VA awards $20.6M contract to UPS for CMOP shipping, highlighting courier service needs

Contract Overview

Contract Amount: $20,163,991 ($20.2M)

Contractor: United Parcel Service CO.

Awarding Agency: Department of Veterans Affairs

Start Date: 2023-10-01

End Date: 2025-05-27

Contract Duration: 604 days

Daily Burn Rate: $33.4K/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: CMOP SHIPPING

Place of Performance

Location: LEAVENWORTH, LEAVENWORTH County, KANSAS, 66048

State: Kansas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $20.2 million to UNITED PARCEL SERVICE CO. for work described as: CMOP SHIPPING Key points: 1. Contract leverages established logistics provider for critical pharmaceutical delivery. 2. Competition was open, suggesting potential for competitive pricing. 3. Fixed-price contract type mitigates cost overrun risks for the VA. 4. Delivery order structure allows for flexibility in service needs. 5. Focus on courier services aligns with efficient healthcare supply chain management. 6. Contract duration extends into FY25, indicating ongoing service requirement.

Value Assessment

Rating: good

This contract for CMOP shipping appears to be a standard procurement for essential logistics services. While specific value-for-money metrics are not provided, the use of a well-established carrier like UPS for a fixed-price contract suggests a predictable cost structure. Benchmarking against similar federal contracts for express delivery services would provide further insight into whether the pricing is competitive. The total award amount of $20.6 million over its period of performance indicates a significant but likely necessary investment for the Department of Veterans Affairs' pharmaceutical supply chain.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating that while the competition was intended to be broad, certain sources may have been excluded prior to the solicitation. The presence of 4 bids suggests a reasonable level of competition. This level of competition is generally positive for price discovery, as it encourages bidders to offer competitive rates to secure the contract. However, the 'after exclusion of sources' clause warrants further investigation into the rationale for exclusions.

Taxpayer Impact: A competitive bidding process helps ensure that taxpayer dollars are used efficiently by driving down costs. The open competition, even with exclusions, suggests that the VA sought the best value, which should translate to more favorable pricing for the government.

Public Impact

Veterans will benefit from timely and reliable delivery of pharmaceuticals through the VA's Consolidated Mail Outpatient Pharmacy (CMOP) program. The contract ensures the continued operation of a critical component of the VA's healthcare supply chain. Services are likely to have a nationwide impact, supporting veterans across the United States. The contract supports the logistics and delivery workforce employed by United Parcel Service.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for higher costs if excluded sources offered significantly lower pricing.
Dependence on a single large carrier could pose risks if service disruptions occur.

Positive Signals

Leverages a proven, large-scale logistics provider with extensive infrastructure.
Fixed-price contract provides cost certainty for the VA.
Open competition, even with exclusions, aims for best value.

Sector Analysis

The courier and express delivery services sector is a vital part of the national economy, facilitating the movement of goods and information. This contract falls within the broader logistics and transportation industry, which is characterized by significant competition and technological advancements. Federal spending in this sector often supports critical government operations, including healthcare, defense, and emergency response. Comparable spending benchmarks would involve analyzing other federal contracts awarded to major shipping carriers for similar delivery volumes and service requirements.

Small Business Impact

This contract does not appear to have a small business set-aside. Given the scale and nature of the services required (nationwide express delivery of pharmaceuticals), it is likely that large, established carriers like UPS are best positioned to meet the demand. There is no explicit information regarding subcontracting opportunities for small businesses within this award, but it is common for large prime contractors to utilize small businesses for specific legs of delivery or specialized services.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Veterans Affairs contracting officers and program managers. Accountability measures are embedded in the firm fixed-price contract terms, requiring UPS to meet delivery standards. Transparency is facilitated through federal procurement databases where contract awards are published. The Inspector General's office within the VA may conduct audits or investigations into the contract's performance and financial integrity if concerns arise.

Related Government Programs

VA Pharmaceutical Supply Chain Management
Federal Express Delivery Services
Logistics and Transportation Contracts
Healthcare Supply Chain Services

Risk Flags

Potential for limited competition due to 'exclusion of sources' clause.
Dependence on a single large carrier for critical pharmaceutical deliveries.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $20.2 million to UNITED PARCEL SERVICE CO.. CMOP SHIPPING

Who is the contractor on this award?

The obligated recipient is UNITED PARCEL SERVICE CO..

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 $20.2 million.

What is the period of performance?

