VA Awards $51.2M Contract to UPS for Shipping Services Under Full and Open Competition

Contract Overview

Contract Amount: $51,212,717 ($51.2M)

Contractor: United Parcel Service CO.

Awarding Agency: Department of Veterans Affairs

Start Date: 2023-10-01

End Date: 2026-09-30

Contract Duration: 1,095 days

Daily Burn Rate: $46.8K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: SHIPPING CHARGES

Place of Performance

Location: HINES, COOK County, ILLINOIS, 60141

State: Illinois Government Spending

Plain-Language Summary

Department of Veterans Affairs obligated $51.2 million to UNITED PARCEL SERVICE CO. for work described as: SHIPPING CHARGES Key points: 1. Significant contract value of $51.2 million for essential shipping services. 2. Competition was full and open, indicating a competitive bidding process. 3. Risk appears moderate given the established nature of the service and provider. 4. The IT sector is not directly involved; this falls under general logistics.

Value Assessment

Rating: good

The contract value of $51.2 million for 3 years appears reasonable for nationwide express delivery services. Benchmarking against similar large-scale logistics contracts would provide further validation.

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, suggesting a robust process to ensure fair pricing and service. This method typically drives competitive pricing.

Taxpayer Impact: Taxpayers benefit from a competitive process likely securing favorable rates for essential shipping services.

Public Impact

Ensures timely delivery of medical supplies and equipment to VA facilities nationwide. Supports the operational efficiency of the Department of Veterans Affairs. Provides critical logistics infrastructure for veteran healthcare services.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for price increases in future contract periods.
Dependence on a single large provider could create vulnerabilities.
Geopolitical or economic factors impacting fuel costs.

Positive Signals

Established provider with a proven track record.
Competitive bidding process likely secured favorable initial pricing.
Long-term contract provides budget stability for VA.

Sector Analysis

This contract falls under the general services sector, specifically couriers and express delivery. Spending benchmarks for federal logistics contracts of this size are typically in the tens to hundreds of millions annually, depending on scope.

Small Business Impact

While the primary awardee is a large corporation (UPS), the contract may indirectly benefit small businesses through subcontracting opportunities within the broader logistics network, though this is not explicitly stated.

Oversight & Accountability

The contract is subject to standard federal procurement oversight. The VA's contracting office is responsible for monitoring performance and ensuring compliance with contract terms.

Related Government Programs

Couriers and Express Delivery Services
Department of Veterans Affairs Contracting
Department of Veterans Affairs Programs

Risk Flags

Price escalation risk over the contract duration.
Potential for service disruptions impacting critical VA operations.
Limited visibility into subcontracting opportunities for small businesses.
Dependence on a single, large commercial entity.

Frequently Asked Questions

What is this federal contract paying for?

Department of Veterans Affairs awarded $51.2 million to UNITED PARCEL SERVICE CO.. SHIPPING CHARGES

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 $51.2 million.

What is the period of performance?

Start: 2023-10-01. End: 2026-09-30.

What is the projected cost per package or per pound, and how does it compare to industry averages?

The provided data does not detail per-package or per-pound costs. A comprehensive value assessment would require this granular data to benchmark against industry averages and identify potential cost savings or overspending relative to service volume.

What are the key performance indicators (KPIs) for this contract, and what are the penalties for non-performance?

Key performance indicators and associated penalties are not detailed in the provided data. Effective oversight requires clearly defined KPIs related to delivery times, package integrity, and tracking accuracy, along with contractual remedies for failure to meet these standards.

How does the VA plan to manage potential service disruptions or price volatility from the sole large provider?

While awarded under full and open competition, the reliance on a single large provider like UPS necessitates proactive risk management. The VA should have contingency plans for service disruptions and mechanisms to address significant price volatility beyond initial contract terms.

Industry Classification

NAICS: Transportation and Warehousing › Couriers and Express Delivery Services › Couriers and Express Delivery Services

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

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: $51,212,717

Exercised Options: $51,212,717

Current Obligation: $51,212,717

Actual Outlays: $36,051,974

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HTC71117DC003

IDV Type: IDC

Timeline