VA awards $32.7M delivery order to Federal Express for courier services, highlighting a competitive procurement

Contract Overview

Contract Amount: $32,713,079 ($32.7M)

Contractor: Federal Express Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-02-05

End Date: 2024-09-30

Contract Duration: 238 days

Daily Burn Rate: $137.4K/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: DTP NGDS ORDER

Place of Performance

Location: LEAVENWORTH, LEAVENWORTH County, KANSAS, 66048

State: Kansas Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $32.7 million to FEDERAL EXPRESS CORPORATION for work described as: DTP NGDS ORDER Key points: 1. The contract value represents a significant investment in essential logistics support for the VA. 2. Full and open competition suggests a robust market for these services, potentially driving favorable pricing. 3. The fixed-price contract structure shifts performance risk to the contractor. 4. Delivery order for courier and express services indicates a need for rapid and reliable mail and package transport. 5. The contract duration of 238 days suggests a short-term, immediate need for these services. 6. The award to a major carrier like FedEx implies a focus on established performance and reach.

Value Assessment

Rating: good

The awarded amount of $32.7 million for a delivery order is substantial for courier services. Benchmarking against similar contracts for express delivery by federal agencies is difficult without more specific service details (e.g., volume, speed, geographic coverage). However, the use of a well-established provider like Federal Express suggests a reliance on proven infrastructure and service levels. The firm-fixed-price nature of the contract provides cost certainty for the VA, assuming the scope of work is well-defined.

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 multiple vendors were likely solicited and had the opportunity to bid. The presence of 3 bids suggests a reasonable level of competition for this requirement. A competitive process generally leads to better price discovery and ensures the government receives offers from qualified vendors.

Taxpayer Impact: The competitive nature of this procurement is beneficial for taxpayers, as it likely resulted in a more cost-effective solution compared to a sole-source award. It also signals that the market has sufficient capacity and interest to meet the VA's needs.

Public Impact

Beneficiaries include VA personnel and potentially veterans who rely on timely delivery of medical supplies, documents, and other essential items. Services delivered are critical for the operational efficiency of the Department of Veterans Affairs, ensuring the smooth flow of mail and packages. The geographic impact is likely nationwide, given the nature of Federal Express's operations, supporting VA facilities across the country. Workforce implications are minimal for the VA, as the service is outsourced to a private contractor.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for increased costs if delivery volumes exceed initial estimates under the firm-fixed-price contract.
Reliance on a single large carrier could create vulnerabilities if service disruptions occur.
Limited visibility into the contractor's internal operational efficiencies and cost structures.

Positive Signals

Award to a reputable carrier with a proven track record in express delivery.
Firm-fixed-price contract provides cost predictability for the VA.
Competitive bidding process likely secured a fair market price.
Leverages existing infrastructure of a major logistics provider, ensuring broad reach and capacity.

Sector Analysis

The courier and express delivery services sector is a mature and highly competitive market dominated by a few large global players and numerous regional and specialized providers. Federal spending in this area supports a wide range of government functions, from administrative mailings to the rapid transport of sensitive materials. The market is characterized by significant investments in technology, logistics networks, and fleet management. This contract fits within the broader category of logistics and transportation services, a critical component of government operations.

Small Business Impact

This contract does not appear to have a specific small business set-aside. Given the award to Federal Express, a large corporation, it is unlikely that significant subcontracting opportunities will be directed towards small businesses unless explicitly mandated or pursued by the prime contractor. The focus is on leveraging the established capabilities of a major carrier rather than fostering small business participation.

Oversight & Accountability

Oversight for this contract would primarily reside with the contracting officer and the relevant program managers within the Department of Veterans Affairs. Performance monitoring would likely involve tracking delivery times, service quality metrics, and adherence to contract terms. Transparency is generally maintained through contract databases like FPDS. Inspector General jurisdiction would apply if any fraud, waste, or abuse related to the contract is suspected.