Start: 2023-10-01. End: 2025-05-27.

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

Analyzing historical spending on CMOP shipping by the VA is crucial for understanding trends and identifying potential cost efficiencies or escalations. While specific data for this contract is limited to the current award, the VA has consistently relied on contracted logistics services to manage its vast pharmaceutical distribution network. Past contracts would likely show a similar reliance on major carriers, with spending fluctuating based on demand, service level agreements, and market pricing. Examining annual reports or budget justifications from the VA's acquisition or logistics departments could reveal multi-year spending trends. For instance, if previous contracts were significantly lower or higher, it would indicate a shift in market conditions, service scope, or the VA's strategic approach to pharmaceutical logistics. Understanding this history helps contextualize the current $20.6 million award and assess its alignment with long-term budgetary planning and operational needs.

How does the pricing of this UPS contract compare to other federal contracts for similar courier and express delivery services?

Benchmarking the pricing of this $20.6 million contract against similar federal procurements is essential for assessing value for money. The Department of Veterans Affairs (VA) likely sought competitive bids, and the 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES' suggests an effort to secure favorable rates. However, without access to the specific per-unit costs (e.g., cost per package, cost per mile, or zone-based pricing) and the exact scope of services (e.g., delivery speed, handling requirements), a direct comparison is challenging. Generally, contracts with major carriers like UPS, FedEx, and DHL for large volumes of express delivery services are negotiated based on established rate cards, volume discounts, and specific service level agreements. Comparing this contract's unit costs to those awarded by agencies like the Department of Defense or GSA for similar express delivery needs would provide a clearer picture of its competitiveness. Factors such as geographic coverage, delivery timeframes, and specialized handling requirements significantly influence pricing, making precise comparisons difficult without detailed data.

What are the primary risks associated with this contract, and how are they being mitigated?

The primary risks associated with this contract include potential service disruptions from the carrier, unexpected increases in fuel or operational costs (despite the fixed-price nature), and the possibility that the 'exclusion of sources' limited the competitive landscape, potentially leading to suboptimal pricing. Mitigation strategies are embedded within the contract structure and oversight. The fixed-price nature of the contract shifts the risk of cost overruns to UPS. The Department of Veterans Affairs (VA) likely has performance metrics and service level agreements (SLAs) in place, with penalties for non-compliance, to ensure service reliability. Furthermore, the contract's duration and the number of bids received suggest a level of stability and market validation. The VA's contracting officers and program managers are responsible for ongoing oversight, monitoring performance, and addressing any issues promptly to ensure the continuity of critical pharmaceutical deliveries.

What is the track record of United Parcel Service (UPS) in fulfilling federal contracts, particularly for the Department of Veterans Affairs?

United Parcel Service (UPS) has a long-standing and extensive track record of fulfilling federal contracts across various agencies, including the Department of Veterans Affairs (VA). As a major global logistics provider, UPS possesses the infrastructure, technology, and experience necessary to manage large-scale delivery operations. Their history with the VA likely includes numerous contracts for shipping medical supplies, equipment, and pharmaceuticals, similar to this CMOP shipping award. Federal procurement databases often show UPS as a frequent awardee for transportation and logistics services. While specific performance details for past VA contracts are not detailed here, UPS's continued success in securing federal business suggests a generally positive performance history. However, like any large contractor, there may have been instances of minor performance issues or disputes, which are typically resolved through contract management processes or are publicly documented if significant.

How does this contract contribute to the overall effectiveness of the VA's Consolidated Mail Outpatient Pharmacy (CMOP) program?

This contract is fundamental to the operational effectiveness of the VA's Consolidated Mail Outpatient Pharmacy (CMOP) program. The CMOP program's core function is to efficiently dispense and deliver prescription medications to veterans nationwide, reducing the need for them to visit physical pharmacies. The reliability and speed of the shipping service directly impact patient care, ensuring veterans receive their necessary medications in a timely manner. By awarding this contract to a capable provider like UPS, the VA aims to maintain a robust and dependable supply chain. The contract's duration and scope suggest a commitment to ensuring consistent service delivery, which is critical for patient adherence to treatment plans and overall health outcomes. Effective logistics are not just a support function but a critical enabler of the VA's mission to provide comprehensive healthcare services to its beneficiaries.

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: $23,597,310

Exercised Options: $23,597,310

Current Obligation: $20,163,991

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71123DC025

IDV Type: IDC

Timeline