VA awards $48M contract for mail manifesting and parcel services to support hearing aid and telehealth programs

Contract Overview

Contract Amount: $48,075,297 ($48.1M)

Contractor: Fedex Supply Chain Distribution System, Inc.

Awarding Agency: Department of Veterans Affairs

Start Date: 2018-01-01

End Date: 2024-12-31

Contract Duration: 2,556 days

Daily Burn Rate: $18.8K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: THIS REQUIREMENT IS TO EFFECTIVELY PROCESS THE ORDERS RECEIVED AT DLC IN SUPPORT OF THE VA NATIONAL HEARING AID, TELEHEALTH PROGRAMS, AND FUTURE COMMODITY LINES SUCH AS CPAP/BIPAP. THE REQUIREMENT IS FOR A CONTRACTOR TO PROVIDE SERVICES FOR MAIL MANIFESTING, APPLICATION AND PRE-PAYMENT OF POSTAGE, INSERTION AND MANAGEMENT OF PARCELS INTO THE USPS STREAM FROM TWO PICKUP LOCATIONS: GOLDEN, CO AND HINES, IL.

Place of Performance

Location: GOLDEN, JEFFERSON County, COLORADO, 80401

State: Colorado Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $48.1 million to FEDEX SUPPLY CHAIN DISTRIBUTION SYSTEM, INC. for work described as: THIS REQUIREMENT IS TO EFFECTIVELY PROCESS THE ORDERS RECEIVED AT DLC IN SUPPORT OF THE VA NATIONAL HEARING AID, TELEHEALTH PROGRAMS, AND FUTURE COMMODITY LINES SUCH AS CPAP/BIPAP. THE REQUIREMENT IS FOR A CONTRACTOR TO PROVIDE SERVICES FOR MAIL MANIFESTING, APPLICATION AND PRE-P… Key points: 1. The contract focuses on essential logistics for critical VA programs, ensuring timely delivery of medical supplies. 2. Services include mail manifesting, postage application, and parcel insertion into the USPS stream. 3. The contract spans multiple years, indicating a long-term need for these logistical capabilities. 4. Two key operational locations in Colorado and Illinois are specified for parcel pickup. 5. The firm-fixed-price structure aims to provide cost certainty for the government. 6. This award represents a significant investment in the supply chain supporting veterans' healthcare.

Value Assessment

Rating: good

The contract value of approximately $48 million over its duration appears reasonable for the scope of services provided, which include comprehensive mail manifesting and parcel management for critical VA programs. Benchmarking against similar logistics contracts for government agencies, the per-annoyance cost seems aligned with industry standards for specialized supply chain support. The firm-fixed-price nature of the contract helps in predictable budgeting, though it places the risk of cost overruns on the contractor.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors had the opportunity to bid. The presence of two bidders suggests a competitive environment, which is generally favorable for price discovery and ensuring the government receives competitive pricing. The specific details of the bidding process and the number of proposals received would provide further insight into the intensity of the competition.

Taxpayer Impact: Full and open competition typically leads to better value for taxpayers by fostering a competitive bidding process that drives down costs and encourages innovation.

Public Impact

Veterans receiving hearing aids and telehealth services benefit from the reliable and efficient delivery of necessary equipment and supplies. The Department of Veterans Affairs (VA) ensures the smooth operation of its national hearing aid and telehealth programs. The contract supports logistical operations across two key states, Colorado and Illinois, impacting regional USPS operations. The contract indirectly supports jobs within the logistics and supply chain sector, including those involved in mail handling and parcel processing.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for increased USPS volume impacting other mailers.
Dependence on contractor's efficiency for critical medical supply delivery.
Geographic concentration of pickup locations could pose risks if disruptions occur.

Positive Signals

Firm-fixed-price contract provides cost predictability.
Full and open competition suggests a competitive market for these services.
Long-term contract duration indicates a stable and ongoing need, fostering contractor investment.

Sector Analysis

This contract falls within the Business Support Services sector, specifically focusing on logistics and mail management. The market for these services is substantial, with numerous providers ranging from large logistics firms to specialized mail service companies. The VA's requirement for secure and efficient processing of medical-related parcels is a niche within this broader sector, demanding reliability and compliance with government standards. Comparable spending benchmarks would likely be found in contracts for mailroom management, fulfillment services, and third-party logistics for government agencies.

