VA awards $60.8M contract for mail manifesting services to FedEx Supply Chain

Contract Overview

Contract Amount: $60,830,821 ($60.8M)

Contractor: Fedex Supply Chain Distribution System, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2023-10-01

End Date: 2024-09-30

Contract Duration: 365 days

Daily Burn Rate: $166.7K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: MAIL MANIFESTING SERVICES

Place of Performance

Location: GURLEY, CHEYENNE County, NEBRASKA, 69141

State: Nebraska Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $60.8 million to FEDEX SUPPLY CHAIN DISTRIBUTION SYSTEM, INC. for work described as: MAIL MANIFESTING SERVICES Key points: 1. Contract awarded to a single, established provider for essential logistics support. 2. Pricing appears competitive given the scale and nature of the services required. 3. Potential for service disruptions if contractor performance falters. 4. Service delivery is critical for efficient processing of veteran-related mail. 5. This contract represents a significant portion of the VA's spending on business support services. 6. The firm fixed-price structure shifts performance risk to the contractor.

Value Assessment

Rating: good

The contract value of $60.8 million for mail manifesting services over one year appears reasonable when considering the scope of operations for the Department of Veterans Affairs. Benchmarking against similar large-scale logistics and business support contracts suggests that the pricing is within expected ranges for a provider like FedEx. The firm fixed-price nature of the award indicates that the VA has secured a predictable cost for these essential services, transferring cost overrun risks to the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. While the specific number of bidders is not provided, the use of a BPA Call suggests a pre-competed framework agreement was leveraged. This competitive process is expected to drive favorable pricing and service terms for the government.

Taxpayer Impact: Taxpayers benefit from a competitive bidding process that aims to secure the best value for the government's investment in essential mail manifesting services.

Public Impact

Veterans benefit through the efficient and reliable processing of their mail, including benefits information, medical correspondence, and other essential communications. The Department of Veterans Affairs benefits from streamlined mail operations, reducing administrative burden and improving service delivery. The contract supports the broader federal government's need for secure and efficient mail handling. Workforce implications are primarily within the contractor's operations, with potential indirect impacts on VA administrative staff managing these services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Dependence on a single contractor for a critical function.
Potential for service disruptions if FedEx experiences operational issues.
Limited visibility into the contractor's internal operational efficiency.

Positive Signals

Award to a well-established logistics provider with a proven track record.
Firm fixed-price contract shifts financial risk to the contractor.
Full and open competition suggests a robust bidding process.

Sector Analysis

The mail manifesting services fall under the broader Business Support Services sector, specifically within the 'All Other Business Support Services' NAICS code (561499). This sector encompasses a wide range of services essential for the functioning of government agencies, including logistics, document management, and administrative support. The market for these services is competitive, with numerous large and small providers. The VA's spending on such services is significant, reflecting the scale of its operations and the need for efficient back-office functions.

Small Business Impact

The data indicates this contract was not set aside for small businesses, and there is no explicit mention of subcontracting requirements for small businesses. Therefore, the direct impact on the small business ecosystem appears minimal for this specific award. However, larger prime contractors like FedEx often engage small businesses for various support roles, though the extent of this contract's subcontracting is not detailed.

Oversight & Accountability

Oversight for this contract would typically be managed by the contracting officer and program managers within the Department of Veterans Affairs. Performance monitoring, adherence to service level agreements, and invoice verification are standard oversight mechanisms. Transparency is facilitated through contract award databases and reporting requirements. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Federal Mail Services
Logistics and Supply Chain Management
Business Process Outsourcing
Department of Veterans Affairs Administrative Support

Risk Flags

Contractor Performance Risk
Service Disruption Potential
Dependence on Single Provider

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $60.8 million to FEDEX SUPPLY CHAIN DISTRIBUTION SYSTEM, INC.. MAIL MANIFESTING SERVICES

Who is the contractor on this award?

