VA awards $19.7M contract to Federal Express for nationwide delivery services

Contract Overview

Contract Amount: $19,665,014 ($19.7M)

Contractor: Federal Express Corporation

Awarding Agency: Department of Veterans Affairs

Start Date: 2024-10-01

End Date: 2025-09-30

Contract Duration: 364 days

Daily Burn Rate: $54.0K/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: NGDS SHIPPING

Place of Performance

Location: TUCSON, PIMA County, ARIZONA, 85706

State: Arizona Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $19.7 million to FEDERAL EXPRESS CORPORATION for work described as: NGDS SHIPPING Key points: 1. Contract provides essential courier and express delivery services across the U.S. 2. Federal Express Corporation selected through full and open competition. 3. Contract duration of one year with potential for renewal. 4. Pricing appears competitive given the scope of services. 5. Service area covers all states, indicating broad logistical reach. 6. This award aligns with the VA's ongoing need for reliable mail and package delivery.

Value Assessment

Rating: good

The contract value of $19.7 million for a one-year period for nationwide express delivery services appears reasonable when benchmarked against similar government-wide contracts for logistics and courier services. Federal Express is a well-established provider with extensive infrastructure, suggesting a capacity to meet the VA's demands efficiently. While specific per-unit cost comparisons are not readily available without detailed service level agreements, the overall contract value is within expected ranges for the scale of operations.

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 evaluated. The specific exclusion of sources clause suggests a prior contract or situation that necessitated this approach, but the core competition was open. The presence of multiple bidders in such a scenario typically fosters competitive pricing and encourages providers to offer their best terms.

Taxpayer Impact: A fully competed contract like this generally ensures that taxpayer dollars are used efficiently, as the government benefits from the most competitive pricing available in the market.

Public Impact

Veterans will benefit from timely delivery of medical supplies, prescriptions, and other essential items. The Department of Veterans Affairs will receive reliable courier services for its nationwide operations. Services will impact all states within the U.S., ensuring broad accessibility. The contract supports jobs within the logistics and delivery sector through Federal Express.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for increased delivery costs if fuel prices or operational expenses rise significantly.
Dependence on a single large provider could create risks if service levels degrade unexpectedly.

Positive Signals

Federal Express is a reputable provider with a proven track record in logistics.
The contract is for a defined period, allowing for re-evaluation of needs and providers.
The firm-fixed-price structure provides cost certainty for the VA.

Sector Analysis

The couriers and express delivery services sector is a critical component of the federal supply chain, 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. Government spending in this area is substantial, supporting agencies' operational needs across various departments. Comparable spending benchmarks for similar delivery services often range in the tens of millions annually, depending on the scope and duration.

Small Business Impact

While this contract was awarded to Federal Express Corporation, a large business, the analysis does not indicate any specific small business set-aside provisions or subcontracting requirements. The scale of this contract likely focuses on large-scale, nationwide logistics, which may not be as conducive to small business participation unless through subcontracting opportunities not detailed here. Further review of subcontracting plans would be necessary to assess the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract will primarily reside with the Department of Veterans Affairs contracting officers and program managers. Performance will be monitored against the terms and conditions of the firm-fixed-price delivery order, including delivery timelines and service quality. Transparency is facilitated through federal procurement databases where contract awards are publicly reported. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse related to the contract.

Related Government Programs

USPS Mail Services
FedEx Government Contracts
UPS Government Contracts
Logistics and Transportation Services

Risk Flags

Potential for service disruption
Dependence on single large provider
Price escalation risk in future renewals

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $19.7 million to FEDERAL EXPRESS CORPORATION. NGDS 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 $19.7 million.

What is the period of performance?

Start: 2024-10-01. End: 2025-09-30.

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

Analyzing historical spending by the VA on courier and express delivery services reveals a consistent and significant reliance on these services to support its vast network of facilities and patient care. Prior to this $19.7 million award to Federal Express, the VA has historically allocated substantial funds to ensure the timely delivery of pharmaceuticals, medical equipment, lab samples, and administrative documents. While specific annual figures fluctuate based on agency needs and contract vehicles, spending in this category typically runs into the tens of millions of dollars annually. This consistent investment underscores the critical nature of reliable logistics for the VA's mission. The current award represents a continuation of this established spending pattern, albeit with a specific provider and contract terms.

How does the per-unit cost of this contract compare to similar federal contracts for express delivery?

Determining the precise per-unit cost for this Federal Express contract is challenging without access to the detailed service catalog and specific delivery metrics (e.g., package weight, distance, speed of delivery). Federal Express, as a major commercial carrier, operates on complex pricing structures that vary significantly based on these factors. However, when comparing the overall contract value of approximately $19.7 million for a one-year period to other large-scale federal contracts for similar nationwide express delivery services awarded to major carriers like UPS or even government-specific services, the pricing appears to be within a competitive range. The 'full and open competition' aspect suggests that the VA likely received multiple bids, which would drive pricing towards market norms. Benchmarking against GSA schedules or other agency-specific large-volume contracts would provide a more granular comparison, but the headline figure suggests reasonable value for the scope.

What are the primary risks associated with relying on Federal Express for these critical VA deliveries?

The primary risks associated with relying on Federal Express for critical VA deliveries include potential service disruptions due to unforeseen events such as severe weather, natural disasters, labor disputes, or logistical failures within Federal Express's network. A significant risk also lies in the potential for price increases in future contract renewals, especially if market conditions change or if competition diminishes. Furthermore, any degradation in service quality, such as delayed deliveries or damaged packages, could directly impact patient care and administrative operations within the VA. Dependence on a single large provider, even one with a strong reputation, inherently carries concentration risk. The VA mitigates some of these risks through performance clauses in the contract and by maintaining oversight, but the operational reliance remains a key consideration.

What is the track record of Federal Express in fulfilling government contracts, particularly for healthcare-related logistics?

Federal Express Corporation has a long and extensive track record of fulfilling government contracts across various agencies, including significant work with the Department of Defense, Postal Service, and civilian agencies like the VA. Their experience in healthcare-related logistics is substantial, encompassing the delivery of pharmaceuticals, medical supplies, and biological samples, often under stringent time and temperature control requirements. Federal Express has demonstrated capabilities in managing large-scale, complex supply chains critical to healthcare operations. While specific contract performance details are often proprietary, their continued success in winning and executing large government contracts, including those with healthcare components, suggests a generally positive performance history. The VA's decision to award this contract further implies confidence in Federal Express's ability to meet their specific needs.

How does this contract align with the VA's broader strategy for supply chain management and logistics?

This contract aligns with the VA's broader strategy for supply chain management and logistics by ensuring a reliable and efficient mechanism for transporting essential goods and materials across its extensive network. The VA relies heavily on timely deliveries for everything from prescription medications to medical equipment, directly impacting patient care and operational continuity. By securing a contract with a major carrier like Federal Express through competitive bidding, the VA aims to optimize costs while maintaining service quality. This approach supports the agency's goal of modernizing its supply chain, leveraging established commercial logistics capabilities to enhance responsiveness and reach, particularly in remote or underserved areas. It reflects a strategic decision to outsource core transportation functions to specialized providers, allowing the VA to focus on its primary mission of serving veterans.

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

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: $19,665,014

Exercised Options: $19,665,014

Current Obligation: $19,665,014

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71123DC023

IDV Type: IDC

Timeline