Related Government Programs

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

Risk Flags

Potential for service disruption due to reliance on a single large carrier.
Need for robust performance monitoring to ensure service quality and timeliness.
Firm-fixed-price contract requires clear definition of scope to avoid cost overruns.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $32.7 million to FEDERAL EXPRESS CORPORATION. DTP NGDS 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 $32.7 million.

What is the period of performance?

Start: 2024-02-05. End: 2024-09-30.

What is the historical spending pattern of the VA on courier and express delivery services?

Analyzing the VA's historical spending on courier and express delivery services requires accessing comprehensive contract data over several fiscal years. While this specific delivery order is for $32.7 million, understanding the VA's total expenditure in this category would involve aggregating data from numerous contracts, including those awarded through GSA schedules, other competitive procurements, and potentially blanket purchase agreements. Trends might reveal increasing reliance on private carriers, shifts in service needs (e.g., expedited shipping), or changes in pricing dynamics. Without a broader historical dataset for the VA specifically in this NAICS code (492110), it's challenging to establish a definitive spending pattern or identify significant deviations from past norms. However, the consistent need for such services across large federal agencies suggests a stable, albeit potentially growing, expenditure area.

How does the per-unit cost of this contract compare to other federal agencies using similar courier services?

A direct per-unit cost comparison is difficult without granular data on the specific services rendered under this $32.7 million delivery order, such as cost per package, cost per pound, or cost per mile for different service levels (e.g., overnight, same-day). Federal Express, as a major carrier, likely offers competitive rates negotiated through this full and open competition. However, agencies often utilize GSA schedules or other large-scale contracts that may have different pricing structures. To perform a robust comparison, one would need to identify comparable contracts from other agencies for similar volumes and service types, then normalize the pricing data. It's possible that rates negotiated through large, competitive contracts like this one are more favorable than those obtained through smaller, less competitive procurements or less established providers.

What are the key performance indicators (KPIs) used to evaluate Federal Express's performance under this contract?

Key performance indicators (KPIs) for a contract of this nature typically focus on delivery timeliness, package integrity, tracking accuracy, and customer service responsiveness. Specific metrics might include on-time delivery rates (e.g., percentage of packages delivered by the promised time), damage rates (percentage of packages reported damaged), loss rates (percentage of packages lost in transit), and the accuracy of shipment tracking information. The contract likely specifies acceptable thresholds for these KPIs, and Federal Express's performance would be monitored against these benchmarks. Failure to meet these KPIs could result in financial penalties, corrective action requests, or even contract termination, depending on the severity and frequency of non-compliance.

What is the risk associated with relying on a single large carrier like Federal Express for critical VA logistics?

The primary risk associated with relying on a single large carrier like Federal Express is service disruption. Major carriers can experience operational issues due to weather events, labor disputes, system outages, or unforeseen demand surges, which could impact the VA's ability to receive or send critical shipments. While Federal Express has a robust network, any significant disruption could have cascading effects on VA operations. Another risk is potential price escalation in future contract renewals, as the contractor may have significant leverage if they are the incumbent and deeply integrated into the VA's logistics. However, the competitive nature of the initial award and the possibility of re-competing the contract mitigate some of this long-term pricing risk.

How does this contract align with the VA's overall mission and strategic objectives?

This contract directly supports the VA's mission to provide comprehensive healthcare and benefits to veterans. Reliable and efficient delivery of medical supplies, pharmaceuticals, equipment, and administrative documents is crucial for the seamless operation of VA facilities and the timely delivery of services to veterans. By outsourcing these logistics to a specialized provider like Federal Express, the VA can ensure that its personnel can focus on core healthcare and benefits administration rather than managing complex shipping operations. The use of a competitive process also aligns with government objectives for responsible stewardship of taxpayer funds, ensuring value for money in supporting the VA's critical functions.

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: $32,713,079

Exercised Options: $32,713,079

Current Obligation: $32,713,079

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71123DC023

IDV Type: IDC

Timeline