capable providers, it might reduce competitive pressure and potentially lead to less optimal pricing or service.

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: $99,463,606

Exercised Options: $99,463,606

Current Obligation: $99,463,606

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71123DC023

IDV Type: IDC

Timeline