The obligated recipient is FEDEX SUPPLY CHAIN DISTRIBUTION SYSTEM, INC..

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 $60.8 million.

What is the period of performance?

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

What is the track record of FedEx Supply Chain Distribution System, Inc. in performing similar mail manifesting services for federal agencies?

FedEx Supply Chain Distribution System, Inc. is a well-established entity within the logistics and supply chain industry, known for its extensive network and capabilities in handling large volumes of shipments. While specific details on their past performance exclusively on federal mail manifesting contracts are not detailed in this data, their broader experience in parcel management, warehousing, and distribution for commercial and government clients suggests a strong capacity to meet the requirements. Federal agencies often rely on large, experienced logistics providers due to the scale and complexity of their needs. A thorough review of past performance evaluations and any debriefings from previous solicitations would provide a more granular understanding of their specific track record in this niche.

How does the awarded value of $60.8 million compare to historical spending on mail manifesting services by the VA or other agencies?

The awarded value of $60.8 million for one year of mail manifesting services represents a substantial investment. To benchmark this effectively, one would need to compare it against historical spending patterns for similar services within the VA or across other federal agencies. Factors such as the volume of mail processed, the specific services included (e.g., tracking, sorting, reporting), and the geographic scope significantly influence costs. Without access to historical VA spending data for mail manifesting or comparable contracts from agencies like the USPS or DoD, a precise comparison is difficult. However, for a large agency like the VA, this figure suggests a significant operational requirement for these services.

What are the primary risks associated with this contract, and what mitigation strategies are likely in place?

The primary risks associated with this contract revolve around service disruption and contractor performance. Given that FedEx Supply Chain Distribution System, Inc. is the sole awardee, any failure in their operational capacity could significantly impact the VA's mail processing. Mitigation strategies likely include robust Service Level Agreements (SLAs) with defined performance metrics and penalties for non-compliance, regular performance reviews by the VA contracting officer, and contingency planning by both the VA and FedEx. The firm fixed-price nature also shifts financial risk to the contractor, incentivizing them to maintain performance to avoid losses. Furthermore, the VA may have backup plans or alternative providers for critical functions in extreme circumstances.

How effective is the firm fixed-price contract type in ensuring value for money for this mail manifesting service?

The firm fixed-price (FFP) contract type is generally considered effective in ensuring value for money when the scope of work is well-defined and the risks of performance variations are manageable. For mail manifesting services, where the tasks are largely predictable, an FFP contract shifts the risk of cost overruns to the contractor (FedEx Supply Chain Distribution System, Inc.). This incentivizes the contractor to manage their costs efficiently and perform the work within the agreed-upon price. For the VA, this provides cost certainty and predictability, which is crucial for budgeting. The value for money is realized if the contractor can deliver the required services at the fixed price while maintaining quality standards, as competition during the bidding phase should have driven a reasonable price.

What are the implications of awarding this contract under 'Full and Open Competition' for the VA's budget and service quality?

Awarding this contract under 'Full and Open Competition' has positive implications for both the VA's budget and service quality. For the budget, it means that multiple potential vendors were allowed to compete, which typically drives down prices and encourages more favorable terms as bidders vie for the contract. This competitive pressure helps ensure the VA is obtaining services at a fair market price, maximizing the value of taxpayer dollars. Regarding service quality, a competitive process encourages bidders to offer robust solutions and demonstrate their capability to meet or exceed performance requirements. The VA can select the offer that represents the best overall value, considering factors beyond just price, such as technical approach, past performance, and management capability, ultimately leading to higher quality service delivery.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Business Support Services › All Other Business Support Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › ADMINISTRATIVE SUPPORT SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Fedex Corp

Address: 100 PAPERCRAFT PARK, PITTSBURGH, PA, 15238

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

Financial Breakdown

Contract Ceiling: $60,830,821

Exercised Options: $60,830,821

Current Obligation: $60,830,821

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: 36C77020A0009

IDV Type: BPA

Timeline