Small Business Impact

The data indicates that this contract was not set aside for small businesses, and the primary contractor is not a small business. There is no explicit information regarding subcontracting plans for small businesses. Therefore, the direct impact on the small business ecosystem appears limited unless the prime contractor actively engages small businesses for subcontracting opportunities.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of Veterans Affairs contracting officers and program managers. Accountability measures are embedded within the firm-fixed-price contract terms, requiring the contractor to meet specific performance standards for mail manifesting and parcel delivery. Transparency is facilitated through federal contract databases, though detailed operational performance metrics may not be publicly disclosed. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

VA National Hearing Aid Program
VA Telehealth Services
USPS Mail Processing Services
Federal Logistics and Supply Chain Management

Risk Flags

Potential for service disruption due to geographic concentration of pickup locations.
Reliance on contractor's efficiency for timely delivery of critical medical supplies.
Risk of errors in mail manifesting or postage application impacting delivery.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $48.1 million to FEDEX SUPPLY CHAIN DISTRIBUTION SYSTEM, INC.. THIS REQUIREMENT IS TO EFFECTIVELY PROCESS THE ORDERS RECEIVED AT DLC IN SUPPORT OF THE VA NATIONAL HEARING AID, TELEHEALTH PROGRAMS, AND FUTURE COMMODITY LINES SUCH AS CPAP/BIPAP. THE REQUIREMENT IS FOR A CONTRACTOR TO PROVIDE SERVICES FOR MAIL MANIFESTING, APPLICATION AND PRE-PAYMENT OF POSTAGE, INSERTION AND MANAGEMENT OF PARCELS INTO THE USPS STREAM FROM TWO PICKUP LOCATIONS: GOLDEN, CO AND HINES, IL.

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 $48.1 million.

What is the period of performance?

Start: 2018-01-01. End: 2024-12-31.

What is the historical spending trend for this specific service requirement within the VA?

Analyzing historical spending for this specific service requirement within the VA would involve examining past contract awards for mail manifesting, postage application, and parcel management related to the National Hearing Aid and Telehealth programs. Without access to detailed historical contract data, it's difficult to provide precise figures. However, the current award of approximately $48 million over a multi-year period suggests a consistent and significant need for these logistical services. Trends might show an increase in spending if the scope of telehealth or the number of beneficiaries for hearing aids has grown, or if new commodity lines like CPAP/BIPAP have been added, as indicated in the requirement description. Fluctuations could also be influenced by changes in postage rates or the efficiency of the chosen logistics provider.

How does the per-unit cost of processing a parcel under this contract compare to industry benchmarks?

Determining the exact per-unit cost of processing a parcel under this contract requires knowing the total number of parcels processed annually. The contract value is approximately $48 million over its duration (estimated 2018-2024, which is 7 years, or 2556 days). If we assume an average daily processing volume, we could derive a per-parcel cost. However, without that volume data, a direct comparison is challenging. General industry benchmarks for mail manifesting and parcel handling services can vary widely based on service level, package size, and geographic location. Typically, large-scale government contracts aim for cost efficiencies through volume. If the VA is processing hundreds of thousands or millions of parcels annually, the per-unit cost could be competitive. However, without specific volume metrics, it's difficult to definitively state if it's above or below market rates.

What are the key performance indicators (KPIs) used to evaluate the contractor's performance?

Key Performance Indicators (KPIs) for this contract would likely focus on the efficiency, accuracy, and timeliness of the mail manifesting and parcel processing services. Specific KPIs could include: On-Time Pickup Rate (ensuring USPS or designated carriers pick up parcels as scheduled from the two locations), Parcel Processing Accuracy (correct manifesting, postage application, and addressing), Delivery Time Performance (meeting any specified delivery windows for the parcels), and Data Reporting Accuracy (timely and accurate submission of manifests and tracking information). The contract would also likely include clauses for service level agreements (SLAs) that define acceptable performance thresholds and potential penalties for non-compliance. The VA would monitor these KPIs to ensure the smooth operation of critical healthcare support services.

What is the potential impact of this contract on USPS delivery times and capacity?

This contract involves the insertion of parcels into the USPS stream from two specific locations. The volume of parcels generated by this contract could have a noticeable impact on USPS delivery times and capacity, particularly in the regions surrounding Golden, CO, and Hines, IL. If the contractor efficiently processes and hands off large volumes of mail, it could potentially streamline the initial sorting and processing stages for USPS. However, a significant increase in volume could also strain USPS resources if not adequately anticipated and managed. The contract's success relies on the contractor's ability to integrate seamlessly with USPS logistics to avoid delays and ensure that these critical medical supplies reach veterans promptly without negatively affecting the broader mail delivery network.

Are there any identified risks associated with the contractor's track record or the nature of the services provided?

Assessing the contractor's track record would require a review of their past performance on similar government contracts, including any past performance evaluations, contract disputes, or quality issues. For FEDEX SUPPLY CHAIN DISTRIBUTION SYSTEM, INC., their extensive experience in logistics suggests a generally robust capability. However, risks inherent in this type of service include potential disruptions in the supply chain (e.g., transportation delays, weather events), errors in mail manifesting or postage application leading to delivery issues, or data security breaches related to shipment information. The geographic concentration of pickup locations (Colorado and Illinois) also presents a risk; a disruption at either site could impact service delivery. The VA would mitigate these risks through performance monitoring, clear contract terms, and contingency planning.

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

Offers Received: 2

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: $131,913,530

Exercised Options: $59,305,671

Current Obligation: $48,075,297

Actual Outlays: $25,133,738

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Parent Contract

Parent Award PIID: GS03F0169X

IDV Type: FSS

Timeline